Financial management can be an activity setting up, budgeting, audit, operations, control, search and storage area of cash owned by a business or company. management Activities
Financial management linked to the three activities, specifically:
Activities usage of funds, the activity to purchase various assets.
Activities proceeds, namely actions to obtain money, both from internal financing sources and external funding sources.
Asset management activities, specifically after the cash obtained and allocated by means of assets, the fund ought to be managed as proficiently as possible.
A finance supervisor in a company got to know how to manage all of the elements and in fiscal terms, this should be done because finance is probably the important functions in reaching the objectives of the business.
Components of financial management ought to be known by a supervisor. Let’s say a financial manager didn’t know what-what will be the components of financial management, it could appear difficult to perform a company.
Therefore, the financial supervisor will be able to find out all of the activities of financial operations, especially analyzing the foundation and usage of its funds to understand the utmost benefit for the business. A financial supervisor must understand the move of profit circulation, both exterior and internal.
Financial Management Function
This is a brief description of the function of Financial Operations:
Financial planning, money and expenditure to create plans along with other activities for a particular period.
Financial budgeting, follow-up of fiscal planning by making information on expenditures and revenues.
Financial Management, used provider funds to increase the funds obtainable by various means.
Finance search, get and exploit the information designed for the operational actions of the company.
Financial storage, raising the business and storing and securing these cash.
Financial control, analysis and improvement of budget and financial devices in the enterprise.
Audit, interior audit on the prevailing corporate finance in order to avoid deviations.
Financial reporting, providing information regarding the financial state of the company and an evaluation
When connected with this objective, the fiscal manager functions are the following:
Supervision over costs
Setting a cost policy
Predicting the near future earnings
Measuring or explore the expense of working capital
Objectives of Financial Management
Objectives of Financial Operations is to increase the value of the business. Thus, if 1 day the company comes, then the price could be set as great as possible. A supervisor also needs to be able to decrease the flow of profit circulation to avoid unwanted actions.
Analysis of Funding Options and Uses
Analysis of the foundation of cash or fund analysis is important for the financial supervisor. This analysis pays to to know how cash are used and the foundation of the acquisition of these funds. A written report that describes the foundation of the foundation of funds and usage of funds. The analysis software which you can use to look for the condition and financial effectiveness of the company may be the examination of the ratio and proportion.
The first rung on the ladder in the examination of the foundation and usage of funds is a written report of the improvements prepared based on two balance sheets for just two times. The article describes the change of every of these factors that reflect their origin or usage of funds.
In general, fiscal ratios are calculated could be grouped into six types:
Liquidity ratio, this ratio to evaluate a company’s capability to meet its short-term obligations.
Leverage ratio, this ratio can be used to measure just how much of the cash that are supplied by the owner of the company in proportion to the funds obtained from the company’s creditors.
Activity Ratio, this ratio is used to measure the effectiveness of management in the use of its resources. All the activity ratio involves a comparison between the level of sales and investments in various kinds of treasure.
Profitability ratio, this ratio is used to measure the effectiveness of management as seen from the profit generated on sales and investment companies.
Growth ratio, this ratio is used to measure how well the company maintain its economic position of economic and industrial growth.
Valuation Ratios This ratio is a measure of the company’s achievements of the most complete because of these ratios reflect the combined effects of the risk ratio with the ratio of the return.
Definition of Capital
The term “capital” is usually interpreted to mean many things, the terms of capital expenditures the company can be divided into two, namely: capital active and passive capital. Active capital is the wealth or the use of funds, while passive capital is a source of funds.
Financial manager is someone who has the right to take a decision that is very important in the field of investment and financing company. The financial manager is also responsible for the financial sector in a company.
Understanding Functions and Objectives of Financial Management. Definition of Financial Management
Financial management is any activity or activities of the company related to how to obtain working capital financing, use or allocate, and manage assets to achieve the main objectives of the company.
Objectives of Financial Management
The main objective of Financial Management is to maximize the value of the company or provide added value to the assets owned by shareholders.
Scope of Financial Management
Scope of Financial Management consists of:
Funding decision, including management policies in the search company’s funds, such as policies issued a number of bonds and debt policy short and long term company sourced from internal and external.
Investment Decision, Policy venture capital investment to fixed assets or Fixed Assets such as buildings, land and equipment or machinery, as well as financial assets in the form of securities such as stocks and bonds or activity to invest in various assets.
Decisions Asset Management, assets management policy efficiently to achieve its goals.
Financial Management Function
The main function of Financial Management are as follows:
Planning or Financial Planning, Cash Flow Planning covers and Income.
Budgeting or budget, reception planning and budget allocation efficiently and maximize cost-owned funds.
Controlling or Financial Control, evaluation and improvement of finances and financial systems.
Auditing or Audit, internal audit for the financial companies to comply with existing rules and accounting standards to prevent deviation.
Reporting or Financial Reporting, provide information reports about the company’s financial condition and ratio analysis of financial statements.
Financial Ratio Analysis
The analysis tool that is often used to determine the condition and financial performance of the company. Benchmark typically by comparing the increase or decrease in achievement between the two statements of financial position at two specific time period.
Financial Ratio Analysis commonly used are grouped as follows:
Liquidity Ratio, the ratio for assessing the company’s ability to meet all financial obligations in the short term. Reports in the form of analysis and Working Capital Current Ratio to Total Assets (WCTAR).
Leverage Ratio, the ratio to assess the extent of the funds provided by the shareholders or owner as compared with funds obtained from loans from the creditors. Reports in the form of Total Debt to Assets (DAR), Total Debt to Equity (DER).
Activity Ratio, this ratio is used to measure the effectiveness of management in the use of its resources. All the activity ratio involves a comparison between the level of sales and investments in various types of assets. Analysis report in the form of Total Asset Turn Over (ATO), Working Capital Turn Over (WCTO), Total Equity to Total Assets (EA).
Rentability Ratio, this ratio is used to assess the effectiveness of management as seen from the profit generated on sales and investment companies. The report analyzes the form of Return on Equity (ROE), Return on Assets (ROA), Earning Power of to Total Investment (EPTI), Gross Profit Margin (GPM), and Operating Income (OI).