Methods and tools of financial management are needed for financing, investment. Here we are given important methods and tools of financial management.
1. Tools of Financial Management for Financing
A ) Financial Leverage
In this tool, finance manager fixes his need of financing. Over and low financing estimation may be harmful for company. Optimum loan requirement is fixed with financial leverage tool. Learn about it at here.
B) Selection Best Source of Finance
In this tool, finance manager analyze different source of financing. He check their rates, repayment terms and other conditions and then choose best option.
2. Tools of Financial Management for Investing Decision
These tools are used to know which is best alternative of investment. Will this alternative give us best return at minimum risk. Capital budgeting, internal rate of return, net present value. In the area of investment in current assets, we use working capital management for knowing best investment in current assets.
Related : Scope of Financial Management
1. Tools of Financial Management for Financing
A ) Financial Leverage
In this tool, finance manager fixes his need of financing. Over and low financing estimation may be harmful for company. Optimum loan requirement is fixed with financial leverage tool. Learn about it at here.
B) Selection Best Source of Finance
In this tool, finance manager analyze different source of financing. He check their rates, repayment terms and other conditions and then choose best option.
2. Tools of Financial Management for Investing Decision
These tools are used to know which is best alternative of investment. Will this alternative give us best return at minimum risk. Capital budgeting, internal rate of return, net present value. In the area of investment in current assets, we use working capital management for knowing best investment in current assets.
Related : Scope of Financial Management
