Financial Management Introduction ============ Every organization, irrespective of its size or ownership pattern, has to manage its finances. The overall objectives of an organization cannot be achieved in the absence of financial management. Many organizations fail in their objectives because of financial mismanagement and this failure rate is quite high among the small business enterprises. Hence, financial management is vital for all types of organizations, profit making as well as non-profit making. In case of non-profit making organizations also the effectiveness and performance depends on their financial resources management. Financial Management ==================== When we attempt to analyze the financial functions of an organization we find that funds (capital) have to be: Ø Procured Ø Allocated for various activities Ø Used effectively Ø Monitored Further, the results of all these have to be recorded also. All this brings to fore a three dimensional financial process: Ø Financial management Ø Management Accounting Ø Financial Accounting Ø All these three are at the same time separate yet overlapping areas of thee financial functions of an organization. 1. Oval: Financial Reporting Oval: Management Accounting Oval: Financial Management Financial Accounting deals with the measurements and reports of the financial position of the organisation and providies this to external users such as the shareholders, creditors, government agencies, etc. 2. " Finacial Accounting is the art of recording, classifying and summarising in a significant anner and in terms of money,... ... middle of paper ... ...ctual performance with budgeted performance is called budgetary control. This is a crucial activity because every organisation has to evaluate whether the activities and operations are going in the right direction for achieving the organisational objectives. The actual performance has to be compared with the budgeted performance on the basis of actual level of activity. The actual performance of each area of responsibility is measured through general accounting system in financial terms. Financial managers also go in for periodical review of budgetary performance and then apply corrective measures to ensure that the future performance is as per the budgets. There are many other aspects related to financial management and it is suggested that an entrepreneur should utilize the services of a financial consultant.
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Management accounting in organisation is very important for decision-making and to make the business more efficient and therefore increasing its profits. Is the process of preparing accounts that can help managers to make day-to-day and short-term decisions, by providing them with accurate and timely key financial and statistical information...
Gerald, J. M., Samuel, J. Y., W, B. H., & Rabin, J. (2005). How financial managers deal
Brigham, Eugene F., and Houston, Joel F. Fundamentals of Financial Management. Second ed. Dryden, New York, © 1999.
Ross, S.A., Westerfield, R.W., Jaffe, J. and Jordan, B.D., 2008. Modern Financial Management: International Student Edition. 8th Edition. New York: McGraw-Hill Companies.
Managerial Accounting addresses those aspects that relates to an individual organization return on investments (ROI). (Albrecht, Stice, Stice, & Skousen, 2002) A company’s profitability depends on periodic attention to its assets turnover and profit margin. This process is designed to support the decision making that adds value to an organization. Organizations are sometimes broad and divisional. Planning, controlling, and evaluating is key in the effective decision making process. (Albrecht, Stice, Stice, & Skousen, 2002) An organization must make decisions about its future products, services, operations, and investments. It must begin a tracking process for cost, quality, and performance. Finally it must analyze the results, and variances, providing feedback to assess areas of personnel, divisions, products, and processes. (Albrecht, Stice, Stice, & Skousen, 2002)
Accounting On September 28, 1998, Chairman of the U.S. Securities and Exchange Commission Arthur Levitt sounded the call to arms in the financial community. Levitt asked for, "immediate and coordinated action… to assure credibility and transparency" of financial reporting. Levitt’s speech emphasized the importance of clear financial reporting to those gathered at New York University. Reporting which has bowed to the pressures and tricks of earnings management. Levitt specifically addresses five of the most popular tricks used by firms to smooth earnings.
What do you understand by the phrase “stakeholder analysis”? Attempt a stakeholder analysis of an organisation that you are closely associated with.
Corporate finance is a specific area of finance dealing with the financial decisions corporations make and the tools as well as analyses used to make these decisions. The primary goal of corporate finance is to enhance corporate value, without taking excessive financial risks.
However, the resource based view ignores the knowledge aspect and since the SMEs are owner-managed, then the study of Turyahebwa, A. & Sunday, A., (2013) considers the extent to which knowledge and skills of owners boost performance. According to Meredith (2003), financial management is concerned with all areas of management, which involve finance not only the sources, and uses of finance in the enterprises but also the financial implications especially the total performance of the enterprise. One performance measure that is widely used among small businesses, as a subjective indicator of the overall business performance is the degree of owner/manager satisfaction with the business performance. Few researchers have consulted owner/managers about their views on success of their small business ventures (Simpson M., Tuck, N., and Bellamy S., 2004). Performance can thus be measured in both financial and non-financial terms through level of sales (Umeze, G., & Ohen, S., 2014). Several researchers evaluate financial performance through growth in sales, net income (Nyamao, et, al., 2012) and number of employees (Lerner, M., & Almor, T., 2002). For small firms however, subjective performance or self-reported measures (Ethiraj, S. K., Kale, P., Krishnan, M. S., & Singh, J. V. 2005) and non-financial measures appear to be more essential than
I believed financial sector is one of the fastest growing and most influential elements in our modern society and economy. Financial professionals help companies and organizations stay on top of their own finances, which is a top priority in the wake of the recession. The growing of financial services in the world has brought massive opportunities to utilize newer principles, methodologies, tools and practices in the field of finance. It is this challenging field in which I would like to gain expertise.
Maintaining a company’s financial assets is a daunting task. Cash management techniques and short-term financing provide accounting executives with the tools needed to survive the constant changes within the economy. The combination of these tools and the knowledge of the world economy will assist companies in maintaining current assets and facilitates growth.
This shows that the skills obtained from the Financial Management module can be used by students in University to enhance their financial literacy. The topics addressed in the chapters of long term financing decisions and long term investment decisions are relevant to budgeting and risks related thereof and also the understanding of cashflows, therefore financial literacy is obtained by the students through learning the contents taught by the Financial Management
I am currently majoring in Finance Management. Most of the time people think of finance as just managing money. However, finance is needed for so much more! The finance industry deals with starting businesses, developing new products, expanding markets, as well as everyday things like saving for retirement, purchasing a home, and even insurance. The stock market, asset allocation, portfolio analysis, and electronic commerce are all key aspects in finance. In this paper, I will explain how these features play a vital role in the industry, along with the issues that come with these factors.
In the past, the company performance was measured by asking ‘how much money the company makes?’ To a certain extent, they are right because gross revenue, profitability, return on capital, etc. are the results that companies must bring to survive. Unfortunately, in today business if the management focuses only on the financial health of the company, numerous unwanted consequences may arise.