Financial Management

Fin an cial M a na gem en t What w ill your out look t ow ar ds m aint enance of liquid asset s t o ensur e t hat t he fir m has adequat e cash in hand t o m eet it s obligat ions at all t im es?

:: AN SW ER ::

Alm ost ever y act ion of com pany has financial im plicat ions, m anager r esponsible for or w it h over sight of cash flow get dir ect ly involved in m any funct ional ar eas of t he business. Cash flow m anager alt hough in lar ge com pany t he financial m anagem ent funct ion m ay be br oken dow n int o var ious segm ent s and t he cash flow m anagem ent segm ent m ay concer n it self pr im ar ily w it h shor t t er m m anagem ent issues, or t he daily cash flow m anagem ent t ask.Exam ples of t hese w ould be t he m aint enance of only m inim um balance in non- int er est bear ing bank account s, t he m ovem ent of excess cash int o shor t - t erm invest m ent , and t he m aint enance of adequat e cash balance t o cover t he nor m al operat ing expenses of t he com pany t hat m ust be paid fr om day t o day. I n any event , t hose r esponsible for shor t ter m cash flow m ust consider t he long t er m financial m anagem ent obj ect ive of t he com pany. Obj ect ives of t he Financial Managem ent 1. To ensur e t hat t he com pany alw ays has enough cash t o m eet it s legal obligat ions and avoid illiquidit y – i.e. t o m aint ain adequat e shor t t er m financial flex ibilit y. 2. To arr ange t o obtain w hat ever funds ar e r equir ed fr om ext er nal sour ces at t he r ight t im e , in t he r ight for m and t he best possible t er m s. 3. To ensur e t hat t he com panies asset s and liabilit ies ; cur r ent and long t er m , financial and operat ing ar e ut ilized as effect ively as possible. 4. To for ecast and plan for t he financial r equir em ent of fut ur e oper at ions. 5. To m ake all decisions & r ecom m endat ions on t he basis of one pr im ar y cr it er ion, m axim izing t he long t er m value of t he or ganizat ion . t his obj ect ive...