FIN 242 Chapter 1: Introduction

Definition of Finance.

Finance is " Process which money is transferred among business, individuals and goverment"-                                 Gitman & Madura,2001

What is financial management?

• A process involved in an attempt  to obtain and allocate financial resources effectively and efficiently to achieve firm's  goal. That is to maximize the shareholder's wealth by maximizing the share price.
• Involves money-related decision on:
  i) the source of money.
  ii) the keeping of money.
  iii) the investment of money.
  iv) how to use the money to generate even more money in order to achieve company's                     objectives.