CFO Consultant: for Financial Success of a Business | The Enterprise WorldTEWMAGAZINE
Let's explore the various ways in which a CFO consultant can unlock financial success for your business: 1. The role of a CFO consultant in financial success 2. Assessing your business's financial health 3. Developing a financial strategy and action plan 4. Optimizing budgeting and forecasting processes 5. Mitigating financial risks and ensuring compliance
Defination of Financial Management
Major Areas
Corporates
Corporate Structure
Corporate Objectives & Strategy
Factors influencing Corporate Objectives
Primary vs Secondary Objectives
Strategies(Corporate) / Tactical (Functional)
Role Of a Financial Manager
1. Working capital is the capital that a company uses for its day to.pdfanjaliselectionahd
1. Working capital is the capital that a company uses for its day to day operations. Working
capital is computed using the formula: Working capital = current assets – current liabilities.
2. Determinants of working capital requirements are – nature of business, seasonality of
operations, production policy, market conditions and conditions of supply. A service company
will have a lower working capital requirement than a manufacturing company. Firms with
seasonality in operations will have higher fluctuations with regards to their working capital
requirements. Market conditions in the form of degree of competition will affect working capital
requirements. Higher competitive pressure will increase working capital requirements.
3. Three major decisions that managers have to take while performing the finance function are:
(i) Investment decision – Managers have to select those assets that the business will invest in. It
is also known as capital budgeting decisions.
(ii) Financing decision – These decisions pertain to determining how the total funds that are
required for the business will be obtained – will it be through debt or equity or a mix of debt or
equity.
(iii) Dividend decision – This pertains to determining what quantum of earnings should be
distributed to shareholders as dividends and what quantum should be retained for meeting future
growth requirements of the company.
4. Financial management involves planning, directing, monitoring and controlling the monetary
resources of a company in such a manner that the goals and objectives of the company are
achieved in an efficient manner. It involves management of capital budgeting, capital structure,
working capital management, etc. Financial management is important as it helps an organization
to set clarity towards its financial goals and helps in efficient utilization of resources.
5. Cash flow is not a suitable judge of profitability as it merely shows the changes in cash
position of a firm in a financial year from its operating activities, from its financing activities and
from its investing activities. Cash flow statement does not help us to determine gross profit
margins, operating profit margins and net profit margins. We can just gauge the reason for
changes in cash position in a year.
6. Financial risk refers to all kinds of risk associated with a financial transaction and an
investment transaction. It can be in the form of credit risk, asset backed risk, investment risk etc.
These risks arise due to the fact that there is a probability of loss that is inherent in any financing
and investment method and this probability of loss cannot be avoided.
Solution
1. Working capital is the capital that a company uses for its day to day operations. Working
capital is computed using the formula: Working capital = current assets – current liabilities.
2. Determinants of working capital requirements are – nature of business, seasonality of
operations, production policy, market conditions and condi.
What Are Financial Statements?
Financial statements are written records that convey the business activities and the financial performance of a company. Financial statements are often audited by government agencies, accountants, firms, etc. to ensure accuracy and for tax, financing, or investing purposes. For-profit primary financial statements include the balance sheet, income statement, statement of cash flow, and statement of changes in equity. Nonprofit entities use a similar but different set of financial statements.
FINANCIAL LITERACY FOR DIRECTORS - NOKIA SUCCESS, FAILURE & PATH TO REVIVAL b...Kumari Warsha Goel
My research thesis on Nokia brand .Please note above thesis is purely for personal learning.This does not represent or target to any individual or company.
CFO Consultant: for Financial Success of a Business | The Enterprise WorldTEWMAGAZINE
Let's explore the various ways in which a CFO consultant can unlock financial success for your business: 1. The role of a CFO consultant in financial success 2. Assessing your business's financial health 3. Developing a financial strategy and action plan 4. Optimizing budgeting and forecasting processes 5. Mitigating financial risks and ensuring compliance
Defination of Financial Management
Major Areas
Corporates
Corporate Structure
Corporate Objectives & Strategy
Factors influencing Corporate Objectives
Primary vs Secondary Objectives
Strategies(Corporate) / Tactical (Functional)
Role Of a Financial Manager
1. Working capital is the capital that a company uses for its day to.pdfanjaliselectionahd
1. Working capital is the capital that a company uses for its day to day operations. Working
capital is computed using the formula: Working capital = current assets – current liabilities.
