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Managerial economics propagates optimum utilization of the factors of production. Asset Management, one of the most important finance function of a firm is helpful in achieving the objective of optimizing the utilization of the factors of production.
Asset Management  includes the vast area of financial planning, forecasting of cash flows, budget preparation and  allocation of funds.

• The underlying principles of investment decisions in s firm are the security and liquidity of funds while yields are maximized at the same time. 
• Moreover, for manufacturing firms,decisions are made to establish the optimum level of inventory of raw materials and finished goods. The other decisions to be made are for the purchase or renting of buildings for factory and office premises, purchase of equipment and machinery and so on. 
• These decisions are made  by the Chief Financial Officer of a firm. In a scenario of severe competition in the market, these decisions can help to improve the profitability of the firm.