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The plastic problem has become a major talking point across the entire world. Almost every country in the world is alarmed with how much plastic is being used and the effect it has on the environment. Plastic is an extremely convenient product to use. However, the problem with plastic is that when it is disposed […]
Omnichannel Retailing and its Benefits
The past few years have witnessed the rise of online retail. As a result, there has been a persistent debate about whether or not brick-and-mortar stores have outlived their utility. There are many critics who believe that this may not be the case. Even though online retail has significant advantages, it still lags behind traditional […]
Debt Ceiling in Sporting World
In the previous articles, we have already seen that sporting franchises are required to raise a lot of capital at regular intervals. Hence, they are required to regularly raise debt from the marketplace. However, it is important to note that the decision regarding how much debt can be raised by a sporting franchise is not […]
The Importance of Personal Finance
There is no shortage of education in the field of finance. There are various academicians who work tirelessly in the field of finance. Many theories have been developed, and many conjectures have been disproved. Every year thousands of people graduate with finance as their major. However, most of these people are trained in the field […]
The MasterCard Visa Duopoly
The global payments processing market is dominated by only two major players viz. MasterCard and Visa. Many experts find this perplexing. How is it possible that in the era of global competition, there is a market niche which is completely dominated by two players only? What makes it even more interesting is the fact that […]
Financial activities of a firm is one of the most important and complex activities of a firm. Therefore in order to take care of these activities a financial manager performs all the requisite financial activities.
A financial manger is a person who takes care of all the important financial functions of an organization. The person in charge should maintain a far sightedness in order to ensure that the funds are utilized in the most efficient manner.
His/Her actions directly affect the Profitability, growth and goodwill of the firm.
Following are the main functions of a Financial Manager:
In order to meet the obligation of the business it is important to have enough cash and liquidity. A firm can raise funds by the way of equity and debt.
It is the responsibility of a financial manager to decide the ratio between debt and equity. It is important to maintain a good balance between equity and debt.
Once the funds are raised through different channels the next important function is to allocate the funds.
The funds should be allocated in such a manner that they are optimally used. In order to allocate funds in the best possible manner the following point must be considered
These financial decisions directly and indirectly influence other managerial activities. Hence formation of a good asset mix and proper allocation of funds is one of the most important activity
Profit earning is one of the prime functions of any business organization.
Profit earning is important for survival and sustenance of any organization. Profit planning refers to proper usage of the profit generated by the firm.
Profit arises due to many factors such as pricing, industry competition, state of the economy, mechanism of demand and supply, cost and output.
A healthy mix of variable and fixed factors of production can lead to an increase in the profitability of the firm.
Fixed costs are incurred by the use of fixed factors of production such as land and machinery. In order to maintain a tandem it is important to continuously value the depreciation cost of fixed cost of production.
An opportunity cost must be calculated in order to replace those factors of production which has gone thrown wear and tear. If this is not noted then these fixed cost can cause huge fluctuations in profit.
Shares of a company are traded on stock exchange and there is a continuous sale and purchase of securities. Hence a clear understanding of capital market is an important function of a financial manager.
When securities are traded on stock market there involves a huge amount of risk involved. Therefore a financial manger understands and calculates the risk involved in this trading of shares and debentures.
Its on the discretion of a financial manager as to how to distribute the profits. Many investors do not like the firm to distribute the profits amongst share holders as dividend instead invest in the business itself to enhance growth.
The practices of a financial manager directly impact the operation in capital market.
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