Functions of Financial Management
a. Investment Decision
Investment is defined as an investment of company in real and financial assets. Financial decision is a decision on what assets will be managed by the company. Investment decision will directly influence to the amount of investment profitability (return on investment) and treasury flow of the company in the future.
b. Financing Decision
Financing decision studies funding sources on the liabilities side. Therefore, it needs to be considered a source of funds that has most minimal costs and favorable conditions. Fulfillment of funds can be done through internal and external company resources.
c. Dividend Decision
This decision is made to determine:
1. The amount of profit percentage distributed to shareholders in the form of cash dividends
2. The dividend stability to be distributed
3. Stock dividend
4. Stock split
5. Withdrawal of stock outstanding.
Here is a brief explanation of Financial Management Functions:
Financial planning, making income and outcome planning and other activities for a certain period.
Financial budgeting, following up of financial planning to make detailed outcome and income.
Financial Management, using company funds to maximize the funds available in a variety of ways.
Financial searching, finding out and exploiting the resources available for the operational activities of the company.
Financial storage, collecting funds and saving and securing the funds.
Financial control, evaluation and improvement of finances and financial systems in the company.
Financial Audit, internal audit on the financial company to avoid deviations.
Financial reporting, providing information about the company's financial condition as well as evaluation.
