Goals in Financial Management

Financial management involves managing the financial resources of a business. This includes risk management, insurance, accounts receivable and budgeting. These things are all important to the overall well being of a business. Successful financial management results in a company that achieves success in finance.

Increase value

The overreaching goal of financial management is to increase the value of a company for shareholders. If this goal is reached, then several other lower level goals have been reached also. Increased value in a company leads to stability in the stock market, stability or growth in employment within the company and continued profits and growth.

Make money

Money is made by producing a product or providing a service. More money can be made by increasing the quality of the product, increasing demand for it or marketing better, also increasing demand. Producing the product or completing the service may also allow the company to make more money. Financial management is necessary to make money, because of the need to consider increased revenues in comparison to increased costs.

Expand operations

Expansion of operations shows to investors that a company is prospering and taking measures to further prosper by tapping a new market geographically or physically in a new place or with new services or products. A business can expand by investing more capital it has in expansion or by proving to a lender that the expansion is economical and will be successful. Good financial management is needed to expand operations because of the money that must be saved to expand or the creditworthiness that must be preserved for lenders to lend the necessary funds.