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The financial management function

The nature and purpose of financial

management

1.1 Financial management decisions

Financial management is concerned with the efficient acquisition and deployment of
both short- and long-term financial resources, to ensure the objectives of the
enterprise are achieved.

Decisions must be taken in three key areas:

Investment decision – both long-term investment in non-current assets
and short-term investment in working capital

Financing decision – from what sources should funds be raised?

Dividend decision – how should cash funds be allocated to
shareholders and how will the value of the business be affected by
this?

3