Financial management “is the operational and financing activity of a business that is responsible for obtaining and utilizing the funds necessary for effective operations. Thus, Financial Management is concerned with the effective funds management in the business process.
Finance is interrelated functions which deals with marketing function, production function, Human Recourse function and Research & development activities of the business concern. Financial Management is concerned with the financing, acquisition and management of assets with some overall goal in minds. There are three major areas in Financial Management decision making.
1- Investment decision
2- Financing decision,
3- Assets Management decision.
1- Investment Decision
It is one of the most important decisions. Finance Management is …show more content…
It must be full fill the business concern’s requirement. Every organization must maintain adequate amount of finance for their smooth running of the business organizations and to achieve the business goals. Importance of Finance can’t be neglect in an organization. Some are the importance of financial management is as follows:
• Financial Planning
Financial planning is an essential part of the business organization. Financial management helps to determine the financial requirements of the organization and leads to take financial planning to the organization.
• Accomplishment of funds
Financial management involves the accomplishment of required fund to the business organization. Accomplishing needed funds play a major part of the financial management in an organization which involve possible source of finance at minimum cost.
• Proper Use of Funds
Financial management systems help to proper use and allocation of funds which leads to improve the operational activity of the business organization. If the funds use properly, so it helps to reduce the cost of capital and maximizing the value of the firm.
Ensure that the property, plant and equipment exist and are genuine assets of the business and are beneficially owned by the business and any restrictions, pledges or liens on the property, plant and equipment are identified and adequately disclosed in the financial statements. At the same time, have to prepare fixed assets schedule as to attachment for this section. Test the mathematical accuracy, agree opening balances to prior period working papers and agree closing balances to the nominal ledger and investment ledger where maintained. Vouch against invoices, contract notes, and agreements for any additions or disposals in order to ensure that all property, plant and equipment are included in the balance sheet and gains or losses on realization of property, plant and equipment are correctly stated. In additions, ensure the property, plant and equipment are properly disclosed and
It is therefore worth to spend time to review the potential risks that you face and come up with a contingency plan. Cash Flow and Financial Management Smooth cash flow management is crucial to any business. For a business that has just started and it is even more important. Cash constraints can turn to be the biggest monster to limit
Financial Statements- Is a record of a Business’s Financial Figures that contains the data of how their business is running and their cash flows. They should be clearly structured so that the professionals understand them. Financial Statements are used to show how a company’s money is created and how able they are to make their own money, it is also used to show what sources they use for their money. They also show us if the business is able to pay back the money and have the ability to pay back their debts. The statement also shows financial ratios that can specify the form of a particular business and also shows if any profit is at loss.
However, financial performance subsists with different levels of organisation, which is concerned with measuring financial performance of organisation. These measures are categorised into four that includes profitability, gearing, liquidity or working capital, and investor ratios. However, the financial plan of organisation is associated with operating plan since financial plan involves revenue and expenses for the activities that are linked with each objective. Hence, the main reason, in monitoring financial plan is to audit the committee (Hasan, 2011).
The changing regulations and the market operations will impact highly the financial planning, Investment, taxation and superannuation. The future skills which would be critically required by the financial services organizations would be: • Supervision and
Financial fears have grown increasingly common in our society. It seems that the pile of bills on the kitchen table continues to grow as the money in our wallets continues to shrink. Everyday there are those who are unable to sleep because the fear of not being able to make ends meet gnaws at them. Research shows that financial fears have become some of the most prominent fears in America. But why is this the case?
However, I still want to learn many other new things. Specific factors to learn are decision-making and communication skills. This is because making decisions is a tough process since it requires one to choose between various conflicting options and in the end not regret the choice made (Rippin, 2015). Learning about decision-making process will help me to understand the risks involved in making right choices. To be able to make bold choices such as Howard Schultz 's decision to leave Starbucks, it needs a lot of considerations and careful analysis.
a) What rate, compounded monthly, would have resulted in the same accumulated debt? How long would it take for her debt to reach 100,000 if she does not repay any amount throughout the term? Assume the same interest rate of 6% compounded semi-annually throughout this extended period b) If she had taken the same loan amount from a local bank, it would have accumulated to $80,654 in 18 months instead of two years. What is the interest rate compounded semi-annually charged by the local bank? c) What would her savings be if the loan had been issued to her at an annually compounded frequency?
“How am I going to save my money if I can’t go a month without being short on cash?” Is this the question you ask yourself every now and then? Why is saving money that much difficult for you? Saving money needs a hell lot of self-control and self-control is challenging. Not only that, saving is a habit and habits take time and effort to form.
Self -Reflection on Module 8.2a Financial Management Before the commencement of the sub-module 8.2, we were supposed to choice either 8.2a (Financial Management) or 8.2b (Investing Social Security Reserves), because the sub-module is divided into two. I have decided to take the sub-module 8.2a, and during online VC sessions, I have had gained some basic knowledge from this subject (Financial Management). For me, this is the first time I had chance to learn about the subject, before that I have just heard some information about financial management only from a friend who studied Accounting and working as Auditor at Association of Chartered Certified Accountants (ACCA) consultancy in Ethiopia. From the beginning I am so much eager and impressed