Textbook Notes (369,137)
Canada (162,407)
MGTA02H3 (363)
Chapter 10

Chapter 10 Textbook Notes

7 Pages

Management (MGT)
Course Code
Chris Bovaird

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MGTA04 01 Chapter 10: Financial Decisions The Role of the Financial Manager (pg. 221 223) - Financial mangers 5O,3,3.43974O9K0,.6:L8L9L43,3L85078,O419K0.425,38 financial assets - the business activity known as finance (or corporate finance) typically involves four responsibilities: a) determining a 1L728O43J-term investments b) obtaining funds to pay for those investments . .43:.9L3J9K01L7280;07,1L3,3.L,O,.9L;L9L08 d) helping to manage the risks that the firm takes Objectives of the Financial Manager - Financial managers collect funds, pay debts, establish trade credit, obtain loans, control .,8K-,O,3.08,35O,31471:9:701L3,3.L,O3008 -M0.9L;0L894L3.70,80,1L728;,O:0 - ..4:39,398.70,90,9,94701O0.9,1L7281L3,3.L,O89,9:8,31L3,3.L,O2,3,J0782,N0 decisions for improving that status - !741L9897,38O,90894,3L3.70,80L34Z3078Z0,O9K for sole proprietorshipspartners; profits translates to an increase in the value of common stock for corporations Responsibilities of the Financial Manager - Responsibilities 419K01L3,3.L,O2,3,J07L3L3.70,8L3J,1L728Z0,O9K1,OOL3949K700 general categories: cash flow management, financial control, and financial planning Cash Flow Management - Financial managers must ensure that it always has enough funds on hand to purchase the materials and human resources that it needs to produce goods and services - Funds that are not needed immediately should be invested to earn more money for the firm - Cash flow management is 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 - Firms are learning to put their idle fundscash to work in order to gain additional income and avoid having to borrow from outside sources (savings on interest payments) Financial Control - Financial control is the process of checking actual performance against plans to ensure that the desired financial status is achieved - E.g. planned revenues based on forecasts usually turn out to be higher or lower than actual o Higher: cash can be deposited in short-term interest-bearing accounts or used to pay off short-term debt o Lower: may necessitate short-term borrowing to meet current debt obligations Financial Planning - A financial plan is a description of how a business will reach some financial position it seeks for the future; includes projections for sources and uses of funds - When constructing a plan, the financial manager must ask several questions: o What amount of funds does the company need to meet immediate plans? o When will it need more funds? o Where can it get the funds to meet both its short-term and its long-term needs? - The financial manager must develop a clear picture of why a firm needs funds www.notesolution.com
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