Question

What is the goal of the finance manager? What tools, calculations, concepts, and analyses should the finance manager employ to be successful?

Answer 1

Goals of a Finance Manager - The goal of a finance manager is to maximise the stakeholders wealth and their satisfaction. Stakehiolders of an organisation can be Share holders, Government, Employees , Suppliers, Customers etc

Let us discuss how he can satisfy some of the parties

A ) Share holders - By increasing their wealth with better profits , Gaining market value , Paying regular dividends etc

B) Government - By paying regular taxes , Ensuring better compliance and Better reporting

C) Employees - By increasing the employee benefits and their salaries which will happen only when the firm has adequate profits

D) Suppliers and customers - For suppliers he has to ensure that he can make timely payments and for customers he has to ensure that he provides better products at low costs with the help of cost control and reduction

Tools Used by the finance manager -

- Budgeting

- Payroll management

- Cost Controlling

- Cost Reduction

- Working Capital Management

- Inventory Management

- External and internal reporting

Calculations used by the Finance Manager -

- Calculations relating to time value of money

- Fiancial Ratio Analysis

- Liquidity Analysis

- Taxation Workings

- Profit Calculations and Cost calculations

Concepts Used by a Finance Manager -

- Capital Structure of the entity

- Cash Management

- Planning

- Forecasting

- Organising liquid Funds

Analyses Used by the Finance Manager -

- Interest rate analysis

- Analyse the cash reserve

- Analyse the Marco economic factors and Micro economic factors

- Analyse the accounting principles

- Analyse the laws and regulations etc