Financial management is the process of planning, managing, and controlling the financial resources of a business. The primary objective of financial management is to assist the business in achieving its goals by maximizing profitability, liquidity, and earnings per share. Financial management consists of three basic components: investment, financing, and dividends.

Investment is the decision-making process of determining which projects or assets a business will allocate funds to. Investment decisions impact the future cash flows and value of the business. When making investment decisions, techniques such as capital budgeting and working capital management should be employed.

Financing is the decision-making process of determining from which sources or instruments a business will obtain funds. Financing decisions affect the capital structure and cost of the business. When making financing decisions, factors such as debt/equity ratio, interest rate, maturity period, and credit risk should be taken into account.

Dividends involve the decision-making process of how the profits or surplus of a business will be distributed. Dividend decisions impact the satisfaction and expectations of the shareholders. When making dividend decisions, factors such as dividend policy, frequency of payment, amount of payment, and tax rate should be considered.