Avail The Most Preferred Discuss the Main Functions of Financial Managers in the Organisation Assignment At Expertsmind!

Home   Course  
Previous << || >> Next

Discuss the Main Functions of Financial Managers in the Organisation


Discussion of the Functions of a Finance Manager in the Financial Success of a Firm

The finance function is a function which is aimed at maximizing the value of a company by optimally using the resources and by maximizing the profitability. it is mostly related to the planning aspect and decision making with an objective of maximizing the profits and use of the resources. The finance managers play a very critical role in the overall wealth maximization of the firm’s value and optimal resource allocation and generation of required growth and returns on investment. While the functions of a finance manager are multidimensional the same is mostly oriented towards structuring of the capital structure, allocation of funds to maximize wealth and take up the most beneficial projects and also deciding the payout to the shareholders with a view to increasing market value (Fabozz & Drake, 2009. ).

The primary objectives of the finance manager are to analyze the financial statements of the firm and make a comparison of the same with a comparable firm or the industry and a year on year review. By assessing the results, the finance manager is in a position to recommend certain changes to make the whole of the processes more efficient, reduce cots of operation and increase future profitability.

The second most important function is related to both short- and long-term planning. the fiancé officer or the manager is tasked with evaluation of the funding requirement of the firm in the short and long period. once the funding needs are assessed with a reasonable degree of certainty the fiancé manager would look to find and pinpoint the probable sources of finance and finalize the modalities of accessing the same. The emphasis in this stage is finalizing and selecting those sources which are cheaper for the firm. The cheaper the source, the cheaper would be the firms cost of capital and the same would lead to value creation. In this stage, the finance team would also look into possibilities of investing the excess funds and cash balances if any to earn extra incomes and augment the operational growth (Damodaran, 2012).

The next function of the fiancé manager is looking for growth opportunities from operational perspectives. The firm can expand in terms of expanding to new markets or in terms of creating a larger product mix both of which needs excess funding. Once a long- term investment decision like building a new plant is undertaken it can’t be postponed afterward. Thus, before deciding as to which project shall be given the go-ahead a number of projects must be considered and analyzed. Analysis of the projects must use capital budgeting techniques such as the Net present value method and Internal rate of return methods. If the NPV of a project is positive it can be selected and among a few projects that project shall be accepted which has the highest NPV. Also, in terms of IRR, the fiancé manager must select a project which has an IRR > r and the project with the largest IRR shall be accepted for implementation. A positive NPV project would increase the firm’s value by the NPV amount. Thus, finance managers role in long term investment decisions are often critical and growth-oriented (Brealey, Myers, & Allen, 2017).

Also, in this aspect the fiancé managers needs to make an assessment of the new project or new assets risk and return prospects. Every project whether big or small would have some kind of risk inbuilt into the same. Therefore, it is essential for the finance manager to analyze the risk and uncertainty associated with the same and take a decision only after that as uncertainty associated with the cash flows would run into many years into the future.

Apart from the above, the finance manager is crucial in making decisions regarding the selection of the best dividend payment decisions. As he was the best person to locate industry trends and opportunities which exists for the company, he would be in a position to know if a growing dividend or a stable and constant dividend policy would be the best. However, it must be noted that the final decision regarding how much of a dividend payout is enough for the firm depends upon the size of the firm, the required return for the shareholders and the kind of investing opportunities available for the fiancé manager.

The other key aspects which the fiancé manager must look into is the fact that the fiancé manager must look into the financial statements and analyze the same to find the trends. His job is to prepare different financial reports depending upon the needs of decision making and increase productivity. The reports prepared by the fiancé manager and his would be the foundation on the basis of which major investment decisions like expansion, acquisition and disposal of assets etc. would be taken and this is why the fiancé manager plays a very crucial role in the eventual long-range planning and preparation of strategy. He is also the one who would look to exercise control over implementation of different strategies (KHAN & JAIN, 2015).

The above discussion clearly shows that the expected function of the fiancé manager is not limited in its scope and it's quite flexible depending upon the size and nature of the firms and the industry in which the firm operates. While the Board of directors and the Management is allowed to take the final decision like if it would be wise to invest in a new expansion project or buy and acquire an existing firm- the inputs provided by the finance manager and his team would provide crucial and important. Ultimately the success of the firm in terms of returns and value creation depends as much on the financial analysis of the finance manager as much as on the vision of the Board of directors of the firm (Baker & Nofsinger, 2010). In effect the financial manager needs to play a proactive and analytical role in the financial planning and success story of any firm.


Tag This :- EM201995ALA213FM Discuss the Main Functions of Financial Managers in the Organisation

get assignment Quote

Assignment Samples

    Glycolysis Assignment Help

    glycolysis assignment help - Write a research Paper on glycolysis, citric acid cycle and oxidative phosphorylation

    Nursing Assignment Help

    nursing assignment help - This study focuses extensively on various experiences gained in regards to the death of patients in a healthcare setting.

    ITC161 Computer Systems Assignment Help

    itc161 computer systems assignment help - Charles Sturt University, Australia. write program in MARIE assembly language to work out if a given year is leap year

Get Academic Excellence with Best Skilled Tutor! Order Assignment Now! Submit Assignment