For making right decisions, financial management needs to understand financial envi­ronment within which these decisions operate

For making right decisions, financial management needs to understand financial envi­ronment within which these decisions operate. Financial management will then be able to analyse these financial information’s to predict likely future results and to plan more carefully their proposed course of action.
Financial management is concerned with the acquisition (investment), financing (arranging funds), and management of assets with some overall goal in mind. Invest­ment decisions begin with a determination of the total amount of assets required by the firm and to determine the money value of the same. Assets that cannot be economically justified, may be reduced, eliminated or replaced.
Financing decisions include decisions regarding mix of financing, type of financing em­ployed, dividend policy and method of acquiring funds i.e., getting a short term loan, or a long term lease arrangement, sale of bonds or stock.
Asset management decisions means managing the assets efficiently after their acquisition.