Advantages and disadvantages of financial management PDF

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Note on the advantages and disadvantages of financial management...

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ADVANTAGES OF FINANCIAL MANAGEMENT

● Financial management facilitates beter decision making by providing all fnancial informaton regarding organisaton.

● In fnancial management concept, all informaton’s collected are recorded systematcally and made it available to all business users. It is called transparency of informaton that helps to develop beter understanding .

● The fnance manager ensure that all actvites of business are in accordance with the estmated costs and should not go above the pre-set standards. This facilitates fnance control

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Financial management ensures that all fnancial resources are efciently utlised and there is no wastage.

● Financial management aims at raising the proft of the concern and wealth of the shareholders. ● Financial management estmates the right amount of funds required by the business so that it can be acquired tmely

●Financial management helps in avoiding and taking any unnecessary debt by the company.

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Proper and efcient applicaton of all funds results in the reducton of overall cost.

DISADVANTAGES OF FINANCIAL MANAGEMENT

● For controlling and measuring the cost, fnancial management implies various fnancial control tools. These tools are costly to use and are tme consuming.

● Financial management leads to rigidity by setng certain standards for measure performance.

● Financial management requires determinaton of standards for measuring actual performance which is very difcult task.

● The fnancial control measures put forward by fnancial management can be easily applied at the startng of process but,its implementaton become difcult during operaton of the process.

● Financial management can work toward managing or avoiding deviatons only if the real reasons for such deviatons are found out.Otherwise,it is ineffectve.

● There are no proper criteria for setng up standards and there may be chances to set improper standards.

● Due to standard rigidity ,actual and standard performance cannot be properly evaluated.

Financial management deals with the procurement of funds and their effectve utlisaton. These two are core fnancial actvites of a frm without which no business concern can move ahead.Further,fnance is central to all business actvites. It is impossible for any concern to survive and grow without proper fnancial management. Financial management helps in the important decision making of the frm by providing adequate informatons and data. Many studies have conducted on fnancial management has stated the importance of fnancial management techniques in different industries. Those studies gives clear cut picture of fnancial management and their importance in the growth and development of an organisaton....