Quick Answer: What Are The Basic Principles Of Financial Management?

What are the five principles of financial management?

The five principles are consistency, timeliness, justification, documentation, and certification..

What are the six financial principles?

There are six basic principles of finance, these are:Principles of risk and return.Time value of money.Cash flow principle.Profitability and liquidity.Principles of diversity.Hedging principle.

What are the 3 rules of money?

The three Golden Rules of money managementGolden Rule #1: Don’t spend more than you make.Golden Rule #2: Always plan for the future.Golden Rule #3: Help your money grow.Your banker is one of your best sources of money management advice.

What are the six steps in the financial planning process?

The financial planning process is a logical, six-step procedure:(1) determining your current financial situation.(2) developing financial goals.(3) identifying alternative courses of action.(4) evaluating alternatives.(5) creating and implementing a financial action plan, and.(6) reevaluating and revising the plan.

What are the objectives of financial planning?

The most prominent five objectives of financial planning are the following:Estimating the total capital required: … Determining the sources, availability, and timing of funds: … Determining the business capital structure: … Avoid excess generation of funds: … Counter strategies for Risks:

What are the 4 elements of financial management?

There are four recognized elements of financial management: (1) planning, (2) control- ling, (3) organizing and directing, and (4) decision making. The four divisions are based on the purpose of each task.

What are the principles of financial planning?

Four Principles of Financial Planning SuccessThink long-term with goals and investing.Spend less than you earn.Maintain liquidity (an emergency savings).Minimize the use of debt.

What are the 3 types of financial management?

The three types of financial management decisions are capital budgeting, capital structure, and working capital management.

What are the 10 principles of financial management?

10 Basic Principles of Financial ManagementOrganize Your Finances. Organizing your finances is the first step to creating wealth. … Spend Less Than You Earn. … Put Your Money to Work. … Limit Debt to Income-Producing Assets. … Continuously Educate Yourself. … Understand Risk. … Diversification Is Not Just for Investments. … Maximize Your Employment Benefits.More items…•

What are the major types of financial management?

There are four main financial decisions- Capital Budgeting or Long term Investment decision (Application of funds), Capital Structure or Financing decision (Procurement of funds), Dividend decision (Distribution of funds) and Working Capital Management Decision in order to accomplish goal of the firm viz., to maximize …

What are the types of financial management?

The three types of financial management decisions are capital budgeting, capital structure, and working capital management. A business transaction that would include capital budgeting is if your company should open another store or not.