ESEM 5554: SCHOOL FINANCIAL MANAGEMENT AND CONTROL

LESSON 1: REFLECTION 1

MC 220417306

NOORARPIZA BINTI ROSLIN

DISCUSS THE IMPORTANCE OF FINANCIAL MANAGEMENT AND ITS KEY

FEATURES

Financial management is strategic planning, organizing, directing, and controlling of

financial undertakings in an organization or an institute. It also includes applying

management principles to the financial. In simple words, financial management is the

business function that deals with investing the available financial resources in a way that

means greater business success and return-on-investment (ROI) is achieved. Financial

management is involved with allocation, procurement, and control of financial resources of

a concern.

The goals of financial management are to ensure a regular and adequate supply of

funds for the organization. Secondly, ensuring adequate returns to the organization will

depend upon the earning capacity, market price of the share, expectations of the

shareholders. Thirdly, to ensure all the funds utilization. At the momment the organization

receives the funds, they should be used to the maximum, and they also have to know

where the best place is to invest money that will regenerate the income of the

organization. Lastly, to plan a capital structure. There should be fair composition of capital

so that a balance is maintained between assets and liabilities.

 IMPORTANCE OF FINANCIAL MANAGEMENT

They are of importance in financial management. Here I just list down only 6 from

that. 1. Profit Maximization. This of the most critical target is to ensure maximum profits

in the short and long run. A finance manager must consider this at the top of his priority list

and ensure business performance is profitable.

2. Proper Mobilization. Financial officers need to evaluate and make final

decisions on the allocation and utilization of all funds. Whether it is shares, products, or

investing in small companies, all the critical factors must be considered before investing

and using their money.

3. High Efficiency. Financial Management must increase the efficiency of all the

departments of the company. Financial officers must consider all the resources and work

involved from the fund must increase the organization's efficiency.

4. Reduce Risks. This is important for the company to reduce the risks involved

in running a business, especially with the uncertainties that come along. Financial officers

need to avoid high-risk situations and take calculated risks under the control of

experienced leaders and subject matter experts.

5. Business Survival. Nowadays, the survival of the business is a primary goal.

Darwin said, “Survival of the fittest” in Biology, which is applicable for companies.

Companies need to make decisions intuitively. They can always have the support of expert

consultants if needed.

6. Balanced Structure. Like people say” Balance is key to everything”. This

applies not just in life but to businesses too. Financial managers must prepare a capital

structure considering all capital sources. This balance sheet company for liquidity,

flexibility, economy, and stability.

 ELEMENTS OF FINANCIAL MANAGEMENT (KEY FEATURES)

Financial Management is made up of the following key elements. These are:

1. Financial Planning. Financial Planning is a way of determining the capital

required by an organization and appropriately allocating resources accordingly. To do this

impressive, one needs to have answers to the 4 following questions. First, do you have

well-created business goals and objectives, what is your long-term plan as a brand, what

is the capital required for the organization to sustain itself, what are the different policies

and regulations involved in your business? Answers to all the questions, it will give us

guidelines to make financial planning. So, it is important to plan things properly to help you

achieve your business goals.

2. Financial Control. It is a crucial activity to ensure the business is working to

meet its objectives. It is more about setting a proper objective rather than reducing costs. It

is essential to make sure everyone in the organization is aware of both financial and

business objectives.

3. Financial Decision-making. Once you have an impulsive plan and understand

all the financial aspects, shareholders should know how to allocate and decide on

fundings, resource allocations, profit distributions, and many more.

CITETATION

Mandell, L., & Klein, L. S. (2009). The impact of financial literacy education on subsequent

financial behavior. Journal of Financial Counseling and Planning, 20(1).

Wilson, J. (1998). EBOOK: Financial Management for the Public Services. McGraw-Hill

Education (UK).

Bandy, G. (2014). Financial management and accounting in the public sector. Routledge.

Parotta, J. L. M. (1996). The impact of financial attitudes and knowledge on financial

management and satisfaction (Doctoral dissertation, University of British Columbia).