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Financial management introduction
Financial planning and management
Introduction on role and objective of financial management
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To be a successful business owner, financial planning is instrumental in business if the owner desires to achieve insurmountable success for the long term. Financial planning in particular is concerned with the evaluation process of the business. Financial management is about establishing short and long term objectives for the business and deciding what resources will be required to achieve the necessary objectives. The primary goal for financial management is to accurately account for the income and expenditures of a business to maximize the monetary value of that business to its owners. To obtain this, business managers must be able to evaluate the three elements of profit margins, which are gross profit margin, operating profit margin and net profit margin. As the cycle of financial management comes into play, the financial planning aspect of the business is as paramount in the ongoing activities of the business. A few of the objectives for financial planning are establishing budgets, cash flow and minimizing financial risks and losses.
Gross Profit Margin informs the bu...
This memorandum shall provide an in depth analysis of Target Corporation’s performance for the most current for the year 2014. To obtain a better understanding of Target Corporation’s performance the following categories shall be addressed: Preliminary analytical procedures, Accounting policy efficiency and reliability, Evaluation of Disclosure Controls, Evaluating Company’s technology system and its Risks, Substantive Procedures, Payout ratio in the Target Corporation financials, Fraud Considerations and Extended Procedures.
What do you understand by the phrase “stakeholder analysis”? Attempt a stakeholder analysis of an organisation that you are closely associated with.
The following content provided will include information regarding Nikes Inc. cash management strategies, which will include more in depth information from the previous group paper. In addition, working capital recommendations will be provided to senior management base on next year’s in the pro-forma financial statements.
Managerial Accounting addresses those aspects that relates to an individual organization return on investments (ROI). (Albrecht, Stice, Stice, & Skousen, 2002) A company’s profitability depends on periodic attention to its assets turnover and profit margin. This process is designed to support the decision making that adds value to an organization. Organizations are sometimes broad and divisional. Planning, controlling, and evaluating is key in the effective decision making process. (Albrecht, Stice, Stice, & Skousen, 2002) An organization must make decisions about its future products, services, operations, and investments. It must begin a tracking process for cost, quality, and performance. Finally it must analyze the results, and variances, providing feedback to assess areas of personnel, divisions, products, and processes. (Albrecht, Stice, Stice, & Skousen, 2002)
Finance — Managers use finance for ensuring the financial success of the business and to make financial decisions (University of Phoenix, 2012).
The business always develops due to investments and the correct most accurate analysis is an integral part of any initiative. Any initiative should be studied by financial analysts, correctly predicted in terms of financial investments and beneficiaries, tracked at various times, studied , changed on time, if necessary. Success of investments depends From financial analysis, it helps to protect the business from financial losses and predict cash flow and return of investment.
Most critical to this discussion is a clear understanding of what a financial manager is and does and how his or her role aids in helping to establish the valuation of a corporate entity in today's global financial market. Quite simply, a financial manager helps to measure a company's market value and its risk while also helping to systematically reduce its costs and the time necessary to make informed decisions regarding objective driven operations. This is quite a demanding game plan for an individual and most often financial managers, in the corporate world, work in cooperation with a team of financial experts. Each member of that team perhaps having expertise in differing areas of activity, but each however, being no less expert in his or her respective area of endeavors in behalf of the corporation. The team is assembled under the direction of the officer know in the corporation as the Chief Financial Officer who today is becoming increasingly indispensable to the CEO who directs a modern model of action driven, bottom-line oriented corporate activity (Couto, Neilson, 2004). One can accurately state that the role of the competent and capable financial manager is figuratively worth its weight in gold.
Management of working capital as stated in business dictionary, “The process of managing activities and processes related working capital. The level of management services as a check and balance system ensures that the amount of cash flowing into a business is enough to sustain a company’s operations. This is an ongoing process that needs to be evaluated using current level of assets and liabilities. Such a working capital involves implementing short-term decisions which can or cannot carry over from earnings period to the next (www.businessdictionary.com)”.
People are consumed with money, as to what it will buy them to gain the standard of which to live. Some people live paycheck to paycheck while other live frugally and save. Seeing that it is so important, people should be proactive in spending it wisely which will help reserve it for trying times, future investments, retirement and for your children. Financial planning is the process of managing income to make decisions and make achievable goals around budgeting, car and mortgage purchases, savings, and retirement. Of course, it is hard to imagine that all the answers to a financial plan could be determined and used across a life time.
Profitability is the main objective of all businesses. Business will not be able to survive if there is no state of providing a financial gain. Hence, it is especially significant to know and calculate the present and past profitability and forecasting future profitability. Income and expense are being used in computing in computing profitability. Income is what was being produced from the activities of the business. For instance, if raw materials and end products are produced and sold, income is achieved. On the other hand, expenses are the expenditure of assets accumulated or depleted by the activities of the business. For instance, seed corn is an expense of a farm business since it incurred in the production process (Hofstrand, 2009).
Becoming an adult and entering the workforce are big steps in a person’s life. However, financing the wants and needs of that life, including investments, family, house, and finally, retirement is also monumental steps to overcome. Through the process of financial planning, an individual will have a better advantage of fulfilling that economic satisfaction to attain all the desires and necessities that life offers and requires (Kapoor, Dlabay, Hughes, 2014). The financial planning process requires one to assess their current financial situation, develop goals, develop alternative courses of action, evaluate alternatives, create and implement a financial plan, and review as well as revise the plan (Kapoor et al., 2014).
This paper examines the strategic management sector pertaining to financial planning and decision making methods. Managers use these tools often, in order to carry on day to day operations at their firms. Finding the right combinations of cost allocation and implementing strategic measures, can be complex at times. However, to remain competitive in the industry, companies utilize benchmarking and other techniques in order to monitor their competitors’. This paper analyzes various approaches that managers may use, in order to make sound financial planning and decision making.
The management of cash is essential to the survival of any organization. Managing an organization’s financial operation requires knowledge of the economy and ways to maximize revenue. For any organization to operate on a daily basis adequate cash flow is required. Without cash management the organization will be unable to function because there is no cash readily available in case of inconsistencies in the market. Cash is also needed to keep the cycle of the company’s operations going.
A reflection of the work done to date in this course has given me much clarity on the goals that I wish to achieve in my life and the directions that I need to take to achieve them. In module three, I was able to start a financial planning process, in which I was able to determine my current financial situation concerning income, savings, living expenses, and debts through the utilization of a balance and income statement; financial objectives and personal goals sheet. I prepared a list of current asset and debt balances and amounts spent for various items providing me with a foundation for financial planning activities. In module Five, my financial process continued through the evaluation of a home affordability in which I used Maximum Mortgage
Financial theories are the building blocks of today's corporate world. "The basic building blocks of finance theory lay the foundation for many modern tools used in areas such asset pricing and investment. Many of these theoretical concepts such as general equilibrium analysis, information economics and theory of contracts are firmly rooted in classical Microeconomics" (Oaktree, 2005)