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Canada (510,399)
Rotman Commerce (1,103)
RSM100Y1 (287)


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Rotman Commerce
John Kloppenbord

Finance is the business function involving a firms day to day financial activities and decisions about a firms longterm investments and how to obtain those funds to pay for themFinance is broken into two major areas Corporate finance How companies obtain and use funds Investments Analysis of financial securities including how they are valued Process of raising the funds for companies can be considered under corporate finance The two pieces are linked and build on theexistence and efficient functioning of capital markets to be discussed next classSome FinanceRelated Careers Managers CEOs CFOs Works inside the organization Makes decision that will best bring in sustaining future profits for firm Traders Conducts trades for client firms to help meet their financial goals more shortterm focusedAnalysts CFAs evaluates investments and makes buy sell and hold recommendations on securities Financial planners CFPs assists individualsfirms in achieving longterm financial goals by setting up investing programs to do soResponsibilities of a Financial Manager 1Financial Control 2Financial Planning 3Cash Flow ManagementFinancial Control Checking actual performance against strategic plans to ensure that desired goals are achieved Making adjustments as required when plans change or do not work as intended Preparing budgets to ensure that sufficient cash is on hand to meet operationaldebt service needs Actual results that vary from the budget need explanation and adjustmentFinancial Planning A plan for achieving a desired financial status in the future Projections of revenue flows Sourcesplanned uses of funds Timing of when funds will be requiredCash Flow Management Managing the pattern of cash inflows revenues and outflows debt payments Investing funds that are not needed to service debt Funds must either be committed to maintaining the firm or earning interest not sitting idleThe Cash Flow CycleOrder materials purchase on credit Stock arrives Apply labour and build inventories Pay for materials and labour on borrowed funds in necessary Sell goods on credits Collect cash on sales repay borrowed fundsFinancing required during this periodFinance Requirement Between paying suppliers and receiving the cash from customers a company needs financing to keep up with operating and selling expenses An adequate amount of cash is needed to maintain daily operations and to pay bills on timeShortTerm Sources of Funds Allows firms to cover operational expenses and implement shortterm plans 1Trade credit Accounts Payables 2Secured and unsecured loans 3Commercial paper1 Trade Credit
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