Principles of Financial Management - MIT School of Distance Education
                     MIT School of Distance Education
Principles of Financial Management
 Financial Management is concerned with maintaining finances in a 
business so that it never runs out of cash. It is concerned with the 
financial requirements of a business as well as financial planning. 
Perfect financial management facilitates business to make ample 
profits, expand itself and succeed in the long-run. In general, there 
are certain principles of financial management:
 1. Expenditure should be less than the revenues generated
 Most of the businesses lose balance over finances and are 
unable to overcome or avoid debt because they spend more 
than the revenues generated. However, for a business to 
sustain its position in the long run and to look for further growth, 
it must frequently track its financial statement as well as 
expenses to avoid excessive outflow.
 2. Plan for the unexpected
 A business should always be well-equipped to meet the 
financial emergencies at any point in time. To overcome such 
point of crisis effortlessly, the business must save money and 
put restrictions on its cash outflow. This will protect the 
business in derailing from its long term goals or objectives. 
Thus, financial management must be robust to face any kind 
of consequences and achieve the desired goals in a limited 
time period.
 3. Diversification is not just for investments
 For any business, investments are believed to be the best 
method to ensure a regular inflow of cash. However, 
businesses should not just rely on investment, but they 
should regularly find different ways to generate more 
revenues.
 Apart from businesses, even employees working in a 
company can finds ways to earn extra income. For this, they 
can look for a part-time business or start a small business at 
their dwellings. Thus, this brings a change in overall 
financial profile.
 4. Organising
 The very basic step for efficient financial management is to 
organise funds and finances. A business must track its 
different financial activities and sources which include 
brokerage, mortgage, loans or credit limit to avoid any 
chaos in the future.
 5. Understanding risk
 It is a golden rule that more the risk a business takes, more 
would be its return on investment (ROI). However, this is 
possible only if the business has massive information and 
knowledge about finances and investments. Usually, 
investment in shares and bonds are considered to be the 
best source for earning huge profits. But, at the same time 
they involve a higher risk too. So, financial managers should 
have an understanding of risks before taking them. 
 6. Limited debt
 To ensure a regular inflow of cash, a business must avoid 
taking unnecessary loans and clear all its previous debts. 
Furthermore, a business must opt for loans to procure 
necessary items only.
 So these were the principles of financial management. 
Finance is the cornerstone of every business so companies 
look for finance managers who can maximise profits and 
minimise losses. If you wish to become a finance manager, 
then you can pursue Post Graduate Diploma in 
Management (PGDM) or 
Post Graduate Diploma in Business Administration (PGDBA
) with Finance Management
 as specialisation from MIT School of Distance Education 
(MIT-SDE).
The course trains the candidates to effectively manage the 
finances of the organisation and enhance their employability 
skills. So, apply for this job-centric course right away!  
        
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