The world of business today has undergone a complete metamorphosis. This process was further augmented by various round of GATT agreement that culminated into WTO a new world order to trade and business. The command economy has yielded place to market economy with wide ranging implications for Indian business and industry which have to be globally competitive in terms of technology, costs and quality. To cope up with these challenges, a new breed of professional managers is needed some of the traditional theories of management are being challenged today in terms of their relevance in the fast changing environment, and new management practices and concepts are evolving. Unfortunately, however, not many text books are available in India, which thoroughly deals with these changes and which can be gainfully used by the students of management and practicing managers alike.The present text on financial management may be seen and appreciated in the above context. In my long associated with a number of companies, as a consultant or a director on their boards and audit committees, I have been a witness to the changes that have taken place in finance function having far reaching implication for corporate management, in recent years, therefore, financial management has attracted a lot of attention by the corporate sector, goods professionally managed companies are greatly concerned about their capital structure, cost of capital working capital management, project appraisal, corporate governance and so on. They are trying to bring down their cost of debt to international level not only by using new financial instruments but also by borrowing abroad.
LIBOR linked short term borrowing has become very common in such companies with all the world really becoming a global village, international financial management has assumed added significance unprecedented changes have been taking place in various financial sectors like banking, insurance and capital market, information technology has not only added new dimensions to the delivery of financial services, but has also provided a more rigorous analytical framework for decision making. Hence managers have deal with a many more contemporary issues in finance, economy, technology, trade and commerce etc., in the modern global village.
Finance has been aptly described as a lubricant of economic activity, without which the entire business will grind to a halt, and money has been aptly described by monetary economist called Geoffrey crowther “finance as the essential invention on which all the rest is based. With unlimited wants and limited financial resources, the financier is concerned with what is produced, requirements of funds allocation of funds selection of developmental priorities, determination of gestation periods, proper monitoring of accounts to avoid cash flow problems and to ensure the profitability of the enterprises be it in any sector of economy, public sector, private sector ,industrial, agricultural, cooperative, banking and allied enterprises.,” the finance manger has to ensure the rational decision making efforts at the each any every successive stages of pre investment and post investment. In the absence of proper appraisal system and evaluation of managerial abilities, there will be misallocation mortality and lopsided growth in undesired way leading to holocaust of economic wealth.
Financial management is that managerial activity which is concerned with the planning and controlling of the company’s financial resources. According to soloman, “financial management is concerned with efficient use of an important economic resource namely, capital funds. This can be possible only when funds are procured in a manner that the risk, cost, and control consideration are property balanced in a given situation and there is optimum utilization of funds”.
Analysis and interpretation of financial statement is a regular exercise to review the performance of the company. It was proposed to conduct a review to study the short term prospects as well as the long term trends and to arrive at the conclusion on the performance of the company. Performance review resulting in taking corrective action optimizes the performance in the subsequent period.
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