Explain two basic functions of Financial Management. OR Explain any two limitations of profit maximization objective of Financial Management.

(a) Basic function of financial management: (a) Investment decisions (I) These decisions relate to the selection of assets in which funds will be invested by a firm. (b) Financing decisions (F): These decisions relate to acquiring the optimum finance to meet financial objectives and seeing that fixed and working capital are effectively managed. (c) Dividend decisions (D): These decisions relate to the determination as to how much and how frequently cash can be paid out of the profits of an organisation as income for its owners/shareholders. (d) Working Capital Management (WCM): Generally short term decision are reduced to management of current asset and current liability OR (c) Limitations of profit maximisation objective: (i) The term profit is vague. It does not clarify what exactly it means. (ii) Profit maximisation has to be attempted with a realisation of risks involved. (iii) Profit maximisation as an objective does not take into account the time pattern of returns. (iv) Profit maximisation as an objective is too narrow.