AFM131 Chapter Notes - Chapter 17: Bank Reconciliation, Public Company, Financial Plan

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Module 9
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The role of financial managers
What is financial management?
Finance: acquiring/managing funds within the company
Financial management: managing resources to meet goals or objectives
Financial manager
o Day to day planning for the future
o Safeguarding cash assets
Minimize cash on hand
Segregation of duties
Bank reconciliation
Discussion question
How can a profitable company, with growing sales, be forced to close their doors?
o Bad management of Accounts Receivable
You may be selling goods but you are not receiving the profit from them
immediately
o Bad management of inventory
If you have too much, keeping track of it can be a large issue
The most common ways for firms to fail financially:
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it’s  oe
Describe some of the differences between financial management at a private vs. public
company
o Private company
More control over business and financial decisions
Maintain ownership of the company
o Public company
Less control over business and financial decisions since stakeholder
interests need to be considered
The financial planning process and three key budgets
Financial planning
Forecasting financial need
Short-term forecast: predicting revenues, costs, and expenses for a period of one year
or less
o Cash-flow forecast
Long-term forecast: predicting revenues, costs, and expenses for periods longer than
one year
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