Scope of Financial Management free essay sample

Financial Management can be defined as:The management of the finances of a business / organisation in order to achieve financial objectives. Taking a commercial business as the most common organisational structure, the key objectives of financial management would be tocreate wealth for the business ,generate cash, andprovide an adequate return on investment bearing in mind the risks that the business is taking and the resources invested. There are three key elements to the process of financial management: Financial Planning Financial Control Financial Decision-making Meaning and Defination Meaning of Financial Management Financial Management is that specialised function of general management which is related to the procurement of finance and its effective utilisation for the achievement of common goal of the organisation. It includes each and every aspect of financial activity in the business. Financial Management has been defined differently by different scholars. A few of the definitions are being reproduced below:- â€Å"Financial Management is an area of financial decision making harmonizing individual motives and enterprise goals. We will write a custom essay sample on Scope of Financial Management or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page †- Weston and Brigam. Financial Management is the application of the planning and control functions to the finance function. †- Howard and Upton. â€Å"Financial Management is the operational activity of a business that is responsible for obtaining and effectively, utilizing the funds necessary for efficient operations. †- Joseph and Massie. From the above definitions, it is clear that financial management is that specialised activity which is responsible for obtaining and affectively utilizing the funds for the efficient functioning of the business and, therefor, it includes financial planning, financial administration and financial control. According to me, â€Å" Financial Management is a system in which rotate planning , control and decision making. †-chudasama sulochanaba Objectives of Finance Function For optimum financial decisions, the objectives of financial management shall be clearly defined. They should be so laid down that they contribute directly towards the achievement of overall business objectives. Objectives provide a normative framework within which a firm is to take decisions. Financing is the functional area of objective of the business and contribute directly towards it. The main objectives of a business are survival and growth. In order to survive ups and downs in the business, the business must earn sufficient profits and it should also maintain proper relations with shareholders, customers, suppliers and other social groups. The financial management of an organisation must seek to achieve the following objectives: †¢To ensure adequate and regular supply of funds. †¢To provide a fair rate of return to the suppliers of capital viz. shareholders. †¢To ensure effective utilization of funds by maintaining proper balance between profitability, liquidity and safety. to generate and build up sufficient surplus for expansion and growth through ploughing back of profits. †¢To minimize cost of capital by developing a sound capital between various securities issued by the company. †¢To coordinate the activities of the finance department with the activities of other departments in the organisation. Scope of Functions of Financial Manag ement The finance department of an enterprise performs several functions in order to achieve the above objectives. The scope of finance function is very wide. It consists of the following activities: 1. Estimating the Requirement of Funds :- The finance department must estimate the capital requirements of the firm accurately for long term and short term needs. In estimating the capital requirements of the business, the finance department must take help of the budgets of various activities of the business e. g. sales budget, production budget, expenses budget etc. prepared by the concerned departments. In the initial stage, the estimate is done by promoters but in a growing concern, it is done by the finance department. Unless the financial forecast is correct, business is likely to run into difficulties due to excess or shortage of funds. Correct estimates ensure the availability of funds as and when they are needed. In estimating the requirement of funds, nature and size of the business, modernization and expansion plan should be given due consideration. 2. Determining the Capital Structure :- By capital structure we mean the kind and proportion of different securities for raising the required funds. Once the total requirement of funds is etermined, a decision regarding the type of securities to be issued and the relative proportion between them is to be taken. The finance department must determine the proper mix of debt and equity. It should also decide the ratio between long term and short term debts. In determining these ratios, cost of raising finance from different sources, period for which funds are required and several other factors should be considered. A proper balance between risk and re turns should be maintained. Choice of Sources of Finance:- A company can raise funds from different sources e. g. hareholders, debenture holders, banks, financial institutions, public deposits etc. Before raising the funds, it has to decide the source from which the funds are to be raised. The choice of the source of finance should be made very carefully by taking a number of factors into account such as cost of raising funds, conditions attached, charge on assets, burden of fixed charges, dilution of ownership and control etc. For example, if the company does not want to dilute the ownership, it will depend on any source of finance other than investment in shares. 