Financial management entails planning, organizing, directing, and controlling the enterprise’s financial activities such as procurement and utilization of funds. It entails applying general management principles to the enterprise’s financial resources. Now let’s look at the three major types of Finacial Management.
What Are The Three Types Of Financial Management?
In Financial Management three types these are:
- Investment decisions
- Financial Decisions
- Dividend Decision
Further Explanation Of Investment Decisions: An investment decision is a well-planned action that allocates financial resources to obtain the highest possible return. The decision is made based on investment objectives, risk appetites, and the nature of the investor, for example, whether they are an individual or a firm.
Further Explanation Of Financial Decisions: Financial decisions are those made by managers concerning a company’s finances. These are critical decisions for the company’s financial well-being. These decisions can pertain to asset acquisition, financing and fundraising, day-to-day capital and expenditure management, and so on.
Further Explanation Of Dividend Decision: A Dividend Decision is the portion of profits distributed to shareholders. The decision at stake here is how much of the company’s profit after taxes is to be distributed to shareholders.