financial management essay questions and answers

financial management essay questions and answers

Critical Essay Questions and Answers in Financial Management

1. Introduction to Financial Management

What are the primary functions of financial management in a business organization? The primary financial functions in a business include concerns with liquidity (sufficient short-term resources) and solvency (sufficient long-term resources); financing – determining the best way to raise the required funds; returning funds – providing a return to investors for the use of their money; investing funds – spending the funds raised effectively and efficiently; and other activities such as financial control, management of risks associated with financial transactions, and the management of financial transactions. How are primary finance decisions evaluated? In the same way that investors analyze potential investments, the financial manager evaluates decisions based on their contribution to value in the business. However, since the consequences of business decisions can only be partially shown in financial returns (profits at best), and since some of the returns are not expected for a long time, value reflects the financial returns and the timing of those returns. According to modern financial management, the business manager’s primary task is to make decisions that help the business create, maximize, and sustain value. The question: “Does a proposed action create value?” becomes paramount.

The course in financial management provides an overview of the field, giving students the groundwork in advanced finance or finance-related business discipline. Students will learn basic financial tools and methods that can be used to help a business reach its goals, and they will become familiar with typical uses of financial information. A focus will also be on basic financial modeling and how students can apply simple spreadsheets to develop and analyze financial decisions.

2. Key Concepts and Theories in Financial Management

2) How does finance and financial management associate with other business functions? Financial management is a linking process between the economic operations and others of an agricultural business. It must involve other people in making many decisions. Plans for the future need to be bridged to the current production, marketing, postmarketing, evaluation, and decisions between strategies. Its decisions do not occur isolated in financial departments. Nevertheless, financial managers need to know how their decisions can impact other operational aspects in the company, and other operators should participate in working and reviewing these potential changes. In practical agricultural businesses, many operational decisions are separated, and responsibilities are given in terms of labor resources, equipment, supplies, and measurement. To be successful in such an environment, financial management should be explained throughout the operational management structure. Financial planning data must be provided to define these initiating operational variables of an enterprise. It is essential to know the life framework and operating conditions in this farming area, making specializing decisions possible. With the available financial resources, operation strategies can determine proper technologies for economic and operational production goals. The nature and time frame upon which other decisions revolve must be noted.

1) What is finance and financial management? Finance describes the management, creation, and study of money, banking, credit, investments, assets, and debt. The term refers to the creation and control of money and its value in society on a macro and micro level, including personal, corporate, and international finance. Financial management allocates savings to investments. There are many ways to allocate and/or use savings (e.g. through loans, investments, stocks and bonds) in different financial markets. Individuals and companies usually turn to financial professionals for accounting and/or professional investment and mutual funds. The management and regulation of the environment and policies of institutions determining money supply is an important subfield of finance. These organizations usually consist of central banks and governmental departments. In the world of investments, security valuation is usually of great concern, especially if it involves the combination of loans with numerous templates.

Concepts in financial management

3. Essay Questions and Analysis

– Consider risks when making capital budgeting decisions. Not the firm’s total income, but its risk-adjusted cash flow is important. – Time should be taken into consideration. A good must be in possession now, at some time in the future, or at multiple times in the future. – Financial leverage ratios should be utilized to determine the extra common stock required to decrease the firm’s credit risk to a target level without changing the firm’s operation. – Major decisions should be taken for the company to actively transmit signals to the markets. – Market values of debts and equities should be used when assessing the relationship between capital structure, cost, and value. – Value should be maximized, not earnings.

A financial manager should be able to determine the capital requirement for the firm in order to achieve maximum profits. This is the fundamental goal of a financial manager. To reach this goal, the following strategies and principles have been set up to be used when making financial decisions in a corporation:

What strategies and principles should a financial manager use when making financial decisions in a corporation?

4. Case Studies and Practical Applications

While the system of internal control identifies and contains frauds by means of financial management, it is not entirely possible to avoid frauds by means of financial management. Generally, fraud is committed by top management or close relatives of the owners, and they use their control over books of accounts for this purpose. They may or may not bypass internal controls. Even if internal controls are bypassed, there is every likelihood of detection provided the same person does not control implementation and subsequent verification of internal controls. Public interest therefore raises ethical considerations in the field of accounting. Should not all frauds be exposed even if that results in several financial bankruptcies? If yes, how to ensure that it happens? At the same time, can accountants afford the risks in terms of damage to their reputation and livelihood? Once again, the onus is on external auditors. Are they capable of performing this role?

5. Conclusion and Future Trends

– Can an entity exist or operate a business without financial market participation, and why does an entity participate in financial markets? – Which entity is interested in financial markets? – Why does an entity require funds? – What are the key resources of an entity? – What is the role of the financial manager? – How has the role of the financial manager changed over time? – What unique resources does the financial manager care for or make available to the organization? – What are the key responsibilities and challenges faced by today’s financial manager? – What is required to succeed as a scholar or financial manager in financial management? – Will recent trends or developments continue into the future?

The finance function within the business community has undergone many changes since the early part of the 20th century. Critical to these changes has been the manner in which the financial manager operates within the corporate business form and indeed the relevance of the limited liability company under the Anglo-Saxon legal system. By means of addressing the above points, it has been possible to draw several conclusions regarding the likely future of the financial manager within the corporate environment. In order to achieve the above, several questions were addressed: