The success of every company depends on the effectiveness of financial management. The world is currently experiencing a critical liquidity situation that has reduced economic activities across all business lines (Lumby, 2015). Therefore, setting objectives is vital for any entrepreneur managing a new, growing business. The companies' owners set different objectives, including financial objectives, to provide the company with a solid plan for moving in the long-term success direction (Dai and Zhang, 2019). Financial management's great concern is allocating, procurement, and controlling financial resources to the concerned business. Besides, financing could be used in purchasing long-term assets that will produce income and create a gain in value or reduce the expenses of a company. However, according to Al Breiki & Nobanee (2019), the advantages of long-term assets can be affected by personal factors and macroeconomic factors such as; employment, inflation, political instability, and economic inflation that can hugely have impact on business's financial decisions.

Financial corporates objectives of the company, the financial decision, and economic environment impact.

The company common financial objectives includes; implementing working capital management policies, making loan arrangements at reasonable rates with the amount of money collected from investors, managing funds for the company, and making decisions concerning dividends (Bacchetta and Caprio, 2012). There are several routes for fund arrangement for the business entity, including internal and external sources. The internal sources comprise surpluses, reserves, and retained earnings, while the external sources contain the small grants of business, business loans, factoring, and invoice finance. In addition to external sources is the private investors, which is the primary company's financial decision regarding capital market and finance. According to Brott (2013), the surpluses, reserves, and retained earnings are limited to completing the business requirement. Therefore, the business must have to adopt short- and long-term funding plans. 

The concern for a company needs a considerable working capital number. Thus, the business can be managed through trade credits, overdrafts, and short-term loans. The managers should consider three policy types of working capital, including moderate, conservative, and aggressive policy.

Aggressive- This is a policy in which a business is operating with a lower amount of cash, trade receivables, or inventory for a particular sales level

Conservative-This policy type applies to a company with a huge cash balance and holds a high inventory level.

Moderate- This is an aggressive and conservative approach in between policy.

Adopting these policies guarantees less inventory or financial risks and eliminates adverse impacts on profitability (Kaviani, Shahmanosuri & Batebi, 2014). They must take into consideration anticipated corporate taxes and inflation relevant to it. Following the market analysis, the business can adopt an idea concerning inflation's prevailing growth rate on an investment return measurement basis. As well, the investment returns are affected by corporate tax. The UK's tax system has comprised two main characteristic features: Progressivity and taxation revenue from stock and bond holdings (Bakhtin and Alamin, 2016). These UKs prevalent tax system characteristic features mainly focus on efficient financial management and working capital management process adopted by the country's companies. Therefore, inflation rates, tax policies, and other micro and macro-economic aspects contribute to its functional capital management. Also, these factors emphasize financial management through long term sustainability and profitability. 

Critical financial management decisions.

The main decision aspects of financial management include investment, financial, and dividend decisions.

Investment decisions -this decision explains the number of assets to be held in the company. These decisions can be classified into capital budgeting (long term investment decisions) and working capital management (short term investment decisions). Factors that influence investment decisions include; the rate of return, criteria involved for investment, and project cash flow.

Financial investment-it is concerned with finance amount to be receiver from several sources of long term. The factors that could affect financial decisions include cost, risk, floating cost, business cash flow position, control considerations, and capital market states. 

Dividend decisions- the primary concern of this decision is surplus fund distribution. The funds are distributed to the shareholders either in dividend form or retained assets form. The manager of finance has to decide whether to spend the dividend or keep aside. The dividend decisions are affected by the following factors; earnings, earnings stability, position of cashflows, shareholders preference, taxation policy, legal restrictions, stock market reaction, and contractual constrain.

Monetary and fiscal policies targets

The macroeconomic policy primary objectives are to achieve following; full resource employment, price stability, economic growth, payment balance equilibrium, and an appropriate income and wealth distribution. As explained by Kaviani et al. (2014, p.134), company's income and expenses are affected by the contraction or expansion of the economy, particularly concerning the earning potential or employment. While deflation, inflation, or an expected currency appreciation or devaluation influences interest rates, both borrowers and lenders anticipate returning or using already changed value. When macroeconomics and personal factors become part decision-making process, the financial management decision may become complicated. 

