Question

Why should financial manager plan for uncertainty? For a business firm, what type of activities does financial management involve? How can effective financial management be helpful in uncertain economic times?

Answer 1

The finance department in any organization is responsible for planning and maintenance of economic transactions of the company and also to prepare the budget for future expenses and investments of the company . Financial management also involves in maintenance of financial records of the company and conducting activities like audits and maintaining proper tax structure for the company . A finance manager must also be prepared for uncertain conditions like fall in shares or changes in the value of currency so that the company can sustain in such situations with prior planning and budgeting . In this way the finance management can make sure that there are enough funds for the company if any uncertain economic conditions arise and the company can sustain any kind of damage due to these circumstances and hence is very helpful in these uncertain economic times.