Comment on the following: Financial management has changed significantly in its scope and complexity in recent times.

Financial management has changed significantly in scope and complexity in view of introduction of new financial instruments and transactions. Derivative contracts like options and future contracts, foreign currency swaps, and interest rate swaps have now been used very commonly in the financial markets. The globalization of capital markets, GDR (Global Depository Receipts) and Euro Issue, has increased the scope and reach of financial managers. With liberalisation measures taken by the government the scope of financial management has increased from keeping records, preparing financial reports, managing cash position, paying bills and occasionally obtaining funds to investing in assets and new products and determining best mix of financing and dividends in relation to a company's overall valuation. Under the changed circumstances, financial management covers the following: Raising the funds: Apart from Indian Public and Financial Institutions, companies have started raising funds etc. in the international markets by way of Euro Issues and from International Financial Institutions etc. Investment Decisions: Presently, investment decisions of firms are not confined to Indian territory but spread over globally. Foreign investors are encouraged. Hence the competitions in India as well as from abroad have made the financial management more complex and foreign exchange management has become highly specialised area in financial management. The time value of money coupled with exchange rate fluctuations make the decision making exercise more complex and compelled the decision makers to make the use of various sophisticated management techniques like probability theory, capital rationing, linear programming, goal programming and sensitivity analysis to overcome the problems. Dividend Decisions: In view of wealth maximisation of firm, the internally generated funds are not paid out by way of dividend or issue of bonus shares. They are utilised by companies in making investments. It further increases the scope of financial management and makes it more complex.