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Scope and Objectives of Financial Management Video Lecture | Crash Course for CA Intermediate

FAQs on Scope and Objectives of Financial Management Video Lecture - Crash Course for CA Intermediate

1. What is the primary scope of financial management?
Ans.The primary scope of financial management encompasses various activities such as financial planning, capital budgeting, capital structure management, working capital management, and financial analysis. It aims to ensure that an organization can meet its financial obligations, maximize shareholder wealth, and achieve its long-term financial goals.
2. What are the key objectives of financial management?
Ans.The key objectives of financial management include profitability, liquidity, solvency, and stability. Profitability focuses on maximizing earnings, liquidity ensures that the organization can meet short-term obligations, solvency assesses the long-term viability of the organization, and stability aims for consistent growth and minimal financial risk.
3. How does financial management contribute to decision-making in organizations?
Ans.Financial management provides critical information and analyses that assist in decision-making processes. It involves evaluating investment opportunities, assessing risks, forecasting future financial performance, and determining the optimal capital structure. This information enables managers to make informed choices that align with the organization’s strategic objectives.
4. What role does capital budgeting play in financial management?
Ans.Capital budgeting is a vital aspect of financial management that involves evaluating and selecting long-term investment projects. It helps organizations determine which projects will yield the best returns and align with their financial goals. Through techniques like Net Present Value (NPV), Internal Rate of Return (IRR), and Payback Period analysis, capital budgeting ensures that resources are allocated efficiently.
5. Why is working capital management important in financial management?
Ans.Working capital management is crucial as it focuses on managing a company's short-term assets and liabilities to ensure operational efficiency. Effective working capital management helps maintain liquidity, meet short-term obligations, and avoid financial distress. It involves managing inventory levels, accounts receivable, and accounts payable to optimize cash flow and ensure the smooth functioning of business operations.
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