Question

In: Finance

Why is the financial management position becoming so important? What do financial managers do and what...

Why is the financial management position becoming so important? What do financial managers do and what types of businesses employ financial managers? What are the responsibilities of and need for financial managers?

Solutions

Expert Solution

The financial management position is becoming important because financial managers are responsible for all kinds of financial decisions taken by an organization. These decisions are taken only when the financial managers give their consent.

All kinds of projects that the company wishes to pursue are screened by financial managers. They weigh the pros and cons, the economic feasibility and long term effects of the project. Analysis such as NPV, Cost benefit analysis are made and ratios such as profitability index and benefit cost ratio are calculated to judge the project's suitability and viability. Once the project shows long term financial standing, it is then approved by financial managers to be undertaken by the organization. Thus the overall financial health of organization depends on financial managemers.

All big businesses employ financial managers. Every business needs a team of financial managers without which it will make choices regarding project selection and will not be able to function for a long time.

Financial managers have the following responsibilities:

  • Drafting of financial reports and sending the same to management.
  • Interpreting financial analysis statements and recommending actions to take on them
  • Providing advice on investments to make and strategies to employ.
  • Ensure that the organization remains financially strong by taking to the extent it is possible correct financial decisions.

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