Financial Management is the way a person or corporation or
business manages their money to fulfill or accomplish objectives in their organization. What are some other examples of the differences between financial management and financial accounting? Financial Management is the way that the CEO and the board make business decisions that help use their monies to make money. Financial Accounting helps keep track of how the monies or the financial transactions are made. It also records, summarizes and presents all of the reports or financial statements to the stock holders and board members and CEOs to help them make the right business decisions. Give examples. Financial Management example would be the Financial Manager ensuring that his or her company invests, provides dividends, raises capital, budgets, retains profits. He or she will do this by making the correct decisions based on reports provided by the Financial accountant. I guess that the movement of the St. Louis Rams from Missouri back to Los Angeles was a business decision made based on the financial statements given to the owners and stock holders. There is probably more money to be made in Los Angeles. The decision to build a new stadium in California outweighed the decision to stay in St. Louis.
For your next post, explain the DuPont identity.
From my research the Dupont identity is a term that breaks down the return on equity into three parts. Profit margin, total asset turnover and financial leverage. http://www.investopedia.com/terms/d/dupontidentity.asp How is it used in finance? It allows analysts to understand if a company is weak or strong financially and if the company assets are generating sales or cash. It helps identify if that company uses debt to produce incremental returns. http://www.investinganswers.com/financial-dictionary/ratioanalysis/dupont-identity-3127 Locate the financial statements for two firms in the same industry. Calculate all four terms of the DuPont identity, and present the results but do not analyze them. ROE=Profit margin X Asset turnover X Leverage factor ROE=(Net income/Revenue) X (Revenues/Total assets) X (Total assets/Shareholders equity) Home Depot (in millions) Jan 31, 2016 ROE=(7,009/30,265) X (30,265/42,549) X (42,549/6,316) ROE= .231 X .711 X 6.7 ROE=1.106 Lowes (in millions) ROE=(2,546/59,074) X (59,074/31,266) X (31,266/7,654) ROE=.043 X 1.89 X 4.08 ROE=.33
For an additional post, analyze the results that another student
has posted. If you were the appropriate financial manager of one of the firms that you analyzed, what would be your observations and recommendations?