As a function of good governance, financial management forms an integral part of the development process. Financial management means planning, organising, directing and controlling the financial activities such as procurement and utilization of funds of the enterprise. Solid financial management provides the foundation for pillars of sound fiscal governance. These pillars are strategizing, decision making and controlling. With effective financial management, all employees know where the company is headed and they will have visibility into progress. It helps to ensure regular and adequate supply of funds to the concern. It ensures adequate returns to the shareholders which will depend upon the earning capacity, market price of the share and expectations of the shareholders. There should be a sound capital structure so that a balance can be maintained between debt and equity capital. Estimation of capital requirements, determination of capital composition, choice of sources of funds, investment of funds, management of cash and financial control are the primary functions of financial management.

Sreekala P

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