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Questions and Answers
What is primarily meant by financial management?
What is primarily meant by financial management?
Which factor does NOT influence the determination of capital requirements?
Which factor does NOT influence the determination of capital requirements?
What does the capital structure of a business refer to?
What does the capital structure of a business refer to?
Which is NOT an objective of financial planning?
Which is NOT an objective of financial planning?
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What is a key importance of financial planning?
What is a key importance of financial planning?
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Which activity is related to the monitoring aspect of financial management?
Which activity is related to the monitoring aspect of financial management?
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What does effective financial management aim to control?
What does effective financial management aim to control?
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Which financial policies are framed under financial planning?
Which financial policies are framed under financial planning?
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Study Notes
Financial Management Introduction
- Financial management effectively manages a utility's financial functions, including accounting, policies, procedures, record-keeping, reporting, planning, forecasting, budgeting, and oversight.
- The goal is to ensure financial sustainability.
- Financial management involves planning, organizing, directing, monitoring, decision-making, and controlling financial activities (procurement and utilization of funds).
- It applies general management principles to financial resources.
Financial Planning Definition
- Financial planning estimates capital needs and assesses competition.
- It forms financial policies related to procurement, investment, and fund administration.
Financial Planning Objectives
- Determining capital requirements: Considers current and fixed asset costs, promotional expenses, and long-term planning; short-term and long-term needs are important.
- Determining capital structure: Involves the composition of capital (e.g., debt-equity ratio) for short-term and long-term needs.
- Framing financial policies: Covers cash control, lending, and borrowings.
- Maximizing resource utilization: Ensuring efficient use of resources at the lowest cost for maximum return on investment.
Importance of Financial Planning
- Ensures enough funds.
- Maintains a balance between inflows and outflows to maintain stability.
- Creates effective and adequate financial and investment policies.
Financial Management Objectives
- Focuses on procuring and allocating resources.
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Description
This quiz covers the key concepts of financial management, including the management of a utility's financial functions, planning, and oversight. It also delves into financial planning, objectives, and capital requirements to ensure sustainability and effective resource allocation.