4. Investment of Funds:- The funds raised from different sources should be prudently invested in various assets -short term as well as long term to optimize the return on investment. In taking decisions for the investment of long term funds, a careful assessment of various alternatives should be made through capital budgeting, opportunity cost analysis and many other techniques used to evaluate the investment proposals. A part of the long term funds should be invested in working capital of the company. While taking decision for the investment of funds in long term assets, management should be guided by three basic principles, viz. afety, profitability and liquidity. In taking decisions for the investment of funds in working capital, the finance manager must seek cooperation of marketing and production departments in estimating the funds which are to be involved in carrying of inventories in finished product and credit policy of the marketing department and in raw material and factory supplies of the production department. 5. Management of Cash:- It is the prime responsibility of the finance manager to see that an adequate supply of cash is available at proper time for the smooth running of the business. Cash is needed to purchase raw materials, pay off creditors, to pay to workers and to meet the day to day expenses of the business. Availability of cash is necessary to maintain liquidity and credit- worthiness of the business. Excess cash must be avoided as it costs money. It there is any cash in excess, it should be invested in near cash assets such as investments etc. which may be converted into cash within no time. A cash flow statement should be prepared by the department to know the correct need of cash is essential to achieve the goal of profitability and liquidity. The finance manager should decide in advance how much cash he should retain to meet current obligations of the company. 6. Disposal of Surplus:- One of the prime function of the finance department is to allocate the surplus. After paying all taxes, the available surplus of the business can be allocated for three purposes -(a) for paying dividend to the shareholders as a return on their investment, (b) for distributing bonus to workmen and companys contribution to other profit sharing plans, and (c) for ploughing back of profits for the expansion of business. As far as the second alternative is concerned, the amount to be paid to workers is generally fixed either by statute or by agreement and therefore, there is no problem in allocating surplus for this purpose. But a considerable, attention is to be paid in so far as first and third alternatives are concerned i. e. , how much to be paid to shareholders as dividend and how much to be retained in the business. For this purpose factors like the trend of the earning of the company, trend of the market price of its shares; the requirement of funds for the purpose of expansion and future prospects should be considered. . Financial Controls:- The financial manager is under an obligation to check the financial performance of the funds invested in the business. There are a number of techniques to evaluate the performance viz. Return on Investment (ROI), budgetary control, cost control, internal audit, ratio analysis and break-even point analysis. The financial manager must lay emphasis on financ ial planning as well. Importance of financian management Importance of finance cannot be over-emphasised. It is, indeed, the key to successful business operations. Without proper administration of finance, no business enterprise can reach its full potentials for growth and success. Money is a universal lubricant which keeps the enterprise dynamic-develops product, keeps men and machines at work, encourages management to make progress and creates values. The importance of financial administration can be discussed under the following heads (i) success of Promotion Depends on Financial Administration:- One of the most important reasons of failures of business promotions is a defective financial plan. If the plan adopted fails to provide sufficient capital to meet the requirement of fixed and fluctuating capital an particularly, the latter, or it fails to assume the obligations by the corporations without establishing earning power, the business cannot be carried on successfully. Hence sound financial plan is very necessary for the success of business enterprise. (ii) Smooth Running of an Enterprise:- Sound Financial planning is necessary for the smooth running of an enterprise. Money is to an enterprise, what oil is to an engine. As, Finance is required at each stage f an enterprise, i. e. promotion, incorporation, development, expansion