Financial Manager Essay Example | Topics and Well Written Essays - 1000 words

Financial Manager - Essay ExampleAll the operations of the bank line are initiated and supported by the financial managers evaluations and judgments. The cost/benefit analysis, the timings of the cash flows, the sources of finance and provision for liquidity are pivotal to the decision-making process of financial management.In the context of the above, a financial managers role is three fold. He has to perform the functions of hood budgeting, capital structuring and operative capital management simultaneously, providing effective risk management. thusly a financial manager best serves the owners of the business (shareholders) by identifying goods and services that add value to the firm because they are desired and valued in the set free marketplace.Every business enters into long-term investments in anticipation of promising returns and higher growth. Such investments call for efficient assessments and effective decisions by the financial manager. This process of grooming and managing a firms long-term investments is better known as capital budgeting. In capital budgeting, the financial manager tries to identify investment opportunities that are worth more(prenominal) to the firm than they cost to acquire. This means that the value of the cash flow from generated by an asset exceeds the cost of that asset. Evaluating the size, timing, and risk of future cash flows is the essence of capital budgeting. ... In this area two main issues face the financial manager. One is that how much should the firm borrow and two is that what are least expensive sources of funds for the firm. The capital structure (or financial structure) refers to the specific mixture of long-term debt and equity the firm must use to finance its operations. In addition to deciding on the financing mix, the financial manager has to decide exactly how and where to raise the money. The expenses associated with raising long-term financing is a considerable factor. Therefore different possibi lities have to be conservatively evaluated. Businesses borrow money from a variety of lenders in a number of different ways. Choosing among lenders and among loan types is another job handled by the financial manager. A financial manager is also responsible for everyday financial activities and for the working capital management. Managing the firms working capital is a day-to-day activity that ensures the firm has sufficient resources to stretch forth its operations and avoid costly interruptions. The term working capital refers to a firms short-term assets, such as inventory, and its short-term liabilities, such as money owed to suppliers. The working capital management involves a number of activities related to a firms receipt and disbursement of cash. The financial manager must plan for and respond to matters as to the amount of money of cash and quantity of inventory to be kept on hand, should credit be allowed on sales to customers and which sources should be used for short- term financing as and when the need arises. The above three functions of financial management are very broad and only a brief overview of each category is given. By