Essentially Financial Management entails directing, organising, planning and controlling the financial activities (for example procurement and utilisation of funds) of an enterprise. These tasks are either performed by or undertaken with instructions from the Financial Manager.
You can break financial management into five key areas, financial planning, investment project appraisal, financial decisions, capital market operations and financial control.
Financial planning affords the means, through appropriate planning and projecting, to evaluate proposed courses of action. Correspondingly financial control manages the ways and methods by which the plans are realised. The following two tasks; investment project appraisal and financing decisions are seen by many as the two most important tasks in Financial Management.
Investment project appraisal is the accurate assessment and careful evaluation of the comparative powers of a company's investment intentions.
The financing decisions involve the identification and selection of fund sources that will provide the money to be invested into the nominated projects.
A large part of finance is obtained through the capital market, so the finance function has to deal with the capital market. Equity owners, the ordinary shareholders, play a significant role.
This capital market operation does not simply deal only with the raising of funds but also with the ongoing rapport between the company and the market place; any data scattered amongst the capital markets affects the market's perception of the company and the price of the company's shares, and thus wealth of the shareholder for better or for worse.
If you require further reading I recommend Brealey, R.A., S.C. Myers and A.J. Marcus Fundamentals of Corporate Finance. (McGraw-Hill Inc, 2007) especially Chapters one, two and three.
