Financial Management


Financial management is the activity of the owner and management company to obtain the capital resources cheaply as possible and use them as effective, as efficient, productive, as possible to make profit.

Financial Management

Financial Management Function
Financial management can be defined from the duties and responsibilities of financial managers. The principal tasks of financial management among others, include decisions on investment, financing and dividend business activities of a company, thus the task of the financial manager is planning to maximize the company's value.

Another important activity that should be done regarding the financial manager of four aspects:
  • First, the planning and forecasting, where financial managers must collaborate with other managers are partly responsible for the general planning of the company.
  • Second, the financial manager should focus on a variety of investment and financing decisions, as well as matters related to it.
  • Third, financial manager must to collaborate with other managers in the company so that the company can operate as efficiently as possible. 
  • Fourth, concerning the use of money market and capital market, financial manager connects companies with financial markets, where the funds can be obtained and securities companies can be traded.

The fourth aspect of it can be concluded that the basic tasks related to the financial manager of investment and financing decisions. In carrying out its functions, finance manager duties directly related to the subject company's decisions and affect the value of the company.

Main Functions of Financial Management
  1. Investment Decision: The decision on what assets will be managed by the company.
  2. Financing Decision: The decision relating to the establishment of the necessary financial resources and determination of the balance of spending the best (optimal capital structure). 
  3. Asset Management Decision: The decision related to the use and management of assets (word to the wise: it is easier to build than manage).

Main Duties Financial Management
Basic tasks performed by financial manager in general are:
  1. Obtain Funds Company.
  2. Using Company Funds
  3. Divide Gain / Loss Company.

The Purpose of Financial Management
The goal with the financial managers to manage the company's funds to a company in general is to maximize the company's value. Thus, if sometimes the company sold then the price can be set as high as possible.

Activities that should be run financial management

Financing Activity
Financing activities are activities of owners and management companies to seek capital sources (external and internal sources) to finance business activities.
A. External Sources:
  1. Modal owner or equity or share capitals consist of: Ordinary Shares and Shares Outstanding.
  2. Debt, Deb Short-Term and Long-Term Debt.
  3. Others, for example grants.
B. Internal Sources:
  1. Retained Earnings.
  2. Depreciation, Amortization, and Depletion.
  3. Others, for example the sale of fixed assets that are not productive.

Investment Activity
Investment activities are activities of the use of funds based on the premise that maximum results and the smallest risk. Activities include:
  1. Working capital or current assets.
  2. Financial assets comprising: Investment in shares and bond.
  3. Real Assets consisting of: Land, buildings, equipment.
  4. Intangible assets consist of: Patents, Copyright Management of Forests, Mines Management Rights, and Goodwill.

Business Activity
Business activity is an activity for profit through the sale of goods or services, the effectiveness of cost efficiency that will generates profits. Activities that can be seem from the report income, which consists of elements:
  1. Revenue.
  2. Expenses.
  3. Income.

Responsibilities Financial Manager
The company's activity in terms of financial management point is the duty of financial managers. Their tasks, among others, are follows:
  1. Obtaining funding at low cost.
  2. Effective and efficient use of funds.
  3. The financial statement analysis.
  4. Internal and external environmental analysis associated with routine and special decisions.
Based on these tasks, financial management has a purpose:
  1. Maximizing the value of the company.
  2. Fostering relations with the capital market and money market.

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