BU121 Study Guide - Final Guide: Longrun, Financial Statement, Income Statement
Document Summary
Financial management is made up of: accounting provides information, finance makes decisions about the acquisitions, disposition and management of capital with help of accounting information. Liquidity keeping the money in a form that can pay bills. Stability making decisions that keep the business alive: profitability. Operate the business to be as profitable as possible. Risk-return tradeoff: must find a balance between risk (viability) and return (profitability) to maximize return to shareholders. Determining financial resources required: aides budgeting - disposition (how the capital is used) Obtaining financial resources required: this is financing the acquisition of capital (getting money) Managing the financial resources effectively for: working capital management. Inflows and outflows on a daily basis: investing. Long term: develop budgets to meet those needs. Cash budget: establishing financial control (measuring to see if you have reached that budget) Helps stay organized by promoting communication and coordination to the subunits of the organization systems approach .
