Definition: What is Financial Management?
Financial management is the decision-making and strategy-forming process used to guide a company using financial data as the primary evidence for making decisions.
Financial management is a very important part of corporate governance.
It incorporates all of the financial goals of the company into the decision-making processes that governs the company’s operations.
Ultimately, the goal of any corporation is to make money.
Money for its shareholders, whether the company is private or public, is always the end goal.
Financial management is a very important part of that process because it ensures that executives are keeping a watchful eye on the finances of the company so that their profit goals can be realized.
Image Source: What is Financial Management?
In large, in publicly-traded companies there might be an entire team or department dedicated to financial management duties.
In a smaller organization, the owner or manager might be responsible for financial management as part of his/her larger group of responsibilities.
One of the key parts of financial management is managing spending.
Good financial managers look at things, like inventory, R & D, payroll, infrastructure, and any other place where money is flowing out of the company, and try to find ways to reduce spending or maximize profit.
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