James Bashaw | Types of Financial Management | Financing Decision | Investment Decision

Financial Management 

A company needs financial management for a variety of its operations. Examples include approving credit lines or loans, employing staff, cultivating client relationships, establishing a company's credit rating, adjusting budgets, controlling cash input and outflow operations, managing risk, and more.

According to James Bashaw, Building and raising an organization's valuation is one of the crucial fundamental forms of financial management choice. Here, we'll look at some instances of the three main categories of financial management choices, all of which are geared toward a single objective.

Types of Financial Management

The success of any organization's financial reporting largely depends on how various financial management choices are made. According to Jeb Bashaw, It is properly said that a firm with good financial management will always have strong balance sheets and excellent books of accounts, which you may want to review several times. Let's look at the three sorts of financial management decisions that every business must take seriously. Each action takes the exact right moment to occur.

Financing Decision

Financing choices are the most fundamental kind of financial management. financial choices that are made about money raising. Finding both long-term and short-term financial sources, as well as the quantity needed to be obtained, are all parts of the process.

Financial management sets the percentage of money to be obtained from borrowed money and shareholder funds after assessing the cost of capital and financial risks associated with various options as part of the financing decision, according to James Bashaw. A corporation has two options for obtaining long-term financing: using funds from shareholders or borrowing money.

Investment Decision

Investment choices rank as the second-most popular financial management category. Investment decisions are financial choices made by management to distribute money across different assets to maximize prospective returns for investors. It comprises evaluating a range of prospective investment opportunities and selecting the best ones. Investment choices may be made with the long term or the short term in mind.

Dividend Decision

Financial choices regarding the payment of dividends to shareholders, which is how a firm distributes its earnings share, are known as dividend decisions. Dividend decisions should always be made with the overarching objective of increasing shareholder value in mind. The dividend decision, as the name suggests, involves deciding how much profit (after tax) to distribute to shareholders as dividends and how much profit to keep in the business for future growth. These three forms of financial management are available.

Financial Management, Analysis, and Control

The process of defining how a firm will achieve its main goals and targets is known as financial planning. According to James Bashaw, The financial plan is often created by an organization after the vision and purpose have been established. Every action and exercise required to reach these objectives are included in the financial plan.

To determine the execution, appropriateness, and performance of enterprises, budgets, projects, and other financial-related problems, financial analysis is the method used. Financial analysis is frequently used to determine if a firm is stable, liquid, or productive enough to allow investments. Financial controls are policies, plans, and practices that are put into practice to manage funds.

According to Jeb Bashaw, a framework for financial controls provides management with a tool for monitoring the achievement of operational goals and objectives. These financial management choices are made by teams who are frequently not in charge of the budget division, the accounting office, or the audit-related tasks.

Conclusion

Every firm is diverse, has a unique way of doing operations, and has a particular set of concepts. However, there is one factor that unites all businesses, and that is financial. The success of every firm depends on finance. So far, we've discussed the numerous financial management choices a business must make to succeed.