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FAQs on FINANCIAL MANAGEMENT PREVIOUS YEAR QUESTION PAPER - B Com

1. What is Financial Management?
Ans. Financial Management refers to the process of planning, organizing, directing and controlling the financial activities of an organization. It involves managing the financial resources of a company in such a way that it maximizes the wealth of its shareholders. Financial Management includes financial planning, budgeting, financial decision making, and financial control.
2. What are the key components of Financial Management?
Ans. The key components of Financial Management are: 1. Financial Planning: It involves forecasting the financial needs of the organization and developing strategies to achieve these goals. 2. Budgeting: It involves preparing a financial plan that outlines the estimated income and expenses for a given period. 3. Financial Decision Making: It involves evaluating various financial options and selecting the one that maximizes the value of the organization. 4. Financial Control: It involves monitoring the financial performance of the organization and taking corrective actions when necessary.
3. What are the objectives of Financial Management?
Ans. The objectives of Financial Management are as follows: 1. Maximization of Shareholder Wealth: The primary objective of Financial Management is to maximize the wealth of its shareholders. 2. Profit Maximization: Financial Management also aims to maximize the profits of the organization. 3. Risk Minimization: Financial Management aims to minimize the risks associated with financial decisions. 4. Cost Minimization: It aims to minimize the cost of capital and other financial resources.
4. What are the different sources of finance for an organization?
Ans. The different sources of finance for an organization are: 1. Equity Financing: It involves raising capital by issuing shares to investors. 2. Debt Financing: It involves raising capital by borrowing money from banks or other financial institutions. 3. Retained Earnings: It involves using the profits generated by the organization to fund its operations. 4. Venture Capital: It involves raising capital from investors who are willing to take on high-risk investments.
5. What is the importance of Financial Management for an organization?
Ans. The importance of Financial Management for an organization are: 1. Helps in decision making: Financial Management provides information that helps in making informed decisions. 2. Maximizes profits: It helps in maximizing the profits of the organization. 3. Ensures financial stability: Financial Management helps in maintaining the financial stability of the organization. 4. Helps in efficient use of resources: It helps in utilizing the financial resources of the organization in an efficient and effective manner.
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