Lesson 8. Financial Resource Management

Question 1

F.I.N.A.N.C.E.

Answer 1

Financing
Investing
Negotiating and deal making
Administering
Number Generation, Analysis, and Reporting
Cash and Treasury Management
Evaluating and Planning

Question 2

Takes care of fund sourcing and translates corporate goals, strategies and plans into
particular financial aims. It is actually liability planning and management; equity, long term debt and
current liabilities, supplier’s credit, short and long -term debts. The main objective of this is to
minimize the cost of funds raised to finance investments. This refer to interest expenses and other
financial charges. Cost of debt, cost of equity, capital asset pricing model, asset to equity ratio, debt to
equity ratio and coverage ratios, thus the enterprise must be financially liquid and solvent to meet the
loan covenants with creditors.

Answer 2

Financing

Question 3

Provide technical results for interpretations to make
decisions aimed at achieving financial flexibility, maintaining financial control, determining financial
health and capital structure strength, and minimizing financial risks.

Answer 3

Liquidity Measures

Question 4

Refers to putting in and using of monetary resource by owners and investors to attain
the financial objectives of the enterprise. This refers to asset planning and management. It
takes care of fixed assets, current assets and investment portfolio. The basic objective of this is to
maximize returns on the assets (ROA) of the business and the returns on the equities (ROE) of
stockholders and investors. The use of financial tools helps the financial managers to determine the
economic life of the business, earning capacity, cash generation, cash flow and present and future
values. Accounting-based calculations measure the return on investments (ROI) and determine the
earnings before interest, taxes, depreciation and amortizations (EBITDA).
Another objective of investing is to optimize liquidity and leverage position of the enterprise to
attract more investors, remain solvent and well leveraged.

Answer 4

Investing

Question 5

It involve the presentation of a person as regards decisions made by
the executive officers based on the financial standpoint of the company. The person who will do the negotiating and deal making must be carefully chosen because not just anyone has the personality, skill
and ability to negotiate and close deals.

Answer 5

Negotiating and deal making

Question 6

Refers to managing of information, processes and systems based on policies to
attain financial goals. Financial administration is normally in the department of treasury, accounting,
information systems, budget and comptroller, purchasing, general services and property management. It
also involves management advisory, devising macro and micro strategies, streamlining administrative
procedures and giving suggestions to put in order in the attainment of enterprise objectives.

Answer 6

Administering

Question 7

Refers to the collection of all enterprise information
and translating them into accounting entries and reports for analysis to be used in planning and decision
making. The numbers to be generated and recorded depend on who will use them like taxation, credit,
equity determination, budget report. Thus, numbers are gathered, processed and stored, interpreted,
extrapolated, analyzed and compared as to patterns, trends and cycle to reveal information useful for
decision making. Patterns are studied, data are presented in different forms like graphs, tables, charts,
diagrams so that they could be used effectively for planning and decision making.

Answer 7

Number generation, analysis and reporting

Question 8

Refers to orchestrating the flow of funds from sourcing, usage
and end objectives. This function sees to it that the comings and goings of money in its different forms
and properly handled to meet the marketing, production, human resource and financial objectives of the enterprise. It is also concerned with cash and asset management, liability management, taking care of
frozen funds and leakages, expenditures and expense control, funds turnover, receivables control and
fund safekeeping. Generally, it takes care of funds allocation and investment, usage, monitoring and
control.

Answer 8

Cash and treasury management

Question 9

The logical continuation of the other finance functions. The activities
done in financing, investing, negotiating, administering, number generation and cash management are
put into organized coherent reports for evaluation and use for further financial planning and strategy
formulation. Evaluation is based on performance indicators like it focused on customer satisfaction, market and financial performance.

Answer 9

Evaluating and planning