2. OUTCOMES
After studying this chapter, a person
will be able to:
Identify the financial function as a key
business function.
Explain finance as a management task
in relation to planning, organising,
leading and controlling.
Distinguish financial decisions on the
various managerial levels.
Identify the different terminology as
explained in the financial statement.
Explain and interpret the various
financial ratios.
identify advantages and disadvantages
of budget.
3. INTRODUCTION
The subject to finance certainly affects all
people as will as organisations. Faces of
finance which are pertinent to the
efficient operation of an organisation will
be explained in this chapter. In general
finance can be defined as "the art and
science of managing money". This
chapter, though, will concentrate on
understanding finance and financial
management as a key business function in
a profit-driven organisation.
4. The management task of financial
management
Financial management entails planning for
the future of a business organisation to
ensure a positive cash flow. It includes the
administration and maintenance of
financial assets of the organisations. The
primary concern of financial management
is the assessment of the financial
quantifications. A financial manager
evaluates the available data to determine
the performance of an organisation.
5. Finance is an inter-functional approach
referring to both the management of
financial decision and investment
decision. Some experts refer to financial
management as the science of money
management. The financial statement
provide a fair representation of an
organization's financial performance and
financial position. The financial statement
consist of the statement of
comprehensive income and loss,
statement of financial position and the
statement of cash flow.
6. ADVANTAGES OF BUDGET.
•Budget compel management to
plan in advance.
•Budget require management to
analyse its problem early on.
•Budget require the assistance of
the entire organisation.
•A realistic budget motivates
personal to achieve their goals.
•Budget provide the instrument of
periodically testing.
7. THE BUDGET PROCESS
INCLUDES THE FOLLOWING
STEPS:
1.Set the budget guidelines.
2.Prepare the sales budget.
3.Initial preparation of
operating budget
components.
4.Negotiate to evolve final
plans for each component
