Question

What are the main tasks of the financial manager (CFO)? Explain briefly.

Answer 1

CFO (Chief Financial Officer) is amongst the members of KMP (Key Managerial Personnel) of the company. CFO is responsible for executing the financial matters. Some of the main functions/taks of financial manager includes:

• Estimating about the Capital Requirements - it is the primary task of financial manager. Funds may be required for purchasing fixed assets, meeting working capital needs, business expansion etc. Both Short-term and long-term requirements of funds are estimated by financial manager.
• Deciding Capital Structure - The Capital structure comprises of debt and equity. Whether to raise capital through equity or debt is decided by the financial manager. Moreover, the they take due care to achieve minimum cost of capital and maximum shareholders returns.
• Choosing Sources of Funds - This responsibility is related to from where the funds are to be raised. It may be from equity capital, preference capital, banks, fixed ineterest bearing instruments, banks or financial instititutions etc.
• Procuring Funds - The decision regarding procurement of funds is also done by the financial manager. This means requirement of negotiation with the creditors or financial institutions.
• Utilising funds - When to utilise funds, from where to utilise, how much to retain funds, are al the decision made by financial manager in consultation wiht the compliance officer.
• Management of Cash/Cash Equivalents - It is an important function of financial manager for managing the cash, cash equivalents and other assets. It includes managing cash inflows and outflows for purchase of materials, day-to-day expenses, payment of wages etc.
• Control over finance of company - \Evaluating and examing the finacial performance of the company is also an important task of financial manager Some of them includes evaluation of Return on investment (ROI), budgetary control, cost control, internal audit, break-even analysis and ratio analysis.