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FINANCIAL MANAGEMENT
Financial planning works from the strategic and business plans to identify what financial resources are needed to obtain and develop the resources to achieve the goals in the two types of plans. Typically, financial planning results in very relevant and realistic budgets
Operating statements to measure income, expenses, and profits.
Operating margins to identify the components of gross sales and percentage of sales.
Comparative operating statements to compare results for the current period against those earlier periods and the company’s results against those of others in the same line of business.
Balance sheet analysis(comparative , studies , ratios)
Operations budget to forecast sales ,cost ,expenses and profits.
Cash budget to forecast short-run cash flows from operations and short-run working capital requirements.
Capital budget to forecast capital expenditures.
FINANCIAL MANAGEMENT
Acquisition of Funds
the selection between the two would be based on the ff.
1.Period of the obligation agreement .
2. Priority of claim or preference on income.
3. Priority of claim or preference on assets.
4. Participation or voice in management.
- projected regular capital requirements should be desired from long term investors or reliable sources which can ordinarily be depended upon for loan renewals or extensions , while short-term requirements should be covered through short-term borrowings from commercial banks or the money market.
- The use of the funds should generate income which is greater than the cost of the funds.
ff. are the general rules to consider in the acquisition of funds.
- the maturity of the obligation should be well within the earning life of the asset or project being financed.
personal equity
when a company retains portions of an employee's equity.
This is reported on the company's financial statement.
borrowed funds(fixed claims by outsiders.)
The planning, directing, monitoring, organizing, and controlling of the monetary resources of an organization.
This responsible for the liquidity, solvency profitability, and financial control of the business. This responsibility involves: financial planning , analysis of financial condition; and supervision of financial operations.
To perform these functions, the finance manager uses the following tools :