and administration of day-to-day working etc. , proper administration of finance is very necessary. Proper financial administration means the study, analysis and evaluation of all financial problems to be faced by the management and to take proper decision with reference to the present circumstances in regard to the procurement and utilisation of funds. (iii) Financial Administration Co-ordinates Various Functional Activities:- Financial administration provides complete co-ordination between various functional areas such as marketing, production etc. o achieve the organisational goals. If financial management is defective, the efficiency of all other departments can, in no way, be maintained. For example, it is very necessary for the finance-department to provide finance for the purchase of raw materials and meting the other day-to-day expenses for the smooth running of the production unit. If financial department fails in its obligations, the Production and the sales will suffer and consequently, the income of the concern and the rate of profit on investment will also suffer. Thus Financial administration occupies a central place in the business organisation which controls and co-ordinates all other activities in the concern. (iv) Focal Point of Decision Making:- Almost, every decision in the business is take in the light of its profitability. Financial administration provides scientific analysis of all facts and figures through various financial tools, such as different financial statements, budgets etc. , which help in evaluating the profitability of the plan in the given circumstances, so that a proper decision can be taken to minimise the risk involved in the plan. v) Determinant of Business Success:- It has been recognised, even in India that the financial manger splay a very important role in the success of business organisation by advising the top management the solutions of the various financial problems as experts. They present important facts and figures regarding financial position an the performance of various functions of the company in a giv en period before the top management in such a way so as to make it easier for the top management to evaluate the progress of the company to amend suitably the principles and policies of the company. The financial manges assist the top management in its decision making process by suggesting the best possible alternative out of the various alternatives of the problem available. Hence, financial management helps the management at different level in taking financial decisions. (vi) Measure of Performance:- The performance of the firm can be measured by its financial results, i. e, by its size of earnings Riskiness and profitability are two major factors which jointly determine the value of the concern. Financial decisions which increase risks will decrease the value of the firm and on the to the hand, financial decisions which increase the profitability will increase value of the firm. Risk an profitability are two essential ingredients of a business concern. Conclusion:- In short Financial Management is very important for any business. If we want to fully use our money we have to implement financial management in our business . e can see the importance of financial management from success of promotion depends on financial administration, smooth running of an enterprise, focal point of decision making, financial administration co-ordinates various functional activities, determinant of business success, measure of performance.

Everything You Need to Know History of The Great Gatsby

Everything You Need to Know History of The Great Gatsby SAT / ACT Prep Online Guides and Tips What exactly makes The Great Gatsby so â€Å"great?† Why did your English teacher choose this book in particular, when there are dozens of other great American novels from the twentieth century? Has it always been this popular? This article explains how The Great Gatsbynovel went from an unpopular flop during its time to a great American classic today, and how that history could affect your approach to the book. Read on to learn the story of The Great Gatsby’s unlikely path to fame, and why you should care. Why Does the Critical History of The Great GatsbyMatter? Understanding what helped Gatsby take hold as an American classic – its beautiful prose, the elusive Gatsby himself – can guide your approach to writing about the book. You’ll understand what the big picture ideas are and what your teacher is most likely trying to get at in teaching The Great Gatsby. As a general rule, if you’re reading Gatsby in a literature class, you’ll likely spend a lot of time analyzing itsliterary devices, symbols, and characters. But if you’re reading Gatsby in a history or American Studies class, you can expect to focus more on itsbig-picture themes(particularly its exploration of the American dream)and historical context (Gatsby as a record of the 1920s). Understanding Gatsby’s history could also help you if you’re approaching the novel from a more modern perspective.If you’re writing about the role of gender, sexuality, or race in the novel (as opposed to the tried-and-true American Dream topic), it's important to understand how these aspects of the novel were initially recieved. If nothing