Financial management is the management of the functions finance. Financial functions include how acquire funding and how to use the funds them. Financial managers concerned with determination of the amount of assets that are worthy of investment in various assets and selection of sources of funds to finance these assets.
To obtain funds, financial managers can obtain it from within and outside the company. Sources from outside the company come from capital markets, may take the form of debt or equity capital.
Financial management can be defined from the duties and responsibilities responsible financial manager. The principal tasks of financial management, among others include decisions about investment, financing and business activities distribution of dividends of a company, thus the task manager finance is a plan to maximize firm value. Another important activity that must be the financial manager involves four aspects:
- Financial managers must cooperate with other managers responsible for general corporate planning.
- Financial managers must focus on various investment and financing decisions, and all things related with him.
- Financial managers must cooperate with managers in company so the company can operate as efficiently as possible.
- Financial managers must be able to connect the company with financial markets, where companies can obtain funding and securities can be traded company.
Basically the goal of financial management is maximize firm value. However, behind the goal still there is a conflict between business owners with funding providers as a creditor. If the company running smoothly, then the value of shares companies will increase, while the value of corporate debt in bonds are not affected at all. So it can be concluded that the value of stock ownership could be an appropriate index to measure the level of corporate efektifitias. Based on that reason, the financial management objectives stated in the form maximizing the value of the stock ownership of the company, or maximize their share price. Goal to maximize the stock price does not mean that managers should seek increased value shares at the expense of bondholders.
