FINANCIAL MANAGEMENT

Financial Management



FINANCIAL MANAGEMENT

FINANCIAL MANAGEMENT

Financial management, for a business, is a very important technique. This significant facet does not get the importance it deserves because the entrepreneurs are usually ignorant of its use and the advantages associated with it. The financial reports can assist a company in taking crucial decisions for the future of the company. There are a lot of advantages of financial management in a company. It helps in generating the financial and accounting reports for the company. It is very crucial for a company to maintain the record of the capital that has been spent in the business. When a manager examines the financial reports of his company, he would become knowledgeable about all expenditures of the company. The revenues from different areas, products and the salesmen, he will be able to focus on everything in the business. (Baltzell 1987, Pp.87)

The usage of financial ratios can be helpful for any company in making their decisions. Financial ratios provide a manager with all the information that one needs to know about a business. Moreover, these ratios are very easy to work out. The financial ratios are not very crucial, but it can help a company point out the areas for improvement.

The development of the financial statements of the company is a part of the financial management. All the patterns in revenues and expenditures are uncovered with the help of these Statements. The trend of sales comes into focus whether it is influenced by the time of the year, the changing taste of consumer or some other factors. This helps a company to manage their inventories in a better way, optimize the levels of staff and promotion of sales. The varying expenditures and unauthorized expenditures could be supervised with the help of the financial Statements. (Baliga, Moyer, and Rao, 1996, Pp. 41)

FINANCIAL CONTROLS IN THE COMPANY

To manage the financial obligations in an effective manner, the company must develop a sound, realistic, but still challenging budget by determining the actual amount of money needed to open your business (start-up costs), and the amount needed to keep it open (operating costs), running and thriving.

In my business, there are the following controls.

Watching the cash flow. The finance managers has to know about need the money to fund the weekly cash requirements in the way of everyday business operations, business acquisitions, long-term investments and borrowings serviceability. Whatever extra cash available should be parked into high interest earning account that will produce constant returns.

The inventory days are important because slow-moving stock i.e., not competitive and outdated stock, cannot bring the funds at the desired level to expand our offerings and grow the operations of the company. It will slow down the growth rate and cut the sales turnover. The business will decline and suffer because of slow-moving sales figures.

The handling of the account receivables days is critical for various reasons, and there is a special focus on this in our company. Firstly, slow paying accounts bring many problems to your business ...