else, thishistory explains why you have been assigned The Great Gatsby in class! The GreatGatsby in the 1920s and 1930s The Great Gatsbynovel was first published in 1925, during the height of the Roaring ‘20s (the nickname for the post-WWIeconomic boom). Great Gatsby Composition History Gatsby was Fitzgerald’s third novel, and in writing it, he consciously set out to write something more artistic and creative than his previous two books. It took him about two and a half years to write and edit it, in between a failed play production, financial struggles, and a move to France. (See our short biography ofFitzgerald’s lifefor more.) Fitzgerald also didn’t like the title his publisher insisted on – his preferred title was â€Å"Trimalchio† or â€Å"Trimalchio in West Egg† (read our articleabout the title and alternate titlesof theGreat Gatsbyfor more info). But he was facing a deadline, and both his editor, Maxwell Perkins, and his wife, Zelda, were pushing him to finish. Great GatsbyReviews Gatsby debuted in March 1925 to lukewarm critical reviews. Many critics in the 1920s didn’t think The Great Gatsby was as good as Fitzgerald’s previous novels, especially his debut,This Side of Paradise. While he received private letters of praise from the writers T. S. Eliot, Willa Cather, and Edith Wharton, the public critical reviews were mixed at best. As quoted in a New York Times retrospective of The Great Gatsby, critics at the time were rather cold, saying that Gatsby was"clever and brilliantly surfaced but not the work of a wise and mature novelist." Other reviewers felt it was "a little slack, a little soft, more than a little artificial, [falling] into the class of negligible novels." The noted writer H. L. Mencken said that it was "certainly not to be put on the same shelf with, say, This Side of Paradise," and Isabel Paterson remarked that "what has never been alive cannot very well go on living; so this is a book for the season only." However, there were some positive reviews. The Los Angeles Times critic said, â€Å"Character could not be more skillfully revealed than it is here."The New York Times critic called it â€Å"A curious book, a mystical, glamorous story of today. It takes a deeper cut at life than hitherto has been enjoyed by Mr. Fitzgerald. He writes well - he always has - for he writes naturally, and his sense of form is becoming perfected.† The Great Gatsby:Commercial Failure However, despite those small bits of praise, the novel was not a commercial success. Fitzgerald hoped it would sell 75,000 copies, but it didn’t even sell 20,000 in its initial run. Thislack of success probablycontributed to Fitzgerald’s alcoholism and writer’s block after the publication of Gatsby (he didn’t publish Tender is the Night until 1934). While The GreatGatsby was kept alive by the publisher (Scribner) through the 1930s, and attracted a small literary following, it wasn’t widely read. (One interesting exception is J.D. Salinger, whose character, Buddy Glass, says Gatsby was his Tom Sawyer.) In 1934,Gatsby was reissued byThe Modern Library, a renowned publisher of classics, but was again dropped in 1939. Apparently, at the time ofFitzgerald’s death in 1940, Scribner had molderingcopies of the book in their warehouse. In short, during Fitzgerald’s life, Gatsby always fell just shy of â€Å"great† in the American public consciousness. Revival During WWII During WWII, the Red Cross started a program to send pocket-sized books to U.S. soldiers stationed abroad, as well as those being held in prison camps. The GreatGatsby was one of the books selected, and was consequently shipped to thousands of American soldiers during the war. By 1945, 123,000 pocket-sized copies of Gatsby had been shipped to American soldiers. The story of unrequited love and the failure of the American Dream resonated with the young men fighting abroad. This allowed the novelto suddenly become popular with a mass audience, and to get more attention from literary critics. In 1945, a new edition of The Great Gatsbywas published. In the introduction, Lionel Trilling wrote,â€Å"Fitzgerald is now beginning to take his place in our literary tradition.† It was also reprinted by Bantam Books. Full-length articles about Gatsby appeared in 1946. One literary critic, William Troy, said in an article that the novelwas â€Å"one of the few truly mythological creations in our recent literature,† which speaks to not only Gatsby’s growing acceptance in the literary canon, but also the sense critics had that there was something special about it. Throughout the 1950s,The Great Gatsbycontinued to grow in popularity and was the subject of a lot of literary criticism (a.k.a. writing about literature) – which is important because critical attention by professors and graduate students causedThe Great Gatsby to be placed on more college syllabi. This eventually trickled down to high school classes and caused Gatsby to become more and more popular each year. The 1960s - Present By the 1960s, The Great Gatsby was regarded as an American classic. The New York Times, in the retrospective piece mentioned above, confidently stated: â€Å"It is probably safe now to say that it is a classic of twentieth-century American fiction.