Textbook Notes (363,041)
Canada (158,169)
Commerce (1,634)
Rita Cossa (56)
Chapter 14

Chapter 14 – Financial Management.docx

9 Pages
Unlock Document

McMaster University
Rita Cossa

Chapter 14Financial ManagementThe role of finance and financial managers Finance the function in a business that acquires funds for the firm and manages those funds within the firmFinancial management the job of managing a firms resources so it can meet its goals and objectivesFinancial managers managers who make recommendations to top executives regarding strategies for improving the financial strength of a firmFinancial managers must understand accounting and accountants must understand financeA key responsibility if a financial managers tasks is to obtain money and then control the use of that money effectivelyThey are responsible for seeing that the company pays its bills for paying the companys bills at the appropriate time and for collecting overdue accounts receivable to make sure that the company does not lose too much money to bad debtsCritical to small and medium sized businesses3 most common ways for a firm to fail financially 1 Undercapitalization lacking funds to start and run the business 2 Poor control over cash flow3 Inadequate expense controlFinancial Planning Financial planning is a key responsibility of the financial manager in a businessIt involves analyzing shortterm and longterm money flows to and from the firmThe main objective is to optimize the firms profitability and make the best use of its money3 steps of financial planning 1 Forecasting both shortterm and longterm financial needs 2 Developing budgets to meet those needs 3 Establishing financial control to see how well the company is doing what it set out to doForecasting financial needs Shortterm forecast forecast that predicts revenues costs and expenses for a period of one year or lessCashflow forecast forecast that predicts the cash inflows and outflows in future periods usually months or quartersLongterm forecast forecast that predicts revenues costs and expenses for a period longer than one year and sometimes as far as five or ten years into the future
More Less

Related notes for COMMERCE 1E03

Log In


Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.