Financial management refers to the planning, procurement, utilization and controlling of financial resources by an organization so as to support in the achievement of predefined organizational objective. Financial resource plays most important role in the establishment of any business organization. Without financial resource it is not possible to start business. Financial management helps to raise the needed amount of capital and also ensures that the funds are utilized effectively and efficiently. It helps to eliminate the unnecessary expenses and also supports business organization in capital budgeting decision.
Financial management helps the business to make investment in most profitable project by evaluating all the available alternatives through the modern techniques like NPV, IRR, DPBP, and PI.
In the past years financial management focuses on the profit maximization. But nowadays it focuses on the shareholders'wealth maximization along with the profit maximization.