2. Determinants of working capital requirements are – nature of business, seasonality of
operations, production policy, market conditions and conditions of supply. A service company
will have a lower working capital requirement than a manufacturing company. Firms with
seasonality in operations will have higher fluctuations with regards to their working capital
requirements. Market conditions in the form of degree of competition will affect working capital
requirements. Higher competitive pressure will increase working capital requirements.
3. Three major decisions that managers have to take while performing the finance function are:
(i) Investment decision – Managers have to select those assets that the business will invest in. It
is also known as capital budgeting decisions.
(ii) Financing decision – These decisions pertain to determining how the total funds that are
required for the business will be obtained – will it be through debt or equity or a mix of debt or
equity.
(iii) Dividend decision – This pertains to determining what quantum of earnings should be
distributed to shareholders as dividends and what quantum should be retained for meeting future
growth requirements of the company.
4. Financial management involves planning, directing, monitoring and controlling the monetary
resources of a company in such a manner that the goals and objectives of the company are
achieved in an efficient manner. It involves management of capital budgeting, capital structure,
working capital management, etc. Financial management is important as it helps an organization
to set clarity towards its financial goals and helps in efficient utilization of resources.
5. Cash flow is not a suitable judge of profitability as it merely shows the changes in cash
position of a firm in a financial year from its operating activities, from its financing activities and
from its investing activities. Cash flow statement does not help us to determine gross profit
margins, operating profit margins and net profit margins. We can just gauge the reason for
changes in cash position in a year.
6. Financial risk refers to all kinds of risk associated with a financial transaction and an
investment transaction. It can be in the form of credit risk, asset backed risk, investment risk etc.
These risks arise due to the fact that there is a probability of loss that is inherent in any financing
and investment method and this probability of loss cannot be avoided.
Solution
1. Working capital is the capital that a company uses for its day to day operations. Working
capital is computed using the formula: Working capital = current assets – current liabilities.
2. Determinants of working capital requirements are – nature of business, seasonality of
operations, production policy, market conditions and condi.
What Are Financial Statements?
Financial statements are written records that convey the business activities and the financial performance of a company. Financial statements are often audited by government agencies, accountants, firms, etc. to ensure accuracy and for tax, financing, or investing purposes. For-profit primary financial statements include the balance sheet, income statement, statement of cash flow, and statement of changes in equity. Nonprofit entities use a similar but different set of financial statements.
FINANCIAL LITERACY FOR DIRECTORS - NOKIA SUCCESS, FAILURE & PATH TO REVIVAL b...Kumari Warsha Goel
My research thesis on Nokia brand .Please note above thesis is purely for personal learning.This does not represent or target to any individual or company.
Importance of financial management for managing financial resources effective...Joseph Stone Capital
Joseph Stone Capital financial services take a strategy-first approach by creating a unique and customized plan for each client that utilizes both technical and fundamental analysis. We work through volatile markets and build our relationships by committing ourselves towards achieving our clients’ financial goals.
1.1. Nature and Definition of Auditing
Different scholars have defined auditing in different ways. For example, Auditing is a process of collection and evaluation of evidence for the purpose of reporting on economic transaction. The other definition of auditing given by the Institute of Chartered Accountants of India, in its publication titled, General Guidelines on Internal Auditing has defined auditing as ‘ a systematic and independent evaluation of data, statements, records, operations and performances ( financial or otherwise) of an enterprise for stated purpose. In any auditing situation, the auditor perceives and recognizes the propositions before him for examination, collects evidence, evaluates the same and on this basis formulates his/her judgment which is communicated through audit report.
As it is cited in Kanal Gupta and Arora A.(1996,p6), Arens and Loebbecke defined auditing as the process by which a complete, independent person accumulates and evaluates evidence about quantifiable information related to specific economic entity for the purpose of determining and reporting on the degree of correspondence between the quantifiable information and established criteria. To sum up, Auditing is the process of verifying the assertions produced by accounting, as to whether they present a true and fair view of the entity's financial position in accordance with accounting standards and GAAP. In other words, auditing seeks to verify whether or not financial records have been properly prepared.
Study Note
The term audit is derived from the Latin term ‘audire,’ which means to hear. In early days an auditor used to listen to the accounts read over by an accountant in order to check them Auditing is as old as accounting.
It was in use in all ancient countries such as Mesopotamia, Greece, Egypt. Rome, U.K. and India. The Vedas contain reference to accounts and auditing.
