Managing

Financial Resources
4th Meeting
 Overview

● It turns out that numbers are everywhere.

● Whether you are in marketing, HR, operation, or strategy, numbers are a key element of all discussion
relating to productivity and performance.
● Our objective with this chapter is to help you understand the two most common areas involving numbers
within a company, accounting and finance.
● Numbers help us to be systematic in our analysis.
● Number impose a discipline on us that helps us to consider and quantify all factors relevant to a decision.
Finance in
Management
is the operational activity of a business
that is responsible for obtaining and
effectively utilizing the funds
necessary for efficient operations
 The Objectives of Financial Management

01
Financial Planning
and Forecasting 02 Determination of
capital composition 03
Maintaining Proper
Liquidity

04
Fund Investment 05
Disposal of Surplus 06
Financial Control
Users of Accounting Information
Users Applications
Owners, Stockholders, ● To evaluate operations of the firm
Potential Investors, Creditors ● To make investment decisions

● To plan and control

Management

Employees, Union Officials ● To use in contract negotiations

Lenders, Suppliers ● To evaluate credit ratings

Government Agencies, ● To evaluate tax liabilities

Economic Planners, Consumer ● To approve new issues of stocks and
Groups bonds
 Financial Statements

Balance Sheet Statement of Owners’ Equity

Statement of a firm’s financial It designed to show the components
position - what it owns and of the change in equity from the end
the claims against its assets. on one fiscal year to the end of the
next.

Income Statement Cash Flow

Financial record of a company’s A firm’s cash receipts and cash
revenues and expenses and profits payments that presents information on
over a period of time. its sources and uses of cash.
 Sample Balance Sheet
● Photograph of firm’s assets together
with its liabilities and owner’s equity

● Follows the accounting equation

 Sample Income Statement
● Firm’s financial performance in terms
of revenues, expenses, and profits over
a given time period

● Reports profit or loss.

● Focus on revenues and costs associated

with revenues.
 Statement of Owners’ Equity
● Begins with the amount of equity shown
on the balance sheet

● Net income is added, and cash dividends

paid to owners are subtracted
 Sample Statement of Cash Flows
● Statement of cash flows is quite simple. Cash
in, cash out.

● Three categories of cash flows are operating

activities, investing activities, and financing
activities.
 Financial Ratio Analysis

Tools for measuring a firm’s liquidity, profitability, and reliance

Definition on debt financing, as well as the effectiveness of management’s
resources utilization.

Function Ratios assist managers in interpreting actual performance and

making comparisons to the company’s previous projections.
4 Categories of Financial Ratio

Liquidity Ratios Profitability Ratios

A firm’s ability to meet its
short-term obligations when Evaluating its ability to generate
they must be paid revenues in excess of operating
costs and other expenses

Activity Ratios Leverage Ratios

The effectiveness of The extent to which a firm
management’s use of the relies on debt financing.
firm’s resources.
 40 %
Finance activities (for instance, cash
disbursement, revenue management, and
general accounting and operations) can be
fully automated.

These figures demonstrate the degree to

which CFOs and other business leaders can
simplify core internal transactions through
automation, establish standardized reporting
mechanisms, and work more efficiently.

Sources : McKinsey Global Institute analysis ; McKinsey Analysis

Case Study :
Digitalization in
Accounting
Accounting Software : Jurnal by
Mekari
Digital Transformation
in Finance
● Digitalizing finance functions has become a
major challenge for organizations of all kinds.

● Big Data analytics, Robotic Process Automation

(RPA), Artificial Intelligence (AI), and virtual
assistants represents a major opportunity for
financial decision-makers.

● The goal is to make relevant, high-quality,

meaningful data available to better anticipate,
and facilitate decision-making.
Sources : https://www.getyooz.com/en-gb/blog/digitization-in-finance
 Biggest Technology Trends in
Accounting and Finance

Artificial Intelligence Internet of Things Robotic Process

Big Data Cloud Services (AI) (IoT) Automation (RPA) Blockchain

In the financial Cloud Services Artificial intelligence IoT helps finance In accounting and The final tech trend
realm, data produces changes allow can help accounting professionals track finance, robotic that has significant
valuable insights, accounting and and finance ledgers, process automation implications for
drives results and finance departments professionals be more transactions, and (RPA) can handle accounting and
creates a better and firms to store productive. AI other records in real- repetitive and time- finance professionals
experience for and use the data algorithms allow time. consuming tasks such is blockchain. It's a
clients. These effectively. machines to take over as document analysis way to securely store
insights help time-consuming, and processing, and accurately record
improve internal repetitive, and which is abundant in data, which has broad
operations and build redundant tasks. any accounting applications in
revenue. department. accounting and
financial records.
Sources : https://www.linkedin.com/pulse/6-biggest-technology-trends-accounting-finance-bernard-marr/
 Thanks!
Do you have any questions?
 Resources

● Louis E. Boone, David L. Kurtz, 2014. Contemporary Business : 16th edition.

● McKinsey Global Institute analysis ; McKinsey Analysis

● https://www.getyooz.com/en-gb/blog/digitization-in-finance

● https://www.linkedin.com/pulse/6-biggest-technology-trends-accounting-finance-bernard-marr/