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Role of Financial Management
Strategic Role of Financial Management
Objectives of Financial Management
Profitability
Growth
Efficiency
Liquidity
Solvency
Short term
long term
Interdependence with other key business functions
Influences on financial management
Internal sources of finance
Retained profits
External sources of finance
Debt- Short term borrowing
Overdraft
Commercial Bills
Factoring
Long term borrowing
Mortgage
Debentures
Unsecured notes
Leasing
Equity
Ordinary Shares
New issues
Rights issues
Placements
Share purchase plans
Private equity
Financial institutions - banks
Investment Banks
Finance & Life insurance companies
Superannuation funds
Unit trust
THE Australian Securities Exchange
• influence of government
Australian Securities and Investments Commission
Company taxation
Global market influences
Economic Outlook
Availability of funds
interest rates
Role of Financial Management
Planning and Implementing - fiancnail needs
Budgets
Record Systems
Financial risks
Financial Controls
Debt and Equity Finance
matching the terms and source of finance to business purpose
Financial consideration
Factors - 1
Financial Consideration
Factors - 2
Financial Considerations
Factors - 3
Financial Consideration
Factors - 4
Financial Consideration
Factors - 5
Monitoring and Controlling
- Cash flow statements
Income Statement
Balance Sheet
Financial ratios
Liquidity - current ratio (current assets / current liabilities)
Gearing - debt to equity ratio (total liabilits/ total equity
Profitability - gross profit ratio (gross profit / sales)
Net Profit ratio (net profit / sales)
; return on equity ratio (net profit ÷ total equity)-
Efficient - expense ratio (total expenses ÷ sales)
Accounts receivable turnover ratio (sales ÷ accounts receivable)
Comparative ratio nalysis
limitations of financial reports – normalised earnings
Captialising Expenses
Value assets
Timing Issue
Debt Repayments
ethical issues related to financial reports
Financial Management Strategies
Cash flow statments
Distribution of payments
Discount for early payments
Factoring
– control of current assets – cash
Receivables
Inventories
– control of current liabilities – payables
Loans
Overdrafts
Strategies - Leasing
Sale and Lease back
Profitability Management
- Cost controls
Fixed
Cost Centres
Expense Minimization
Revenue Controls
Marketing objectives
Global Financial Management
Exchange Rates
Interest Rates
Methods of international payment
Letter of Credit
Clean Payment
Bill of Exchange
Hedging
Derivatives
