role of Financial Management Flashcards
What is the role of Financial Management?
the planning and monitoring of a Business’ financial resouces to achieve the business’ goals/objectives.
What are Business Objectives?
A goal a business implements strategies to achieve
What is the Acronym used in reference to the objectives of financial management?
LPEGS
What does LPEGS stand for?
Liquidity
Profitability
Efficiency
Growth
Solvency
what is Liquidity
A business’ ability to meet financial obligations in the short-term (less than 12 months)
What is profitability?
a business’ ability to make the most profit
what is efficiency?
the ability to maximise profit & minimise cost
what is growth?
growth is a expansion of a business
what is solvency?
A business’ ability to pay back long term debts
what are financial management strategies
strategies put in place to oversee the business’ future financials
what are short-term strategies
strategies put in place to maximise profits in the present
- operational strategies are daily/weekly
-tactical strategies are 1-2 years
What are Long-term strategies?
strategies put in place for profits made in over a year
- strategic long-term strategies and over 5 years
how are operations & finance interdependent
Needs finance to fund the functions of a business
how are HR and finance interdependant?
Needs finance for recruitment, training, monitoring of employees
Marketing and finance
requires finance for funding to conduct market research and brand products
