Managements primary role
The management uses the available capital resources rationally by good allocation of capital in areas where it is needed and utilizing the available funds properly without misappropriation it. It also selects the sources of capital to finance the business activities which can be from borrowing from banks or financial institutions and also donations from well wishers. This is done by determining the ratio of debt and equity and designing the capital structure to be used.
The management ensures that the business achieves its objectives of maximizing profit by generating revenues which are more than the costs involved in business. It also ensures wealth maximization where the state of business is stable economically and the purchasing power of money is high. This will make the business achieve growth on yearly basis which enable it generate more revenue.
Financial planning is done by management where the management assesses the requirement of funds and identifies the sources and where the funds are to be allocated and controls the use of funds to ensure that all the funds are applied to their intended use.
Management makes investment decisions about the recommended size of the firm, the assets that are supposed to be acquired and if there is need for some assets to be reduced or eliminated from the business.
Management acts as an agent to the shareholders or owners. The managers act on behalf of the shareholders where they make sure the shares are traded in the stock exchange well and they get the feedback of the daily trading where all the information is available and records are properly kept.
l. Gapenski Louis; financial management; Dryden Press; l99l.