8 Definition of Financial Management According to Experts

TentangKitaNovember 25, 2023

Definition of Financial Management According to Experts.

In order to run well, companies need various components, be it tools, human resources or money.

In addition to equipment management and human resource management, finance also needs to be regulated in financial management. What is the meaning of financial management according to experts?

Definition of Financial Management According to Experts

All businesses need funds to meet operational costs and grow the business. The funds can be sourced from working capital or from the purchase of fixed assets. In order to meet these needs, companies look for sources of funds with the lowest cost.

Responsibility for cash management, including finding sources of funds according to needs, is the responsibility of financial management.

To understand well what financial management is, consider the meaning of financial management according to the following experts!

1. Liefman

Liefman said that financial management is an effort to provide funds and provide existing funds to acquire assets.

2. J.L Massie

Financial management is an operational activity in a business that is responsible for obtaining and using existing money effectively in accordance with efficient operational needs.

3. Weston dan Copeland

That financial management can be formulated with the responsibilities and functions of financial managers. The main function of financial management is generally related to decisions regarding the financing of business activities, investment activities and the distribution of dividends to shareholders.

4. Bringham dan Houston

Financial management is the broadest field with the greatest career opportunities in finance.

5. Grestenberg

Financial management in general can be defined as how a company obtains capital in the form of money, how they use the money and how they distribute it.

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Scope and Elements in Financial Management

  • Investment decisions include investments in the form of fixed assets (referred to as capital budgeting). Investing in current assets is also an investment decision which is referred to as a working capital decision.
  • Financial decisions. Deals with fundraising from various sources which will depend on decisions about the type of source, financing period, cost of financing and payback.
  • Dividend decision. The financial manager must make decisions related to the distribution of net profits. Net profit is generally divided into 2:
    • Dividends for shareholders. Dividends and their levels must be decided by financial management
    • Retained earning. The amount of retained earnings to be finalized and its value depends on the company’s expansion and diversification plans.

Those are some Definition of Financial Management According to Experts.

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