Characteristics - Nature of Financial Management:
1) Financial Planning and Control: Finance is a base for all the business activities. Business
Activities should be not only harmonized but also planning determination & implementation offer analysis of finance. All activities revolve around the finance. So finance planning & control are important function.
2) Essence of Managerial Decision: Financial management provides a sound base to all managerial decisions. Financial management is the focal point in the process of decision making such as production, sale Employees, Research & Development decisions are based on financial management.
3) Financial Management is a Scientific & Analytical Analysis: In the process of decision making & financial analysis modern mathematical techniques are used. It requires not only a feeling for the situation & an analytical skill, but also a thorough knowledge of the techniques and tools of financial analysis & the knowledge to apply them & interpret the results.
4) Continuous Administration Function: In older times financial management was used periodically and its importance was limited to the procurement of funds but in modern times finance is a continuous administrative function. Its relation is with the procurement of capital, sources of funds, capital budgeting decisions etc.
5) Centralized Nature: All business activities are centrally administered & control. All financial decisions in business are taken at a central point. Functional areas such as marketing & production are decentralized in the modern industrial concern, but financial co-ordination and control are achieved through centralization.
6) Basis of a Managerial Process: Financial management is the basis of whole management process, such as planning, co-ordination and control. According to Sound financial planning all other plans are executed & controlled.
7) Measure of Performance: Financial management deals with risk & uncertainty factors which are directly hit by profitability & risk. Thus, financial management is needed for maintaining proper balance in risk & uncertainty.