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20 Corporate Finance BRILLIANT’S

of organizations whether it is private or public, H$s Am°J}ZmBOoeÝg Ho$ {c`o _hËdnyU© h¡ [\$a Mmho dh {ZOr
if there is involvement of funds. Commercial hmo `m gmd©O{ZH$ ~eV} {H$ CgH$m gå~ÝY \$ÊS> go hmoŸ&
history is full of examples where firms have ì`mdgm{`H$ g§ñWmAm| Ho$ B{Vhmg _| H$B© Eogo CXmhaU h¡§
been liquidated not because their technologies {H$ ~hþV gr \$_m] H$m g_mnZ Bg{c`o Zht hþAm {H$ do
were obsolete or because their products were VH$ZrH$s Ñ{ï> go {nN>‹S> ahr Wt `m CZHo$ àmoS>ŠQ> H$s
not in demand or because their labour was not _mH}$Q> _| {S>_mÝS> Zht Wr `m CZHo$ dH©$g© AHw$ec Wo
motivated and unskilled but because there was ~pëH$ do Bg{c`o ~§X H$aZr n‹S>r Š`m|{H$ dhm§ \$m`ZopÝe`b
a complete mis-management of financial affairs. _m_cm| _| A{YH$ {_g _¡ZoO_|Q> Wm&
In a country like India where resources are ^maV O¡go {dH$mgerc Xoem| _| Ohm§ gmYZ H$s
scarce and the demand of fund is rising, the CncãYVm gr{_V hmo VWm \§$S> H$s _m§J ~hþV A{YH$ hmo
need for proper financial management is dhm§ \$m`ZopÝe`c _¡ZoO_|Q> Am¡a ^r A{YH$ _hËdnyU© hmo
inevitable. OmVm h¡Ÿ&
The scope of financial management may \$m`ZopÝe`c _¡ZoO_|Q> Ho$ úmoÌ H$mo _w»`V: Xmo ^mJm| _|
be divided into following two broad categories: {d^º$ {H$`m Om gH$Vm h¡Ÿ:
(a) Traditional Approach-Arrangement of (a) Q´>o{S>eZb EàmoM- \§$S> H$s àm{ßV
funds
(b) Modern Approach-Effective utilisation of (b) _m°S>©Z EàmoM- \§$S> H$m à^mdr Cn`moJ
funds
The traditional approach to the scope of Q´>o{S>eZb EàmoM Ho$ AZwgma \§$S> H$s àm{ßV hr
financial management is concerned with \$m`ZopÝe`c _¡ZoO_|Q> Ho$ H$m`©úmoÌ _| AmVm h¡ O~{H$ _m°S>©Z
arrangement of finance. On the other hand, EàmoM _| Z {g\©$ \§$S> H$s àm{ßV ~pëH$ CgH$m à^mdr T>§J go
modern approach is concerned with proper
allocation of the fund that is raised from various Cn`moJ ^r \$m`ZopÝe`c _¡ZoO_|Q> H$m {hñgm h¡Ÿ& Cnamoº$
sources. The above two approaches can be XmoZm| EàmoMog AmJo {dñVma go g_Pm`r JB© h¡:
discussed in detail as under.
(A) Traditional Approach-Arrangement (A) Q´>o{S>eZb EàmoM-\§$S> H$s àm{ßV
of Funds
According to traditional approach, the Q´>o{S>eZb EàmoM Ho$ AZwgma \$m`ZopÝe`c _¡ZoO_|Q>
scope of financial management is limited to H$m úmoÌ \§$S> H$s àm{ßV VH$ gr{_V h¡Ÿ& EH$ \$m`ZopÝe`c
raising of funds only. The financial manager _¡ZoOa H$m Xm{`Ëd {g\©$ BVZm h¡ {H$ dh \§$S> H$s ì`dñWm
was required to arrange funds to run the day
to day activities of the business. Therefore, the H$a Xo Vm{H$ {XZ-à{V{XZ H$s {~OZog EpŠQ>{dQ>rO g§Mm{cV
study of financial management was concerned H$s Om gHo§$Ÿ& Bg àH$ma \$m`ZopÝe`c _¡ZoO_|Q> Ho$ AÜ``Z
with: _| {ZåZ{c{IV {~ÝXwAm| H$m g_mdoe hmoVm h¡:
(a) What will be the sources of finance for an (a) {H$gr Am°J}ZmBOoeZ Ho$ {c`o \$m`ZoÝg Ho$ òmoV Š`m
organisation? hm|Jo?
(b) What is the estimated requirement of (b) cJ^J {H$VZo \$m`ZoÝg H$s Amdí`H$Vm h¡?
finance?