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Coiner of ‘Financial Management’ term would have never
thought that in future essentiality of learning and applying this
science in almost every aspect of personal and professional lives will
become indispensable. It is this subject’s extensive usefulness, which
has obliged academicians and finance experts to view Financial
Management as more than just a subject.
It was early 19th century when Financial Management came
out as an independent area of study. At that time financial management
was used in, understanding and managing mergers, preparing feasibilities
of new companies or products, and raising finances for new ventures.
Later on, with arrivals and departures of different sorts of crisis in
man’s life, financial management also played its role in teaching man to
deal with unwanted financial phenomena like bankruptcy, liquidation, and
layoffs. After going through all the evolutionary stages of development,
in present era, financial management has finally become the way of
maximizing value of the company.
Value maximization has been the focus of financial
management, since the beginning of 21st century. Both trends of
globalization and fast progress of information technology have played
their roles in adding on to the role of financial management. This
improved role of financial management has provided companies with fresh
exhilarating opportunities of increasing profitability along with
lessening financial risks. Despite the fact that these new opportunities
give invitation to additional competition and new risks as well,
however, these drifts have further increased the importance of financial
management in today’s world.
What role will financial management continue to play for
companies in future? This is certainly not one of the difficult
questions to answer, as the goal of financial management will continue
to facilitate companies in setting their visions and preparing for
future. Such an objective suggests that finance is no longer just an
operational activity, but it’s now more strategic in nature. An
implication of giving this supplementary task to finance will move
finance professionals out of their core departments and, make them to
train their other departmental mates about working towards a single goal
of increasing the value of their organization.
Present global business environment has come up with
numerous challenges. However, the area of financial management has
converted these challenges into opportunities. So, it could be said that
Financial Management will continue to be present in the list of most
important areas of finance till the time, cost considerations and the
value of organizations would remain matters of concern to the financial
world.
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