Financial function
- 2. OUTCOMES After studying this chapter, a person will be able to: Identify the financial function as a key business function. Explain finance as a management task in relation to planning, organising, leading and controlling. Distinguish financial decisions on the various managerial levels. Identify the different terminology as explained in the financial statement. Explain and interpret the various financial ratios. identify advantages and disadvantages of budget.
- 3. INTRODUCTION The subject to finance certainly affects all people as will as organisations. Faces of finance which are pertinent to the efficient operation of an organisation will be explained in this chapter. In general finance can be defined as "the art and science of managing money". This chapter, though, will concentrate on understanding finance and financial management as a key business function in a profit-driven organisation.
- 4. The management task of financial management Financial management entails planning for the future of a business organisation to ensure a positive cash flow. It includes the administration and maintenance of financial assets of the organisations. The primary concern of financial management is the assessment of the financial quantifications. A financial manager evaluates the available data to determine the performance of an organisation.
- 5. Finance is an inter-functional approach referring to both the management of financial decision and investment decision. Some experts refer to financial management as the science of money management. The financial statement provide a fair representation of an organization's financial performance and financial position. The financial statement consist of the statement of comprehensive income and loss, statement of financial position and the statement of cash flow.
- 6. ADVANTAGES OF BUDGET. •Budget compel management to plan in advance. •Budget require management to analyse its problem early on. •Budget require the assistance of the entire organisation. •A realistic budget motivates personal to achieve their goals. •Budget provide the instrument of periodically testing.
- 7. THE BUDGET PROCESS INCLUDES THE FOLLOWING STEPS: 1.Set the budget guidelines. 2.Prepare the sales budget. 3.Initial preparation of operating budget components. 4.Negotiate to evolve final plans for each component