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Role of financial Manager in the organization
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Financial Manager takes care of all the vital financial functions within an organisation. The responsibility scope include managerial activities to support and inform the organisation on all the financial matters. Financial manager analyses all the data prepared by the accountants, informs the senior managers, examines organisational financial status, review the auditor statement, and gives advice related to profit optimization. The corresponding actions have direct impact on the growth profitability and brand name the company.The indicates that the financial manager have to review both short term as well as long term consequences associated with organization's actions The primary functions of a financial Manager include: i) raising of funds through equity and debt by maintaining a good balance, ii) efficient management of funds for optimal utilization, iii) effective planning for profit usage, iv) clear knowledge of capital market for minimizing risk for trading shares and debentures (Chen, 2018). Hence, the overall role is to maximize the organizational value.
The financial environment
Financial environment is defined as the integral part of organizations' economy, in a defined financial framework. This foundation comprises of activities which serves people, firms and government. The sector in this context depicts a major part of a well-developed economy since, the individual who holds private properties has the potential to increase the capital. The prime components within a financial environment are financial manager, financial markets, financial institutions and investors. Financial manager in this scope is responsible for making decision to invest company's fund with minimum risk. Financial market depicts the forum which facilitate the smooth flow of funds within government organizations and investors. Financial institutions acts as intermediaries for transforming savings of individual, government, and organizational investment (Klieštik, Kocišová, &Mišanková, 2015). Investors are those financial institutions or individuals which funds to organizations, individuals (in need) and government agencies. A financial environment is also subjected to the business cycle which describes the growth and fall in the economy and ultimately determines the business conduct.
Source of finance
Arrangement of finance for each department in a company is a major concern. Financial requirement is a long-term requirement (fixed capital requirement) or short term requirement (working capital requirement), which include major sources as (Klieštik, Kocišová, &Mišanková, 2015):
• Venture capital- The venture capital companies provide the required risk capital as well as guidance to new entrepreneurs in order to achieve the promoter's contribution as expected by financial institutions.
• Bridge finance- It is defined as a certain loan being taken by companies from commercial Banks, when there is a delay in sanctioning of a loan or grant.
• Lease financing- It is one of the most important source of long-term or intermediate for financing all types of companies. The lease financing decision include the comparison between cost of lease financing and cost of debt financing.
• Hire purchase finance- In this system the payment is made by the buyer to the seller (vendor) through instalments over a specific period of time, which includes interest as well.
Stocks/shares (equity) and Bonds (debt)
The equity market is a volatile theme, which represents the ownership of an organization. Depending on the financial management strategies as well as impact of socio political and economic factors, the price of equity shares can vary. The owner of equity stake can return the profit or share the loss based on the stock price of company in current market scenario. The debit market on the other hand is a less risky venture which offers a lower return of investment. Bonds are the most common form of debt investment issued by the organization to raise the capital, for various operations of the company. Role of financial manager in this context is to activate the business procedures and undertake the goals and interests of the organization. The objective here is to utilizing the time value of money, maximizing shareholders wealth, and manage the balance between investor's investment to the risk and expected return of value. Financial managers also role in organisational activities by managing the fund acquisition, allocating resources, improving strategy framework according to market condition, and tracking the financial performance for forecast (Chiang, He, &Shiao, 2015). Additionally, they also ensure that necessary obligations were followed to meet the criteria of investors and creditors, thereby analysing and making decisions for capital investment, policy implementation, and strategic planning.
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