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Financial management class lectures_46063259-Elumilade-Financial-Management-Textbook

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CHAPTER ONE INTRODUCTION Financial management is that managerial activity which is concerned with the process of procuring and judicious use of financial resources with a view to maximising the value of the firm thereby the value of the owners. The Traditional view of Financial Management * * * Traditional functions of Financial Manager of a firm include the following Sourcing for short term and long term funds from financial institutions. Mobilisation of funds through financial instruments like Equity Shares, Preference Shares, Debentures and Bonds. Orientation of Finance function with the Accounting function and compliance of legal provisions relating to funds procurement and utilisation. However, with increase in complexity of modern business situation, the role of a Finance Manager is not just confined to procurement of funds, but the functioning is extended to judicious and efficient use of funds available to the firm, keeping in view the objectives of the firm and expectations of the owners of the business. Hence we have: Modern Approach to Financial Management This involves the Financial Manager’s ability to analyse the firm and to determine the following: * The total funds requirement of the firm * The assets to be acquired, and * The pattern of financing the assets. Three major functions of Financial Manager: (a) (b) (c) Investment decisions Finance decisions Dividend decisions Investment Decisions: Investment decisions relate to the careful selection of viable ...
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