The original objective of auditing was to detect and prevent errors and frauds and most recently objective of audit shifted to ascertain whether the accounts were true and fair rather than detection of errors and frauds.
Auditing evolved and grew rapidly after the industrial revolution in the 18th century with the growth of the joint stock companies the ownership and management became separate.
The shareholders who were the owners needed a report from an independent expert on the accounts of the company managed by the board of directors who were the employees.
1.2. Historical Development of Auditing
The development of auditing is closely linked to the development of accounting. In the early stage of civilization, the number of transaction was usually so small that able to record the transactions himself. However, with the growth of civilization and consequential growth in volume and complexity of transactions, it becomes necessary to entrust the job of recording the transactions to other persons. The trend started with maintenance of accounts to empires by public officials
Importance of financial management
Overview of Financial Management
Time Value Of Money
Cost of capital
International Financial Management
Return and Risk
Valuation of financial instruments
Management accounting is a vast field that entails assessing data and managing risks in order to make informed company decisions, making it one of the most profitable accounting occupations
Financial Management means planning, organizing, directing and controlling the financial activities such as procurement and utilization of funds of the enterprise. It means applying general management principles to financial resources of the enterprise.
Importance of financial management for managing financial resources effective...Joseph Stone Capital
Joseph Stone Capital financial services take a strategy-first approach by creating a unique and customized plan for each client that utilizes both technical and fundamental analysis. We work through volatile markets and build our relationships by committing ourselves towards achieving our clients’ financial goals.
1.1. Nature and Definition of Auditing
Different scholars have defined auditing in different ways. For example, Auditing is a process of collection and evaluation of evidence for the purpose of reporting on economic transaction. The other definition of auditing given by the Institute of Chartered Accountants of India, in its publication titled, General Guidelines on Internal Auditing has defined auditing as ‘ a systematic and independent evaluation of data, statements, records, operations and performances ( financial or otherwise) of an enterprise for stated purpose. In any auditing situation, the auditor perceives and recognizes the propositions before him for examination, collects evidence, evaluates the same and on this basis formulates his/her judgment which is communicated through audit report.
As it is cited in Kanal Gupta and Arora A.(1996,p6), Arens and Loebbecke defined auditing as the process by which a complete, independent person accumulates and evaluates evidence about quantifiable information related to specific economic entity for the purpose of determining and reporting on the degree of correspondence between the quantifiable information and established criteria. To sum up, Auditing is the process of verifying the assertions produced by accounting, as to whether they present a true and fair view of the entity's financial position in accordance with accounting standards and GAAP. In other words, auditing seeks to verify whether or not financial records have been properly prepared.
Study Note
The term audit is derived from the Latin term ‘audire,’ which means to hear. In early days an auditor used to listen to the accounts read over by an accountant in order to check them Auditing is as old as accounting.
It was in use in all ancient countries such as Mesopotamia, Greece, Egypt. Rome, U.K. and India. The Vedas contain reference to accounts and auditing.
The original objective of auditing was to detect and prevent errors and frauds and most recently objective of audit shifted to ascertain whether the accounts were true and fair rather than detection of errors and frauds.
Auditing evolved and grew rapidly after the industrial revolution in the 18th century with the growth of the joint stock companies the ownership and management became separate.
The shareholders who were the owners needed a report from an independent expert on the accounts of the company managed by the board of directors who were the employees.
1.2. Historical Development of Auditing
The development of auditing is closely linked to the development of accounting. In the early stage of civilization, the number of transaction was usually so small that able to record the transactions himself. However, with the growth of civilization and consequential growth in volume and complexity of transactions, it becomes necessary to entrust the job of recording the transactions to other persons. The trend started with maintenance of accounts to empires by public officials
Importance of financial management
Overview of Financial Management
Time Value Of Money
Cost of capital
International Financial Management
Return and Risk
Valuation of financial instruments
Management accounting is a vast field that entails assessing data and managing risks in order to make informed company decisions, making it one of the most profitable accounting occupations
Financial Management means planning, organizing, directing and controlling the financial activities such as procurement and utilization of funds of the enterprise. It means applying general management principles to financial resources of the enterprise.
Similar to Dealing with Financial Risks: Building Financial Controls and Systems (20)
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Sustainability has become an increasingly critical topic as the world recognizes the need to protect our planet and its resources for future generations. Sustainability means meeting our current needs without compromising the ability of future generations to meet theirs. It involves long-term planning and consideration of the consequences of our actions. The goal is to create strategies that ensure the long-term viability of People, Planet, and Profit.
