CH8: Financial Management Flashcards
What does operational risk include?
Cyber-attacks, disaster recovery, business continuity plans, and crisis management due to misconduct or fraud.’’’, ‘
What are the core functions and types of financial management?
The core function of financial management is to manage a company’s finances to meet goals and drive value, according to Strutner (2020). It combines planning, budgeting, accounting, reporting, and risk assessment. The three broader types are capital budgeting (long-term investments), working capital management (short-term operations), and financial control.
What is the role of financial managers during the planning and budgeting phase?
Financial managers assess the company’s position and plan resource allocation. They prepare operational budgets (day-to-day planning) and financial budgets (long-term investment and financing decisions).
What are the key roles in a financial management team?
Controllers oversee accounting and compliance. Treasurers manage cash, investments, and financing. Credit Managers evaluate customer creditworthiness. Risk Managers identify and mitigate financial risks.
How did the COVID-19 pandemic impact financial management?
The pandemic increased financial uncertainty and forced companies to rethink risk, liquidity, and continuity planning. Financial managers had to adapt to remote tools, volatile markets, and increased digital reliance.
Why is IT critical in modern financial management and how does it improve performance?
IT enhances data accuracy, speed, and decision-making in financial management. It improves performance by automating processes and enabling real-time reporting. It also supports collaboration with departments like sales and marketing and ensures secure access at lower costs.
What is the role of ERP systems and IT knowledge for finance managers?
ERP systems centralize financial data and processes for better control and integration. Finance managers must understand IT systems to remain effective and strategic in a digitized financial environment.
How has IT transformed the banking and finance industry?
IT has digitized financial services, increased access, and introduced automation across the banking and finance sector. While initially feared for causing job losses, IT has instead created roles in fintech, cybersecurity, data analytics, and mobile banking innovation.
