Financial Management

Financial Management is the efficient and effective management of money (funds) in such a manner as to accomplish the objectives of the organization.

Wealth maximisation is the main objective of financial management and growth is essential for increasing the wealth of equity shareholders. The growth can be achieved through expanding its existing markets or entering in new markets.

A company can expand/diversify its business internally or externally which can also be known as internal growth and external growth. Internal growth requires that the company increase its operating facilities i.e. marketing, human resources, manufacturing, research, IT etc. which requires huge amount of funds. Besides a huge amount of funds, internal growth also require time.

Thus, lack of financial resources or time needed constrains a company’s space of growth. The company can avoid these two problems by acquiring production facilities as well as other resources from outside through mergers and acquisitions.