FAQ

What is the purpose of financial management in business?

The purpose of financial management is to guide businesses or individuals on financial decisions that affect financial stability both now and in the future. Financial management specialists will examine finances and investments, as well as many other types of financial data, to assist customers make decisions that are in line with their goals.

The primary of the purpose of financial management in business include:

  • Maximizing shareholder value: Financial management aims to increase the value of the organization for its shareholders by making wise investments and generating profits.

  • Ensuring liquidity: Financial management ensures that the organization has sufficient cash and other liquid assets to meet its short-term financial obligations.

  • Managing risk: Financial management involves identifying and managing financial risks such as market volatility, credit risk, and operational risk.

  • Maintaining financial control: Financial management involves establishing and maintaining financial controls to ensure that financial transactions are accurate, complete, and reliable.

  • Providing financial information: Financial management provides financial information to internal and external stakeholders, such as investors, creditors, and regulators, to help them make informed decisions.

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