FINANCIAL MANAGEMENT 1

THE ROLE AND ENVIRONMENT OF

MANAGERIAL FINANCE
FINANCE- art and science of managing
money

Major areas of and opportunities in

finance

Financial services- adviser

Managerial finance- manager

Career opportunities in managerial

finance

Financial Analyst
Capital expenditures manager
Project finance manager
Cash manager
Credit analyst or manager
Pension fund manager
Foreign exchange manager

Legal form of business organization

Sole proprietor
Partnership
Corporation

The managerial finance function

ORGANIZATION OF THE
FINANCE FUNCTION
Function of treasurership
PISBCII
Function of Controllership
PREGPET
RELATIONSHP TO ECONOMICS
Be alert to the
consequences of varying
level of economic activity
and changes in economic
policy. PRINCIPLE:

MARGINAL COST BENEFIT

ANALYSIS- action only
taken when the added
benefit exceed the added
cost.`
RELATIONSHIP TO ACCOUNTING
Difference between
finance and accounting;
cash flow and decision
making
Cash flow- accountingaccrual basis
-financeoperating cash
flow
Decision makingaccountants- collection
and presentation of
financial data
-financial
managerevaluate the
data and
make an
assessment
on its
returns and
risks

GOALS OF THE FIRM

MAXIMIZING PROFIT- IT IGNORE

Timing, cash flow and risk.
Measures profit through
earnings per share
Maximizing shareholders
wealth- measure through share
price.

CORPORATE GOVERNANCE- direct and

control a corporation. It defines rights
and responsibilities of key corporate
participants.