Ethical Functions Of Financial Management

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When it comes to being a financial manager, three distinct functions are essential in order to ensure success within the position. These are: investment decisions, financing decisions, and dividend decisions (Pujari, 2015). The first function, investment decisions is crucial because it relates to funds which will be invested into a careful selection of assets. This means the finance manager must ensure that the proper assets are selected in order to ensure the highest rate of return can be seen from the investment. If a poor asset is selected, it can result in the company losing money, which would be reflected poorly upon the financial manager (Pujari, 2015). The second function, financing decisions which is how the company decides how it wishes to be financed. This can be done through debentures or by taking loans and advances. A financial manager must be able to determine what amount is needed in order to ensure proper financing. They …show more content…

The first deals with misrepresentation or misclassifying cash flows. This is done in an attempt in order to pad financial figures that are seen from operating activities or by allocating expenses into financing or investing activities (Ross, Westerfield, Jaffe & Jordan, 2011). In order to avoid this ethical issue, financial managers can ensure that the cash flows are presented in an honest manner. A second ethical issue is insider training, which is when privileged information is utilized that has not been made public (Ross et al., 2011). This is an unfair advantage that should not be utilized by a financial manager in order to gain a greater profit and can be avoided by simply not utilizing any privileged information. By ensuring that as a financial manager, one remains ethical when doing any business dealings, it can create a stronger moral character that will aid in one’s career from a long term

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