1. What Is Financial Management?
All the activities concerned with obtaining money and using it effectively
Determining the best ways to raise money
Ensuring money is used in keeping with the organization’s goals
Planning
The need for financing
When expenses are high or sales are low
Opportunities to expand
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2. The Need for Financing Short-term financing Long-term financing
Money that will be used for one year or less
Cash flow—the movement of money into and out of an organization
Inventory—speculative production (the time lag between the actual production of goods and when the goods are sold)
Long-term financing
Money that will be used for longer than one year
Often involves large amounts of money
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3. Cash Flow for a Manufacturing Business
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4. Comparison of Short- and Long-Term Financing
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5. The Need for Financial Management
Risk-return ratio
Based on the principle that a high-risk decision should generate higher financial returns for a business and more conservative decisions often generate lesser returns
Proper financial management can ensure that
Financing priorities are in line with organizational goals and objectives
Spending is planned and controlled
Sufficient financing is available when it is needed
Credit customers pay on time and delinquencies are reduced
Bills are paid promptly
Taxes are paid in a timely manner
Excess cash is invested in interest-bearing securities
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6. Careers in Finance Skills and traits of successful financial managers
Responsible and honest
Strong background in accounting or math
Knowledge of how to use a computer to analyze data
Expert in written and oral communications
Jobs
Bank officer
Credit officer
Financial analyst
Financial planner
Insurance analyst
Investment account executive
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