Finance - Role Flashcards
Financial Management
The planning + monitoring of a business’s financial resources to enable the business to achieve its financial objectives.
Strategic Role
To ensure the business achieves its goals and objectives
Strategic Roles:
* setting financial objectives
* sourcing finance
* preparing budgest and forecasting furture finances
* preparing financial statements
* maintaining sifficient cash flow
* distributing funds across business
Objectives
Objectives
P.L.E.G.S
Profitabilty
Liquidity
Efficieny
Growth
Efficiency
Short-Term + Long-Term»_space; S.M.A.R.T
Objectives
Liquidity
The extent to which a business can meet its financial commitments in the short term (less than 12 months)
* Good liquidity = 2:1 (assets to liabilities)
Objectives
Solvency
The extent to which the business can meet its financial commitments in the** long-term** (over 12 months)
* Gearing: measures the %age of the business’s assets which are funded by external sources
Objectives
Short + Long Term
Short: tactical (1-2 years) and operational (day-to-day) plans
Long: strategic plans. +5 yrs. tend to be broder than short
* Long term requires short term to be achieved
* S.M.A.R.T»_space; specific, measurable, attainable, relevant, time-bound
Interdependence
Marketing
Marketing relies on Finance to allocate enough funds to devise and implement their marketing mix, specifically promotional strategies
Finance relies on Marketing to promote the products for sales + therefore income
Interdependence
Operations
Operations relise on Finance to allocate adequate funds to purhcase inputs + resources used in the transformation process to product outputs
Finance relies on Operations to produce the products needed for the business to make money
Interdependence
Human Resources
HR relies on Finance to provide adequate funds to pay wages and salaries as well as monetary benefits to retain highly skilled staff
Finance relies on HR to manage the staff effectively
