Role of Managerial Finance

 The main objective of financial management is to increase the income of the shareholders through the aging of assets. To achieve this goal, the financial manager performs various financial functions:


1. Setting financial objectives:
 A firm usually has short-term financial objectives and long-term financial objectives. Short-term financial objectives are to maintain the firm's liquidity and financial solvency. On the other hand, long-term financial objectives are to earn profit and increase wealth.

2. Determining the amount of capital: 
The firm requires fixed capital to meet its capital expenditure and current capital to meet its day-to-day expenses. Proper planning should be done to determine the amount of fixed and working capital. Working capital plan based on which the investment decision of the firm has to be taken.

3. Asset Management: 
It is impossible to run a business without assets i.e. land, buildings, machinery, goods, money, and other assets. Planning and controlling each asset belongs to the financial functions of asset management. For example: preparing and controlling cash plans, preparing and controlling accounts receivable plans, etc.


4. Identification of sources and execution of financial operations:
Working capital is raised from long-term sources and working capital is raised from short-term financing for short periods. Fixed and working capital from different sources Capital has to be raised from the most profitable sources. Moreover, this task is also completed by executing the shareholders' agreement.

5. Determination and Distribution of Profits: 
The policy and procedures for the determination and distribution of profits of the firm are included in the financial functions. Profit planning and control, dividend policy determination, dividend payment, profit retention and reserve funds for business expansion, etc. have to be properly adopted.

6. Ancillary Activities: 
All financial activities that are performed on a routine basis are called incidental activities. It is not necessary to perform executive financial functions to perform this task, the related financial functions are:

A. Supervisory functions:
Transaction monitoring, custody of funds, security and preservation of financial documents, etc.

B. Accounting functions: 
recording transactions, preparing accounts, preparing financial statements, analyzing statements, etc.

c. Communication and Financial Reporting Tasks: 
Communicating with various parties and preparing various financial reports etc.

d. Insurance and tax-related functions: insuring assets, paying insurance premiums properly, and paying proper taxes, etc.

e. Tasks related to Audit of Accounts: Arrange for Audit of Accounts.