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1. Develop a comprehensive understanding of the fundamental principles and concepts that form the foundation of sustainability within corporate environments.
2. Explore the sustainability implementation model, focusing on effective measures and reporting strategies to track and communicate sustainability efforts.
3. Identify and define best practices and critical success factors essential for achieving sustainability goals within organizations.
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1. Introduction and Key Concepts of Sustainability
2. Principles and Practices of Sustainability
3. Measures and Reporting in Sustainability
4. Sustainability Implementation & Best Practices
To download the complete presentation, visit: https://www.oeconsulting.com.sg/training-presentations
4. Dealing with Financial Risks: Building Financial Controls and Systems
Objectives: By the end of this session, participants will be able to:
• Define financial risk and identify the types of financial risks businesses/organizations
face.
• Explain the importance of financial controls and systems in managing financial risk.
• Identify the key elements of an effective financial control system.
• Develop a plan to implement effective financial controls and systems in their
business/organization.
Objectives
5. Key Definitions
Risk
Risk implies future uncertainty about deviation from expected earnings or expected
outcomes. It measures the uncertainty that an investor is willing to take to realize a
gain from an investment.
It is the combination of the following
Probability of an event occurring
The impact of its consequences
1. Where such events have a negative impact – it is called Risk
2. Where such events have a positive impact – it is called Opportunity
Either way, they can affect the value creation or wipe out the value of a company.
Financial risk is a form of risk which refers to the potential for a company or business
to experience losses or negative impacts on its financial position or performance due
to various factors or events. These risks can come from internal factors which are
within the control of the business and external factors which the business has no
control over
6. Key Definitions
Enterprise Risk Management
Enterprise risk management (ERM) is a methodology that looks at risk
management strategically from the perspective of the entire firm or
organization. It is a top-down strategy that aims to identify, assess, and
prepare for potential losses, dangers, hazards, and other potentials for harm
that may interfere with an organization's operations and objectives and/or lead
to losses.
Enterprise risk management (ERM) is a firm-wide strategy to identify and
prepare for hazards with a company's finances, operations, and objectives.
ERM allows managers to shape the firm's overall risk position by mandating
certain business segments engage with or disengage from particular
activities.
Traditional risk management, which leaves decision-making in the hands of
division heads, can lead to siloed evaluations that do not account for other
divisions.
7. Financial Risks Types
Financial risks include the following types
1. Market risk: This refers to the risk of financial loss
due to changes in market conditions such as
fluctuations in
Interest rates
Exchange rates
Commodity prices
Stock prices.
Market risk can affect the value of an
organization's investments, assets, and liabilities,
as well as its profitability and cash flow.
2. Credit risk: This refers to the risk of financial loss
due to the failure of
Customers
Borrowers
Counterparties,
to fulfil their financial obligations, such as
defaulting on loans or failing to pay invoices.
Credit risk can impact an organization's cash flow,
profitability, and overall financial stability.
Market Risk
Credit Risk
Operational Risk
Foreign Exchange Risk
Interest rate Risk
Regulatory Risk
Liquidity Risk
Credit Risk
Credit
Concentration
Causes
Credit Issuing
Process
Customer
Performance
8. Financial Risks Types
3. Operational risk: This refers to the risk of
financial loss due to internal operational failures,
errors, or deficiencies within an organization,
such as
Fraud
human error
system failures
legal and compliance risks.
Operational risk can result in financial losses,
reputational damage, and legal liabilities for the
organization.
4. Liquidity risk: This refers to the risk of financial
loss due to an organization's inability to meet its
short-term financial obligations or fund its
operations efficiently. Liquidity risk can arise from
factors such as
insufficient cash reserves
inability to access credit
disruptions in financial markets
and can impact an organization's ability to
operate smoothly and meet its financial
obligations on time.
Market Risk
Credit Risk
Operational Risk
Foreign Exchange Risk
Interest rate Risk
Regulatory Risk
Liquidity Risk
9. Financial Risks Types
5. Foreign exchange risk: This refers to the risk
of financial loss due to changes in exchange
rates
• when an organization engages in international
transactions
• holds assets or liabilities denominated in
foreign currencies.
Foreign exchange risk can impact an
organization's cash flow, profitability, and
financial statements.
