Financial management refers to the procurement, allocation and utilisation of funds. It deals with three main decisions –

a) Procurement decisions – To decide the source of capital that is from where the capital should be raised so as the overall cost of capital should be at its minimum.

b) Investment decisions (Allocation of funds) - Where the available funds should be invested so as to ensure maximum return.

c) Dividend decision – To decide the rate of dividend to be paid to the shareholders