business finance Flashcards
it deals with the decisions that are supposed to maximize shareholder’s wealth
Financial Management
refers to effective and efficient planning, organizing, directing, and controlling of financial activities and processes of an organization
financial management
Financial management and financial managers play a crucial role in making financial decisions and exercising control over finances in the organization. They make use of techniques like ratio analysis, financial forecasting, profit and loss analysis, etc,
Financial decisions and controls
The finance managers are responsible for the planning of financial activities and resources in the organization. To this end, they use available data to understand the needs and priorities of the organization, as well as the overall economic situation and make plans and budgets for the same purpose
Financial Planning
It is the responsibility of financial management to estimate the capital requirements of the organization from time to time, determines the capital structure and composition and makes the choice of source of funding for the capital needs.
Capital Management
Financial management ensures that all financial resources of the organizations are used and invested effectively and efficiently so that the organization is profitable, sustainable, and viable in the long-run
Allocation and Utilization of financial resources
It is extremely important for organizations to have sufficient working capital and cash flow to meet their operations and emergencies. Financial management tracks account payable and receivable to ensure there is sufficient cash flow available at all times.
Cash Flow Management
The decisions on how the surplus or profits of the organizations is utilized is taken by the financial managers of the organizations. They decide if dividends should be distributed and how much as well as the proportion of profits must be retained and ploughed back into the business
Disposal of surplus
Financial management maintains all necessary reports related to the finance of the organization and uses this as the database for forecasting and planning financial activities
Financial Reporting
Sound financial management prepared the organization to forecast risks, put in place mitigation plans as well as to meet unforeseen risks and emergencies effectively
Risk management
Its goal is to maximize the value of shares of stocks.
Financial Management
They are responsible for making the decisions for the company that would lead towards shareholders’ wealth maximization.
Managers
4 vp of an organization
vp for marketing, finance, production, administration
2 owners and 5 managers of an organization
Shareholders, board of directors
president or ceo, vps
It is the highest policy making body in a corporation. Its primary responsibility is to ensure that the corporation is operating to serve the best interest of the stockholders.
Board of directors
They are the owners or investors in the firm
Shareholders
They set policies on investments, capital structure, and dividend policies
Board of directors
They approve company’s strategies, goals, and budgets. They also appoint and remove members of the top management including the president
Board of directors
They determine top management’s compensation. They also approve the information and other disclosures reported in the financial statements
Board of directors
They oversee the operations of a company and ensure that the strategies as approved by the board are implemented as planned
President
They perform all areas of management: planning, organizing, staffing, directing, and controlling
President
They represent the company in professional, social, and civic activities
President
they formulate marketing strategies and plans. they also direct and coordinate company sales
vp for marketing
they perform market and competitor analysis. they also analyze and evaluate the effectiveness and cost of marketing methods applied.
vp for marketing
they conduct or direct research that will allow the company identify new marketing opportunities, e.g. variants of the existing products/services already offered in the market
vp for marketing
they promote good relationships with customers and distributors
vp for marketing
they ensure production meets customer demands
vp for production
they identify production technology/process that minimizes production cost and make the company cost competitive
vp for production
they come up with a production plan that maximizes the utilization of the company’s production facilities. they also identify adequate and cheap raw material suppliers
VP FOR PRODUCTION
they coordinate the functions of administration, finance, and marketing departments
vp for administration
they assist other departments in hiring employees. they provide assistance in payroll preparation, payment of vendors and collection of receivables
vp for administration
they determine the location and the maximum amount of office space needed by the company
vp for administration
they identify means, processes, or systems that will minimize the operating costs of the company
vp for administration
they fund long term investments (such as company expansions) and working capital which deals with the day to day operations of the company
vp for finance
they determine the type of investment for the firm. they also deal with the daily operations of the company. and they develop policies on dividends
vp for finance
