PRINTABLE LEARNING MATERIAL

Module 1- Topic5: Financial Activities and Role of the Financial Manager

LEARNING OUTCOME:
Explain the flow of funds within an organization through and from the enterprise and the
role of the financial manager. (ABM_BF12-IIIa-5)

Defining Financial Managers:

Financial managers perform data analysis and advise senior managers on profit-
maximizing ideas. Financial managers are responsible for the financial health of an
organization. They produce financial reports, direct investment activities, and develop
strategies and plans for the long-term financial goals of their organization. (Lifted from:
https://courses.lumenlearning.com/boundless-business/chapter/introduction-to-financial-management/)

The image below describes how the cash flows through a business by Financial
Managers:

(Lifted from: https://opentextbc.ca/businessopenstax/chapter/the-role-of-finance-and-the-financial-manager/)

Financial Activities

Financial managers have a complex and challenging job. They analyze financial data
prepared by accountants, monitor the firm’s financial status, and prepare and implement
financial plans. One day they may be developing a better way to automate cash
collections, and the next they may be analyzing a proposed acquisition. The key
activities of the financial manager are:

 Financial planning: Preparing the financial plan, which projects revenues,

expenditures, and financing needs over a given period.
 Investment (spending money): Investing the firm’s funds in projects and
securities that provide high returns in relation to their risks.
 Financing (raising money): Obtaining funding for the firm’s operations and
investments and seeking the best balance between debt (borrowed funds) and
equity (funds raised through the sale of ownership in the business).

(Lifted from: https://opentextbc.ca/businessopenstax/chapter/the-role-of-finance-and-the-financial-manager/)

What are the roles of Financial Managers?

 Prepare financial statements, business activity reports, and forecasts,

 Monitor financial details to ensure that legal requirements are met,
 Supervise employees who do financial reporting and budgeting,
 Review company financial reports and seek ways to reduce costs,
 Analyze market trends to find opportunities for expansion or for acquiring other
companies,
 Help management makes financial decisions. (Lifted from:
https://courses.lumenlearning.com/boundless-business/chapter/introduction-to-financial-
management/)

Licensing & Attributions / References

 lumencandela. (n.d.). Retrieved December 14, 2020, from https://courses.lumenlearning.com/boundless-
business/chapter/introduction-to-financial-management/
 Creative Commons Attribution 4.0. (n.d.). Retrieved January 7, 2021, from
https://opentextbc.ca/businessopenstax/chapter/the-role-of-finance-and-the-financial-manager/