Financial Management week 5 Essay Example | Topics and Well Written Essays - 250 words

Financial Management week 5 - Essay Example By using the resources optimally, financial management can actually help a company to remain financial stable even during hard times when a firm is unable to generate sufficient sales. Cash flows of an organization are considered its life blood because without cash an organization cannot simply exist. It is therefore critical for every organization to manage its cash flow in optimal manner in order to generate sufficient liquidity to pay off its day to day expenses as well as debts. (Webster, Gans, Milburn, & Simmons, Jr., 2007) If cash flows are not managed properly, first thing a company will experience will be the constraints on its liquidity. Apart from liquidity, firm may also not been able to pay for its day to day expenses which could invariably result into its decline. Improper cash flow management may also result into non-optimal use of cash into activities which may not help maximize the returns to the shareholders of the