† With the 1920s firmly in the past, the novel could be appreciated both as a reflection of that particular time period and a well-written character study of Gatsby and those surrounding him. (Perhaps readers and critics in the 1920s didn’t take kindly to the brutally honest portrayal of those decadent times.) The prose, symbolism, and relatively short length also made it a popular choice with English teachers and literature professors. Moreover, the timelessness of the novel's themes – the broken promise of the American Dream, doomed love – make it a consistently popular choice to be assigned very commonly both in high school and in college classes. Literary critics and writers have continued to find new angles and approaches to Gatsby in recent years. For example, one professor contends Jay Gatsby is actually part black, but passing as white, while Dana Goldstein and other feminist critics have come to Daisy Buchanan’s defense. Finally, in the twenty-first century, Gatsby’s continued popularity has made it a cultural touchstone. Search for â€Å"Gatsby† online and you’ll find dozens of pages about Gatsby-themed parties and costumes, as well as all sorts of articles about the recent (2013) film adaptation. So even though Gatsby wasn’t popular in its time, it has now become a classic book and a cultural touchstone. Further Reading NPR: How Gatsby Went From a Moldering Flop to a Great American Novel The New York Times: Gatsby at 35 Maureen Corrigan, So We Read On: How The Great Gatsby Came to Be and Why It Endures What’s Next? Check out our biography of F. Scott Fitzgeraldto learn more about where and how The GreatGatsby was written. Ready to jump in? Check out our guides to Gatsby’s title, its opening pages and epigraph, and the first chapter. Or,start with a summary of The Great Gatsby, along with links to all ourgreat articles analyzing this novel! Want to improve your SAT score by 160 points or your ACT score by 4 points?We've written a guide for each test about the top 5 strategies you must be using to have a shot at improving your score. Download it for free now:

Is the constant vulnerability and pressure on the U.S. dollar a Dissertation

Is the constant vulnerability and pressure on the U.S. dollar a serious threat to American hegemony and unipolarity as a whole - Dissertation Example For example, in 1995 it was estimated that approximately fifty nine percent (59%) of the total global currency reserve was made up of US dollar (Global currency reserve 2013). In 1998, the US dollar constituted approximately sixty nine percent (69%) of the total global currency reserve, and in 1999 it constituted of approximately seventy one percent (71%) of the total global currency reserve. Global currency reserve (2013) further indicated that in the third quarter of 2012, the US dollar was estimated to constitute an approximate of 62 percent of the global currency reserve. The composition of the other competing currencies such as Euro, Japanese Yuan and Starling Pound are still insignificant when compared to that of the United States dollar (Global currency reserve 2013). For example, the second most commonly used international currency, the Euro, was estimated to constitute 24 percent of the total global currency reserve in the third quarter of 2012 (Global currency reserve 2013) . It has been argued by some economists such as Kirshnars (2012) that this constant fall of value and fluctuations of the United States of America dollar in global market has a serious threat to American hegemony and unipolarity as a whole. ... value of US dollar would deprive United States of America of enjoying the benefits of economic dominance such as ability to finance its trade related deficits. Other than Kirshnars, Clerk is another author who supported the opinion that United States of America will lose its economic and political hegemony as whole due to the current pressures and threats. Goldberg (2010) is another economist who suppported the above mentioned argument. Goldberg (2010) explained that the current pressure would affect international trade and economy of the United States of America as a whole. Even though the Kirshnars, Goldberg and Clerk tried to relate the strength of US dollar with the economic and political dominance of United States of America, the authors failed to explain how the United States rose to this dominance and factors that contributed towards this dominance. Also, the authors failed to explain why economic and political influences of some nations such as China are on the rapid rise reg ardless of the fact that their currencies remain insignificant in terms of global currency reserve. Due to the above mentioned weakness, my opinion as well as argument is contrary to those of Kirshnar, Clerk and Goldberg, and contrary to the argument that the constant vulnerability and pressure on the U.S. dollar may cause a serious threat to American hegemony and unipolarity as a whole. In this regard I am of the view that due to the strength and experience of the United States economy, it will not lose its hegemony as a whole but other contenders may arise such as China and emerging markets. This paper, therefore, aims at supporting the view that due to the strength and experience of the United States economy, it will not lose its hegemony as a whole but other contenders may arise such as