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24 Apr 2011

Document Summary

Management chapter 20: financial decisions and risk management. Financial managers: those managers responsible for planning and overseeing the financial resources of a firm. Finance: the business function involving decisions about a firm"s long-term investments and obtaining the funds to pay for those investments o. Four responsibilities: determining long-term investments; obtaining funds; conducting firm"s everyday financial activities; help manage risks. To increase firm"s value (and stockholders" wealth) by making decisions to improve status (in corporations, profits = increase in value of common stock) Cash flow management: managing the pattern in which cash flows into the firm in the form of revenues and out of the firm in the form of debt payments (idle cash should be invested) Financial control: the process of checking actual performance against plans to ensure that the desired financial status is achieved (sales are unpredictable so financial adjustments may need to be made) < budgets provide measuring stick to evaluate performance.