Importance of Financial Management

Finance is considered to be the life blood of business. Financial management is concerned with procurement and utilisation of funds in a proper way. Therefore, financial management enjoys great importance in an organaisation. Financial management is crucial for the success of a business. Financial management is important because of the following advantages:

1. Financial management helps in obtaining sufficient funds at a minimum cost.

2. Financial management ensures effective utilisation of funds. Financial management tries to invest funds in various assets with a view to maximise the return on shareholder’s investment.

3. Financial management tries to generate sufficient profits to finance expansion and modernisation of the enterprise and secure stable growth.

4. Financial management ensures safety of funds through creation of reserves, re-investment of profits, etc.