Diploma in Finance helps you to understand the basic of financial management concepts like:- Various terms applied to financial management refers to its functions scope and objective. Financial manaement as an academic discipline, has undergone fudamental changes as regards its scope and coverage. In ther early years of its evolution, it was treated synonymously with raising funds. In the current leterature pertaining to this growing academic discipline, a broader scope soa s to include, in addition to procurement of funds, efficient use of resources is universally recognised. Similarly the academic thinking as regards the objectives of financial management is also characterised by the change over years. The object of this article is to describe the evolving function sand objectives fo financial management in the academic literature, Diploma in finance courses will help you to understand these terminology better.

Scope of financial management

The approach to the scope and functions of financial mangement is divided , for purpose of expostin, tinto two broad categories

a) Traditional Approach

b) Modern Approach

Traditional Approach

Finance training helps you to understand the traditional Approach to the scope of in the field of financial management which is reffered as the subject matter in the academ literature in the initial stages of its evolution as a separate branch of academic study. The term “corporation finance” was used to describe what is now known in the academic world as “financial management” As the name suggests the concern of corporation finance was with the financing of corporate enterprises. In other words, the scope of finance function was treated by the traditional approach in the narrow sense of procurement of funds by corporate enterpreises to meet their financing needs. The term procurement was used in broad sense so as to include the whole gamut of raising funds externally. Thus defined, the field of study dealing with finance was treated as encompassing three inter-related aspects of raising and administrating resources from outside.

The institutional arrangement in the form of financial institutions with comprise the organisation of teh capital markets and related aspects of practices and the procedural aspects of capital markets and the legal and accounting relationships between a firm and its source of funds. The coverage of corporation finance was, therefore, conceived to describe the rapidly evolving complex of captal market institutions, instruments and practices. A related aspect was that firms require funds at certain episodic events such as merger, liquidation , re-organisatoin and so on. A detail description of these major events constituted the second element of the scope this field of academic study. That these were the broad features of the subject matter of corporate finance. Financial training thus helps you to understand the issues to chich the literature on finance addressed itself was how resources could best be raised from the combination of available sources.

The traditional approach tot he scope of the finance function evolved during the 1920′s and 1930′s dominated the academic thinking during forties and early fifties. It has now been discarded as it suffers from serious limitations. The weaknessess of the traditional approach fall into two borad categories 1) those related to the treatement of various topics and the emphasis attached to them 2) those relating to the basic conceptual and analytical framework of the definitins and scope of finance funtion.

Modern Approach

Under the modern approach views the term financial management in broad sense and provides a conceptual and anlytical framework for financial decision making. According to it the finance function covers both acquisition of funds as well as their allocation. Thus apart from the issues involved in acquiring external funds, the main concern of financial management is efficient and wise allocation of funds to vaious uses. Define in a broad sense, it is an integral part of over all management. The new approach is an analytical way of viewing the financial problems of a firm. The main contents of this approach are. What is the total volume of funds and enterprise should commit ? What specific assets should an enterprise acquire ? How should the funds required by financed ? Alternatively, the principal contents of the modern approach to financial management can be said to be

1) How large should an enterprise be, and how fast it should grow ?

2) In what form should it hold asset

3) what should be the composition of its liabilities ?

The three question posted above cover between them the major financial problems of a firm. In othe words, financial management, according to the new approach is concerned with the solution of three major problems relating to financial operations of a firm, according to three questions namely investment financing and dividend decisions. Thus, financial management in modern management , in the modern sense of the term can be broken down in three major decisions as function of finance these are:-

1) The investment decision 2) The financing decision 3) The dividend policy decision.

Further Diploma in Finance will teach students about Functions of finance like:-

a) Investment decision

b) Capital Budgeting

c) Working capital management

d) Financing decisions

e) Dividend policy decisions