Financial management (FM) is required for organizations to achieve their goals and involves planning, controlling, analyzing, and reporting financial information. FM helps ensure liquidity, profitability, risk minimization, and growth. While objectives like investing for growth may initially hurt cash flow and profits, they can benefit the organization long-term. The economic environment and type of business organization can also impact financial management. Proper financial planning is needed to help businesses obtain financing for capital to support growth.

1. Financial
Management 1
FM is required for an organisation to be
able to achieve its goals. This unit will
look also at Financial Strategies/Planning
and Systems Control

2. Importance and role of financial
management
 Many businesses have departments who
manage the finance in the business.
 It is the responsibility of the finance
manager to plan and control the finances of
the business.
 This produces accurate and timely data.
 Why is this important????

3. Thus
 FM is the recording, reporting, analysing,
interpreting and evaluating of information
so the organisation can meet its objectives.
 Look now at fig 7.1 pg 347

4. Objectives of FM
 Liquidity – Cash Flow
 Profitability – Revenue covers Expenses
 Risk Minimisation – Procedures to minimise
things going wrong
 Growth – Ways to expand the business

5. Conflicting Objectives
 There will be times when the objectives
conflict.
 For example, investing in a new project. This will
hurt the cash flow and profits, but will help make
the business grow in the long run.

6. Economic / Legal Environment
 The type of business organisation can effect the
way the business is run.
 Sole Proprietorship
 1 owner, responsible for all debts (unlimited liability)
 Partnership
 2 owners of more, owners share unlimited liability
 Company
 Owned by share holders. Limited liability but usually need
to give personal guarantees for borrowed funds

7. Question
 Q3 page 349/350

8. Sources of finance
 Lets do the Stop and think top of page 351
 Sometimes finance is vital to help organisations
grow. Without finance capital cant be invested
into the business.
 What does this mean????
 Thus the right type of financial planning is needed
to help businesses grow.

9. Sources of finance
 Lets go over now table 7.2 and 7.3