Managing Financial Resources
Finance—business function of planning, obtaining, and managing a company’s
funds in order to accomplish its objectives in the most effective possible way.
Finance manager—employee responsible for developing and implementing the
firm’s financial plan and for determining the most appropriate sources and uses of
funds.
1. The major responsibility of financial managers is to develop and implement a
financial plan for their organization.
2. The firm’s financial plan is based on forecasts of expenditures and receipts for a
specified period and reflects the timing of cash inflows and outflows.
3. The financial managers systematically determine the company’s needs for funds
during the period and the most appropriate sources for obtaining them.
4. In short, the financial manager is responsible for both raising and spending
money.
Chief financial officer—top finance executive of a corporation; usually reports
directly to the firm’s CEO.
VP for Financial Management
Treasurer
Controller
All address the risk-return trade-off
A. Organizations are placing greater emphasis on measuring and reducing the costs of
conducting business as well as increasing revenues and profits.
B. Financial managers are executives responsible for developing and implementing their
firm's financial plan and for determining the most appropriate sources and uses of funds.
C. The finance organization of a typical company consists of three levels, including:
•at the top is the CEO -- Chief Executive Officer
•second there is the CFO -- Chief Financial Officer
•thirdly, there are three executives, who are commonly called the vice president for
financial management, the treasurer, and controller.
The Financial Plan
Document specifying the funds a firm will need for a period of time, the
timing of inflows and outflows, and the most appropriate sources and uses
of funds.
What funds will the firm require during the appropriate period of
operations?
How will it obtain necessary funds?
When will it need more funds?
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