Role of financial management

• Financial management is the planning and monitoring of a business’s financial resources to enable the business to achieve its financial objectives.
• Profitability is the ability of a business to maximise its profits. Profits satisfy owners and shareholders in the short term but also is important for the longer sustainability of the business.
• Growth is the ability of the business to increase its size in the longer run. Growth is an important financial objective and is crucial for businesses as it ensures that business is sustainable in the future.
• Debt - External finance

  Equity - Internal finance
• Gearing is the proportion of debt (external finance) and equity (internal finance) that is used to finance business activities. Gearing ratios determine the firm's solvency.
• Efficiency is the ability of a business to minimise its costs and manage assets so that maximum profit is achieved with the lowest possible level of assets.