1. What is financial management? Identify the duties and responsibilities of financial managers.

2. Identify and describe the major steps involved in financial planning.

3. Explain the role the operating budget, the capital budget, and the cash budget play in financial planning.

4. Identify and describe three types of short-term financing.

Solutions

Expert Solution

Answering only the 1st Question as per Chegg policy.

Q1. What is financial management? Identify the duties and responsibilities of financial managers?

Answer: Financial management is the management of the companies finances in such a manner so that the cost in terms of overheads, capital expenditure, direct cost etc is minimal and the profit maximized. It even includes the disclosure that the company is supposed to make to all the stakeholders in terms of annual reports. It even involves the process of financial projections which are used in valuation, raising IPOs, mergers, and acquisitions etc.

Financial management is extremely important in current scenario since a wide variety of projects are available with the organization but the best one has to be chosen in terms of the risk and return appetite of the company keeping in mind the opportunity cost of not accepting the other projects.

The duties and responsibilities of a financial manager are as follows:

1. Forecasting the future

It is the responsibility of the financial manager to forecast the future in terms of valuation etc to identify whether the company is underpriced or overpriced in the stock market.

2. Identifying a suitable projection

It is important to identify suitable projects by deploying techniques such as IRR, NPV, Pay Back period etc to choose the right project as per the risk and return appetite of the company.

3. Making the financial projections

It is the responsibility of the financial manager to present the annual statement to all the stakeholders as per the regulations of the companies act.

4. Capital allocation

It is the key responsibility of the financial manager to have a proper allocation of funds to maintain the continuity of the business. He even needs to forecast the feasibility of investment into the capital expenditure for the long-term growth of the company.

keosha answered 1 year ago

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