The role of a financial manager is one complex, which requires a good understanding of how the functions of the overall business and financial knowledge. Head of financial operations is called the head of Finance (CFO).
Corporate structure vary, but a financial manager responsible for the common things that are the same across the Board. The Manager is responsible for managingthe budget. This involves allocating money for different projects and segment so that the business can continue to operate, but the best projects get the necessary funds.
Managers are responsible for figuring out the financial projections for the business. Development of new products, for example, requires capital investment from time to time. The financial manager is responsible for knowing how much this product is expected to cost and how much revenue is expected to get so for example he can invest the appropriate amount in the product. This is a lot harder than it sounds because there is no accurate financial data for the future. The Finance Manager will use data analysis and estimates of value, but it's very rare that he can be 100% sure of future cash flow.
Find out the value of an operation is one thing, but it is another thing to find out whether it is worth financing. There is a fee for the investment in the form of money, both the opportunity cost of not investing in other places, the cost of borrowing money, or cost of equity sales. Financial managers use a number of tools, such as setting capital costs (cost of money from time to time, which will be explored furtherin depth later) to determine the cost of financing.
At the same time that this occurs, the financial manager must also ensure that the business has enough money to pay the financial obligations that will come without the stockpiling of the actual assets can be invested. This is a delicate dance between the responsibility of the short term and the long term.
CFO is head of the Department of finance and is responsible for all the things thatare the same as/his subordinates, but also people who must sign that all of the company's financial reports are accurate. So he is also responsible for financial planning and record-keeping, as well as financial reporting to higher management.
Financial managers are not only experts in the financial projections, so it should also have an understanding of the accounting system in place and the business strategy for the coming years.
The financial activity of an enterprise is one of the most important and complex ofa company. Therefore, in order to take care of this activity a financial manager does all the necessary financial activities.
A financial Manger is a person who takes care of all the important financial function of an organization. The responsible person must maintain far sightedness to ensure that funds are used in the most efficient manner. His actions directly affectingProfitability, growth and goodwill of the company.
The following are the main functions of financial manager:
Raising of Funds
In order to meet business obligations it is important to have enough cash and liquidity. A company can raise funds by way of equity and debt. It is the responsibilityof a financial manager to determine the ratio between debt and equity. It is important to keep a good balance between equity and debt.
Allocation Of Funds
After funds are raised through different channels the next important function is to allocate the funds. Funds should be allocated in such a way that they are optimallyused. To allocate the funds with the best way possible the following points must be observed
- The size of the company and the ability of its growth
- The status of the assets whether they are long term or short term
- Mode where the funds raised
This financial decision directly and indirectly influence other managerial activities. Therefore, the formation of a mixture of good and appropriate asset allocation funds is one of the most important activities
Profit planning
Profit productive is one of the primary functions of any business organization. Profit productive is important for the survival and continuity of the organization. profitplanning refers to the proper use of the profits generated by the company.
Profit arising due to many factors such as pricing, competition, economic circumstances, the mechanism of supply and demand, cost and output. A healthy mix of fixed and variable factors of production can lead to increased profitability of the company.
fixed costs are incurred by the use of factors of production such as land and a fixed machine. In order to maintain the tandem, it is important to continue to appreciate depreciation costs fixed costs of production. Opportunity cost must be calculated to replace the production of factors that has wear and tear is thrown. If this is not observed then it's fixed costs can cause large fluctuations in profits.
Understanding The Stock Market
The company's shares traded on the Exchange, and there is a continuous sales and purchases of securities. Therefore a clear understanding of the capital markets is a crucial function of a financial manager. When effects are traded on the stock market there involves a huge amount of risk involved. Therefore financial Manger understand and calculate the risk involved in trading these stocks and bonds.
At the discretion of a manager of finance as a way to distribute profits. Many investors do not like companies to distribute their profit among shareholders as dividends instead of investing in the business itself to enhance growth. The practice of afinancial manager directly impact operations in the capital market.
