Stages of world financial management
Financial management as a separate science emerged in the XIX and XX centuries. as the formation and development of financial and commodity markets and the emergence of an urgent need for more detailed justification of financial transactions economic calculations. During this period, the commercial open high school and there is a special science commercial arithmetic, in which began to form and financial management tools.
The subject of commercial arithmetic calculation technique was simple and compound interest, discounting future cash flows, payments on debt and equity securities, short-term and long-term investments and loans. Later in countries with market economies, commercial arithmetic was transformed into an independent line financial management - financial management - since then is its constant development, improvement and refinement of object methods.
In the development of Western European and US financial management, depending on the subject and the main priorities of financial management can identify a number of stages. In particular, in the 90 years of XIX century. the main subject of study Financial Management were legal aspects of the merger of various companies, the formation of new companies, issue of various securities in order to attract and increase capital. The objective conditions of financial management in this area is the rapid development of the commodity market and the need for concentration of capital through financial instruments and methods.
It is logical that the economic downturn in 30 years of XX century. the emphasis has shifted dramatically financial management and its main principles were the subject of financial crisis management firms. Accordingly, considerable attention was paid to the development of tools to diagnose the probability of bankruptcy, the evaluation mechanism and liquidity of securities regulation to mitigate the negative effects of the economic downturn.
However, by the end of the 50s of XX century. financial affairs mostly taught as a purely informative, formally established subject of study. Only with the development of the theory of stress analysis in financial management has shifted to making financial decisions on choosing the optimal structure of assets and liabilities by the criterion of maximizing the profitability of the company. At this time there are many classical optimization models of financial management entities.
Thus, retrospective analysis of international financial management experience leads to the conclusion that his development, more attention is paid to:
- Search through the effective use of limited financial resources;
- Substantiation of directions of investing in assets with the highest income at minimum risk;
- Identifying alternative possibilities of formation and allocation of financial resources and assess their impact on the overall cost of capital;
- Balancing the sources of business financing via loans and sale of securities;
- The choice of optimal schemes dividends.
As the complexity of the system of internal and external financial relations entities, increased competition in the financial and commodity markets, the globalization of business and the use of modern computer technology is an objective need for long-term financial planning and forecasting, the use of new financial instruments and levers understanding the mechanism of international finance, the development of specialized information systems supporting financial decisions.
Accordingly, globally expanding and complicated subject of modern financial management tools to meet the requirements of the new stage of economic development. Instead of a functional approach, in which the attention of some financial managers focused on improving process performance of certain management functions (planning, organization, motivation and control) in accordance with accepted at the firm specialization and organizational management structure, comes a systematic approach in which the situation is assessed comprehensively and thoroughly The influence of alternative financial solutions to financial equilibrium state of the economic entity in the short and long run.