THE ROLE OF FINANCIAL MANAGEMENT

Financial management is the management of financial functions. Financial functions include fantasize obtain funding (raising of funds) and how to use these funds (allocation of funds). Financial managers are concerned with the determination of total assets worth of investment in various assets and selecting the sources of funds to finance these assets. To obtain funds, financial managers can obtain it from within and outside the company. Sources from outside the company comes from the capital market, may take the form of debt or equity capital.

Financial management can be defined from the duties and responsibilities of financial managers. The principal tasks of financial management, among others, include an investment decision, financing business activities and the distribution of dividends a company, thus the task of financial managers is to plan to maximize firm value. Another important activity that should be the financial manager involves four aspects:
1. Financial managers must cooperate with other managers are responsible for general planning firm.
2. Financial managers should focus on various investment and financing decisions, and various things associated with it
3. Financial managers must cooperate with managers in the company so the company can operate as efficiently as possible
4. Financial managers must be able to connect companies with the financial markets, where companies can obtain funds and corporate securities can be traded.
Another important aspect of the company's goals and objectives of financial management is the consideration of social responsibility that can be viewed from four aspects, namely:
1. If the financial management leading to maximization stock prices, it would require good management and efficient in accordance with consumer demand.
2. Successful companies always put efficiency and innovation as a priority, so as to produce new products, new technology and expansion of employment
3. Outside factors such as environmental pollution, product safety assurance and safety become more important to consider. Fluctuations in all levels of business activity and the changes that occur in financial markets is an important aspect of the external environment.
4. Cooperation between industry and government is needed to create regulations governing corporate behavior, and vice versa in complying with these regulations. The company's goal is basically maximization value of the company with technical considerations.
Basically the goal of financial management is to maximize firm value. However, behind the goal is still there are conflicts between the owners of the company with the fund provider as a creditor. If the company runs smoothly, then the value of the company's stock will rise, while the value of corporate debt in the form of bonds is not affected at all. So it can be concluded that the value of stock ownership can be an appropriate index to measure the level of corporate effectiveness. Based on this reason, the financial management objectives expressed in terms of maximizing the value of corporate stock ownership, or maximize their stock prices. Goal to maximize the stock price does not mean that managers should seek increased value of the shares at the expense of bondholders.