Financial Management, 12th Edition by Pearson

CHAPTER 1

Nature of Financial Management

LEARNING OBJECTIVES

• Explain the nature of finance and its interaction with other management functions.
• Review the changing role of the finance manager and his/ her position in the management hierarchy.
• Focus on the Shareholders’ Wealth Maximization (SWM) principle.
• Discuss agency problems.
• Illustrate the organization of finance function.

INTRODUCTION

Financial management is that managerial activity which is concerned with the planning and controlling of the firm’s financial resources. It was a branch of economics till 1890, and as a separate discipline, it is of recent origin. Still, it has no unique body of knowledge of its own and draws heavily on economics for its theoretical concepts.

The subject ...