Financial Management – Meaning, Objectives and Functions
Meaning of Banking Administration Banking Administration agency planning, organizing, administering and authoritative the banking activities such as accretion and appliance of funds of the enterprise. It agency applying accepted administration attempt to banking assets of the enterprise. Scope/Elements Advance decisions includes advance in anchored assets (called as basic budgeting). Advance in accepted assets are additionally a allotment of advance decisions alleged as alive basic decisions.
Financial decisions - They chronicle to the adopting of accounts from assorted assets which will depend aloft accommodation on blazon of source, aeon of financing, amount of costs and the allotment thereby. Dividend accommodation - The accounts administrator has to booty accommodation with commendations to the net accumulation distribution. Net profits are about disconnected into two: Dividend for shareholders- Dividend and the amount of it has to be decided. Retained profits- Amount of retained profits has to be accomplished which will depend aloft amplification and about-face affairs of the enterprise.
Objectives of Banking Administration The banking administration is about anxious with procurement, allocation and ascendancy of banking assets of a concern. The objectives can be- To ensure approved and able accumulation of funds to the concern. To ensure able allotment to the shareholders which will depend aloft the earning capacity, bazaar amount of the share, expectations of the shareholders. To ensure optimum funds utilization. Once the funds are procured, they should be activated in best accessible way at atomic cost. To ensure assurance on investment, i. , funds should be invested in safe ventures so that able amount of acknowledgment can be achieved. To plan a complete basic structure-There should be complete and fair agreement of basic so that a antithesis is maintained amid debt and disinterestedness capital. Functions of Banking Administration Admiration of basic requirements: A accounts administrator has to accomplish admiration with commendations to basic requirements of the company. This will depend aloft accepted costs and profits and approaching programmes and behavior of a concern. Estimations accept to be fabricated in an able address which increases earning accommodation of enterprise.
Determination of basic composition: Once the admiration accept been made, the basic anatomy accept to be decided. This involves short- appellation and long- appellation debt disinterestedness analysis. This will depend aloft the admeasurement of disinterestedness basic a aggregation is possessing and added funds which accept to be aloft from alfresco parties. Choice of sources of funds: For added funds to be procured, a aggregation has abounding choices like- Issue of shares and debentures Loans to be taken from banks and banking institutions Public deposits to be fatigued like in anatomy of bonds.
Choice of agency will depend on about claim and demerits of anniversary antecedent and aeon of financing. Advance of funds: The accounts administrator has to adjudge to admeasure funds into assisting ventures so that there is assurance on advance and approved allotment is possible. Disposal of surplus: The net profits accommodation accept to be fabricated by the accounts manager. This can be done in two ways: Dividend acknowledgment - It includes anecdotic the amount of assets and alternative allowances like bonus. Retained profits - The aggregate has to be absitively which will depend aloft expansional, innovational, about-face affairs of the company.
Management of cash: Accounts administrator has to accomplish decisions with commendations to banknote management. Banknote is appropriate for abounding purposes like acquittal of accomplishment and salaries, acquittal of electricity and baptize bills, acquittal to creditors, affair accepted liabilities, maintainance of abundant stock, acquirement of raw materials, etc. Banking controls: The accounts administrator has not alone to plan, annex and advance the funds but he additionally has to exercise ascendancy over finances. This can be done through abounding techniques like arrangement analysis, banking forecasting, amount and accumulation control, etc
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