6. Interest rate risk: This refers to the risk of
financial loss due to changes in interest
rates, particularly for organizations that have
• significant borrowings
• Investments, that are sensitive to changes in
interest rates.
Interest rate risk can affect an organization's
borrowing costs, investment returns, and
overall financial performance
Market Risk
Credit Risk
Operational Risk
Foreign Exchange Risk
Interest rate Risk
Regulatory Risk
Liquidity Risk
Interest rates
Confidence/
speculation
Relative
inflation rate
Exchang
e rate
Rate of
Growth
10. Financial Risks Types
7. Political and regulatory risk: This refers
to the risk of financial loss due to
changes in political or regulatory
environments, such as changes in
• Government policies
• Regulations
• Laws
that can impact an organization's
operations, profitability, or legal
liabilities.
Political and regulatory risk can vary by
country or region and can have
significant implications for an
organization's financial stability and
performance.
11. Financial Controls
Financial controls enable an organization
to determine the direction, allocation,
and use of its financial resources. Thus,
the company can make sensible spending
decisions by maintaining financial
accountability based on its objectives
consistent with its existing situation and
forecast.
Effective financial management planning
aids the company in mitigating financial
risks, complying with fiduciary duties,
corporate governance, and due diligence
requirements, and achieving financial
goals. Its absence can have an impact on
budgeting, operations, and performance.
The first step is to assess the
company’s current
performance in terms of
sales, profitability, and cash
available.
The next step is to detect
anomalies in budgets,
financial reports, and balance
sheets that could prevent the
company from achieving its
goals.
Further, it requires correcting
discrepancies and deviations
in financial accounts to bring
the business operations back
on track
Then comes regularly
updating all of the
information, including
resource management
policies and procedures, in
financial documents.
The next stage necessitates a
thorough examination of the
organization’s operational
policies, such as profitability,
expenses , and production
volume.
The next phase is to improve
operating standards and
decision-making processes by
ensuring sales, profits,
surpluses objectives are met.
Finally, it requires making
forecasts and setting goals for
different scenarios based on
the above steps, including
investment and production
planning.
The following is a step-by-step approach for implementing a
financial controls checklist in a business:
12. Cash flow maintenance
Effective financial control procedures provide a
significant contribution to an organization's ability
to maintain its cash flow. The overall cash inflows
and outflows are monitored and planned for when
an efficient management mechanism is in place,
which leads to effective operations.
Resource management
The efficiency of an organization's operations is
largely dependent on its financial resources. The
other resources required for running a firm are
made available by financial resources. So,
managing financial resources is essential for
managing all other resources. For a business to
ensure resource management, effective financial
control procedures are therefore essential.
Importance of Financial Controls
13. Operational efficiency
An organization's overall operational effectiveness is
guaranteed by an efficient financial control mechanism.
Profitability
Every organizational department will operate without a
hiccup if an organization's overall operational efficiency is
maintained. Thus, it raises productivity, which has a direct,
favorable relationship with profitability. As such, putting in
place efficient financial control methods ensures that
the business becomes more profitable.
Fraud prevention
Financial control protects an institution from fraud by
acting as a preventative step. By keeping track of the inflow
and outflow of money resources, it can aid in the
prevention of any undesirable actions like employee fraud,
cyber theft, and many other kinds.
Importance of Financial Controls
15. 1. Planning
In this stage, the business goals and
objectives are properly established and
steps that align with these goals and
objectives are identified. Financial
management is required in each of these
steps which includes financing, budgeting,
allocating roles, customer research, etc.
2. Controlling
After the establishment of business goals
and objectives, it is important to make
sure that all employees are aware of them
and of their roles in achieving these goals
and objectives. This can be controlled by
setting appropriate KPIs that can
quantifiably lead to achievement of
organizational goals.
Financial control system
The elements of financial management include the following
16. Financial control system
3. Organizing and directing
Making decisions on the necessary
resources to effectively carry out the plans
is as important as setting the plans
themselves. Resources here do not just
refer to material assets and tools, they
include staff, roles, budget, funding,
outsourcing services, technology and
software. These resources need to be
organized and gotten ready before plans
are carried out.
4. Decision making
Once alternatives and potential plans have
been established, choices must be made
on the alternatives that are feasible and
matches business goals and objectives.
17. Conclusion
Financial risk is an important risk type every business must consider
whether it is an existing business or a startup. This is important because
financial resources play an important role in ensuring the smooth
running of other aspects of an organization and should be duly
monitored.