Financial Management - Essay Example

on lies with the management in procuring funds from economic sources, it is also necessary to consider the effects of such acquisitions from the company’s point of view. Therefore, the financial sagacity of any business imply in how economically such funds are procured. It includes administration and maintenance of financial assets. From the point of view of the organisation financial management is the processes associated with the mobilization of funds from the various sources when needed at an acceptable cost which is called Financing Decision through banks and other financial institutions, and control the fund flow by monitoring their use to ensure the procurement and deployment of funds according to the plan.

(Financial Management). Northern PLC is a manufacturing company which has sub-divisions globally. The company is facing deficiency of funds. There are many sources for financing the company through Capital market (through Shares, Debt Securities, and Venture Capital). Capital market is the place where government, institutions and individuals trade financial securities for funds. Two major capital markets are stock and bond market. Some of the examples of the capital are New York Stock Exchange (NYSE), American Stock Exchange (AMEX).

It provides economic efficiency by channelling money from those who have no immediate productive use. In capital market the cash or savings which is risk free are converted into risky assets for the benefit in the future. If the company is not performing well then there will be decrease in the share price of the company which would result in the dissatisfaction of the shareholders like the suppliers, customers and other stakeholders of the company. If the company is performing well, the share price increases and because of this the shareholder gets the benefit as dividends.

The company that is giving the regular dividend has a slight edge. (Woepking). 1. Weak form efficiency- In this the share price reflects the