Financial Management Overview Essay.
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Details:Written Assignment 1: Financial Management Overview Write a 3 to 4 page in APA format paper that answers the following: Explain the concept of financial management in terms of its four basic areas. Define and explain the overarching goal of financial management. Be sure to explaining the impact the Sarbanes Oxley Act has on the financial management environment. Explore the differences in business organization forms (i.e. sole proprietorships, partnerships, and corporations. Explain one of three financial management decisions and how they play a part in a corporations financial successes or failures.
Here’s a snippet of the essay.
Financial management is the application of managerial principles on matters to do with finance decisions. It involves procurement and effective use of resources or funds in an organization. Therefore, financial management main concern is effective management of funds in a firm (Horne & Wachowicz, 2008). In order for a business to realize its goals, proper directing, planning, organizing, financing and investment control are essential. Financial management ensures that all this functions run properly.
Cash management is one of the areas that financial management controls. The aim of this function is to ensure that the business enterprise has enough resources so that financial obligations are met on time. Cash deficits and budget’s forecast deviation can cause severe damage to a company operations and image. For instance, a business may be unable to deliver a major order because of lack of funds needed for the purchase of raw materials for product making. Accounts payable and accounts receivable management is a critical component of managing cash effectively. The main concern of a business owner to be sure that all the business debts are collected on time i.e. accounts receivable. Additionally, he also seeks to ensure that bills are paid quickly and creditors sorted out. By doing this, the company image and reputation is improved and the credit worthiness of the business to suppliers increases.
Forecasting and planning. The planning aspect in financial management involves accurate forecasting of the business expenses, revenues and net profit. The owner of the business uses forecast, also known as a budget for company management. Considerable negative deviations of forecast show that the performance of a company in its market, and the environment has changed (PEFA, 2005). Financial management analyzes variances, then comes up with strategies and methods that ensure that a business achieves it objectives, and meets its forecasts.
Financial reporting is a major area in financial management. The management team and the business owner need accurate and timely reports. These reports are essential for effective running of a business and decision making. Employees in charge of financial management have a responsibility of coming up with information needed for decision making. Reports are then designed to avail this information to the management team in a useful format. The means of measures of performance vary from company to company. For example, in a supermarket performance depends on sales. A decline in sales would force the finance management team to investigate the cause of this (Pandley, 1996).