Financial management means planning, organizing, directing and controlling the financial activities such as procurement and utilization of funds of the enterprise. It means applying general management principles to finance resources of the enterprise. There are so many functions of the financial management such as estimation of capital requirement: A finance manager has to make estimation with regards to capital requirements of the company. This will depend upon expected costs and profits and future programmed and policies of a concern. Estimations have to be made in an adequate manner which increase earning capacity of the enterprise. Determination of capital composition: Once the estimation have being made, the capital structure have to be decided. This involves short-term and long-term debt equity analysis. This will depend upon the proportion of equity capital a company is possessing and additional funds which have to be raised from outside parties.

The role of a financial manager is key is the organisation, financial activities of a firm is one of the most important and complex activities of a firm. Therefore in order to take care of these activities a financial manager performs all the requisite financial activities. The finance manager is the person who take care of all the important financial functions of the organization.The person in charge should maintain a farsightedness in order to ensure that the funds are utilized in the most efficient manner.

The are factors that determines the capital structure such as trading on equity: the word equity denotes the ownership of the company. Trading of equity share capital to borrowed funds on reasonable basis. It refers to additional profits that equity shareholders earn because of issuance of debentures and preference shares.