3.1 Role of Financial Management

Question 1

What is the role of Financial management?

Answer 1

Financial management refers to the planning, organising and controlling of the financial resources.

Question 2

what does the ability to manage financial resources contribute to?

Answer 2

The ability to financially manage contributes to the profit, return on investment, growth and expansion of the business. Effective financial planning is a critical success factor for a business.

Question 3

What is the strategic role of financial management?

Answer 3

The strategic role of financial management is to provide the financial resources to allow the implementation of the business strategic plan.

Question 4

What does the strategic plan outline?

Answer 4

The strategic plan outlines the goals, objectives and future direction of a business.

Question 5

What does financial management involve?

Answer 5

Financial management involves determining the financial resources available to implement the strategies necessary to achieve the goals and objectives of a business.

Question 6

What activities are involved in the strategic management of financial resources?

Answer 6

• Setting policies and procedures regarding cash and credit controls
• Determining the mix of equity and debt finance raising
• Budgeting, including monitoring actual and planned performance
• Record keeping and analysis through the use of financial statements and ratios
• Implementing financial controls
• Taxation management