Agency theory defines agent-principal as a formal contract where the principal employs an agent to take over principal responsibility. The agency theory implies that both the agents and principals serve in their self-interest, provided it works for their advantage. For example, management is encouraged by high-wage or corporates incentives (Payne & Petrenko, 2019). To maintain the incentives, they might maximize the return of shareholders. As well, business owners are encouraged to award able managers for generating profits. However, an agency issue among shareholders and managers can occur when managers possess divergent perspectives and knowledge than the business owners (Kaplan, 2015). Another agency issue is a risk since principals and agents have different ways of assessing risk.

Over a long time, the metrics of business have been the standard used in a company's performance assessment. The balanced scorecard supports the finance function in monitoring and establishing particular and measurable financial strategic objectives, enabling a company's efficient and effective performance. The company's financial decision involves selecting capital investment sources such as private investors, banks, equity investment, financial institutions, and venture capital. The familiar sources of capital funding that can be adopted are the issuance of personal share and equity, but businesses can look for debt issuance capital. The debentures issuance is of more advantage to a business as compared to capital share. According to Zhang & Liu (2020), leasing is another vital decision concerning a company's financial asset. For instance, a company operating as a food restaurant prefers to procure leasing and not purchasing. Moreover, gearing should be maintained on a minimum level, while capital share should add more equity capital than debt capital (Lumby, 2015). 

The monetary and fiscal policies impact financial decisions.

The monetary and fiscal policies have a considerable impact on the finances of every company. The tax rate and government spending significantly affect employment, development, economic growth, and social security payments that establish how much money a company possesses. The central bank's interest rates and establish the circulation of money in a country's economy at a given time. It affects the pricing of goods and services by business. The in-depth understanding of fiscal and monetary policies helps a company's financial manager make the best financial decision. Financial decisions can be affected by uncertainties and risks mostly associated with the business future, including unidentified circumstances that can produce a negative outcome (Dai & Zhang, 2019). Examples of the risks that companies might face are; reduced income disposal, increasing prices of goods and services, and significant competitors.

Additionally, business concerns can face several types of risks, including market or industrial risk, political risk, and economic instability. Other risks include the threat of rivalry among competitors, new concerns in the market, suppliers' bargaining power, consumer bargain power, and substitutes of goods or services. The incidence of politics may affect financial decisions (Breiki & HNobanee, 2019). Such risks influence the development and economic growth of company concern.

Conclusion

Finance involves the management of the company's money. Therefore, finance managers must decide how much money is needed and when, and how suitable to use available funds and get much-needed financing. Financial managers' objectives include; ensuring adequate and regular fund supply to the concern, enabling shareholders with the proper return, and optimizing funds, investing safely and planning of sound capital structure. However, the fiscal policy which is a manipulation government budget influence the aggregate demand and economic activity levels, such as government spending, taxation, and government borrowing. At the same time, monetary policy controls the overall economy of monetary activities. Therefore, fiscal and monetary policies help financial managers and investors make the best decisions through a more detailed understanding of the company's economy and policies' broad trends.

References

Zhang, S., & Liu, C. (2020). State ownership and the structuring of lease arrangements. Journal of Corporate Finance, 101597.

Brott, P.E. 2012, "A career story approach to management, business, and financial occupations," Journal of Employment Counselling, vol. 49, no. 4, pp. 172-184.

Payne, G. T., & Petrenko, O. V. (2019). Agency theory in business and management research. In Oxford Research Encyclopedia of Business and Management.

Al Breiki, M., & Nobanee, H. (2019). The role of financial management in promoting sustainable business practices and development. Available at SSRN 3472404.

Kaviani, M., Shahmanosuri, R., Batebi, M., & Fahim, S. R. S. (2014). Aggressive, Conservative, and Moderate Policy in Working Capital Management and Firms Free Cash Flow Yield (FCFP) Evidence from Tehran Stock Exchange. International Journal of Empirical Finance, 2(3), 130-136. 

Dai, L., & Zhang, B. (2019). Political uncertainty and finance: a survey. Asia‐Pacific Journal of Financial Studies, 48(3), 307-333.

Lumby, S. (2015). Corporate finance Theory and Practice, Retrieved from http://lib.myilibrary.com/ProductDetail.aspx?id=328516 

Journal of Risk Finance available from http://www.emeraldgrouppublishing.com/products/journals/journals.htm?id=JRF

Kaplan Publishing, UK. (2015). ACCA F9- Financial Management, Berkshire, UK: Author. 

Bakhtin, G., and Alamin, M. (2016). The Role of Financial Management in The Decision-Making of Business. [online] 

Bacchetta, P., and Caprio, G. (2012). Handbook of Safeguarding Global Financial Stability. Elsevier. https://www.journals.elsevier.com/journal-of-macroeconomics