Effective financial management is a vital activity in any organization to ensure the proper utilization of funds; Moreover, it is the process of planning, organizing, monitoring, and controlling financial resources to achieve organizational goals and objectives. Additionally, it is an ideal practice for controlling the financial activities of an organization such as the procurement of funds, payments, accounting, and risk assessment. Primarily, it is the application of general principles of management to the financial possession of an enterprise. Furthermore, proper management of the finances of an organization provides regular service and to ensure efficient functioning. Consequently, if an organization does not properly deal with its finances, it may face barriers that have severe repercussions on its growth and development.
effective financial management and utilization of funds
FUNCTIONS OF EFFECTIVE FINANCIAL MANAGEMENT
Fundamentally, effective financial management helps in the estimation of the capital requirements of an organization. This depends upon the costs, profits, future programs, and policies of a concern. Also, it helps in the determination of capital composition. This involves short-term and long-term debt-equity analysis that depends upon the proportion of equity capital that a company is possessing. Additionally, financial management helps in the management of funds to ensure that an organization meets its goals and objectives. Moreover, it also ensures effective utilization of funds by cutting down unnecessary costs and reducing wastage in useless assets.
functions of effective financial management
THE IMPORTANCE OF PROPER UTILIZATION OF FUNDS
Essentially, effective and proper utilization of funds enables organizations to meet their goals and objectives through maximization of returns and minimization of the cost of capital. Also, proper utilization of funds helps in improving savings and bettering the value of an organization. Furthermore, it is a task of effective financial management that enables the growth and flourishing of an organization. It also prevents overutilization or underutilization of funds which ensures the viability and sustainability of the organization.
importance of proper utilization of funds
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