The prerequisite for this extended essay is to know the relevance of financial management to business growth in Nigeria. Financial management is relevant to business growth for a well balanced operation, as business in Nigeria are made up of small, medium and large scale enterprises need financial management to operate well. The ultimate aim of financial management is to plan and forecast the profit making and sourcing of funds for business growth. Money is needed in financial management and used in making plan work. It serves as a measuring device that can be used in measuring the plan in terms of naira, and outsiders such as bankers and other lenders, will do the same. In starting new business or expansion, loan is required. The burden of proof in borrowing money is upon the borrower. You have to show the banker or other lenders how the money borrowed will be used and more important how and when you will repay back the loan. The extended essay also look at budgeting, as organization, whether economic, social or political makes plan for an organization. Without plan there is no longer an organization but an uncoordinated assortment of individuals. Some business owners/managers carry plans in their head, some make rough estimates on their business others express their plans in orderly and systematic manner.
The financial function has always been important in business management. Irrespective of differences in structure, ownership and size, the financial organization of the enterprise ought to be capable of ensuring that the various finance functions: budgeting and controlling are carried out with the highest degree of efficiency. The profitability of any business depends largely upon the manner the financial functions are performed and related to other business function.
During the developing stage, financial management involves only the obtaining of funds to finance the business, overtime, financial function has increased in its scope to include not only the planning of finance, but incorporate the management and control of the available resources within the firm. This also involves the external generation, flow and uses of funds and, the study and evaluation of the capital market.
When talking of the capital market, its operations within the economy cannot be over emphasized. Thus, the demand for and supply of funds for business organizations, become a fundamental management function. Therefore, financial management play an important role both in increasing operational efficiency within the firm and allocating funds to productive or investable sector within and outside the organization.
These functions can only be achieved when there is proper planning and controlling, coordinating and other elements of management combined effectively with the finance function.
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