WHAT IS THE DIFFERENCE BETWEEN FINANCIAL MANAGEMENT AND FINANCIAL PLANNING

J.O. EMMANUEL
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Financial management is the process of managing financial resources in a way that maximizes shareholders' wealth. 

It involves developing financial policies, anticipating and managing cash inflows and cash outflows, monitoring financial performance, and optimizing the financial structure of the business.

Financial management aims to ensure that the company make beneficial investment decisions, financing decisions, and dividend decisions.

On the other hand, financial planning is the process of establishing financial goals and identifying the sources of finance available to a business.

It essentially means planning for the finances of the business. 

That is, it involves determining the financial goals of the organization and making sure that there are sufficient funds to achieve the financial goals of the organization.

The difference between financial management and financial planning can be summarized as follows:

1. The objective of financial management is to maximize shareholders' wealth whereas the objective of financial planning is to ensure that there is always adequate funding for the operation of the business.

2. Financial management focuses on managing the financial resources of the organization in a way that maximizes the shareholder's wealth.

On the other hand, financial planning focuses on setting financial goals and ensuring that funds are always available to meet the goals.

3. Financial management may be short-term or long-term because it involves short-term and long-term management of the company's financial resources.

On the other hand, financial planning is usually long-term because it involves setting goals and identifying the financial means of achieving them.

4. Financial management is concerned with managing the financial resources of the organization in a way that maximizes shareholder wealth.

On the other hand, financial planning is concerned with setting financial goals and ensuring the financial resources required to achieve the goals are available.

In conclusion, the major difference between financial management and financial planning is that financial management involves managing financial resources to maximize shareholder wealth, while financial planning involves setting financial goals and securing the necessary funds to achieve these goals.

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