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BANKING FINANCE

ROLE OF FINANCIAL MANAGEMENT IN A COOPERATE ORGANIZATION

ROLE OF FINANCIAL MANAGEMENT IN A COOPERATE ORGANIZATION

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ROLE OF FINANCIAL MANAGEMENT IN A COOPERATE ORGANIZATION

ABSTRACT
This initiative aims to demonstrate the extent of “the role of financial management in a corporate organisation.” Financial management, as defined by Union Bank (nig) plc Enugu, is the management activities concerned with raising capital, budgeting cash and credit requirements, and effectively controlling financial resources.

Some considerations were made to financial management in order to provide expert planning, control, and management of financial activities. Because the firm’s most important decisions are those related to finance, they must comprehend financial management,

which offers them with conceptual and analytical insights to make these judgements. The finance management must take actions to guarantee that the money are available and committed to the company.

The financial manager is usually in charge of acquiring and analysing important information, forecasting profit levels to anticipate profits from future sales, and being aware of present costs and likely changes in the firm’s capacity to sell its product as planned.

By answering this question, the financial management can determine the required return on this capital investment. Is the level of return offered sufficient to justify the risk? Before the idea is approved, he must know the rate of return that may be predicted.

Finance personnel meet with other executives of the firm to plan decisions affecting the existing and future use of fund resources. The management will discuss the entire number of assets required for the firm’s operations and evaluate the asset composition based on needs. They identify ways to make better use of existing assets, hence eliminating waste and unnecessary expenses.

 

This decision-making role affects liquidity and profitability, as turning equipment to cash increases liquidity while cost reduction improves profitability.

The finance manager’s function in managing the firm’s available funds. The funds comprise cash on hand, borrowed capital, and proceeds from the sale of common and preferred stock.

The financial manager is in charge of ensuring that the firm has enough finances to conduct business and pay its bills, as well as a large sum of money to finance receivables and inventions, as well as arranging arrangements for the purchase of assets and identifying sources of long-term financing. In fact, the goal of this project was to improve the performance of the aforementioned financial managers in any organisation.

Forecasting and profit planning and control financial ration analysis, working capital policy, stocks, cash receivable, marketable severities, financial risk and structure, medium short and long term sources of funds, valuation of stocks and cost of capital, internal financial dividend policy and techniques for capital investment analysis.

The researcher will study whether or not these specified financial management roles are carried out in a case from the following perspectives:

Budgeting and investment examination

Management of short-, medium-, and long-term financing

Financial planning and financial ratios

Taking care of the financial structure.

The researchers will analyse financial concepts using analytical tools and procedures derived from organisational responses to surveys in order to unravel financial managers’ decisions on financial concerns.

It is intended that this project will meet the standards set by all examining organisations while also satisfying the interest of the general reading audience who may like to become familiar.

CHAPTER ONE
1.0 INTRODUCTION AND HISTORIC PERSPECTIVE

Financial management encompasses all of a financial manager’s activities that are concerned with raising capital, planning cash and requirements, and effectively controlling financial resources.

The following actions could be separated:

i. Creating force caste plans and budgets.

ii. Creating adequate capital structures

iii. Obtaining funds from sources outside than the company

iv. Forecasting the future availability and demand for cash

a. Putting extra money to good use

vi. Keeping cash balances and flows under control in conformity with plans and changing conditions.

When finance emerged as a distinct branch of study, the emphasis was more or less on legal problems such as mergers, establishment of new companies, disposal, and consolidations.

With the firm’s most critical difficulty being the identification of means of obtaining capital for possible expansion due to the increasing wave of industrialization, the mobility of funds from areas of surplus to areas of scarcity poses a number of problems.

Because of drastic changes such as those that occurred during the 1930s depression, which resulted in the demise of numerous businesses, financing was re-directed to bankruptcy organisational and corporate liquidity.

Because the majority of business firms’ goals are profit maximisation and company liquidity. The pursuit of profitability in the face of imperfect / perfect competition remains the motive for owners to increase their wealth.

This desire to develop and maximise wealth has resulted in the study of financial management, of which the following attribute aspects can be socialised:

a. Savings

b. Business expansion

c. Expenses for research & development.

d. Inflation

e. Competitive, and so forth

Based on the foregoing, financial management was given the same thoughts in order to provide skilled planning, control, and execution of financial activities. The finance function of any firm is of interest to practising managers because among the most critical decisions of the firm are those related to finance,

and thus the need to understand financial management which provides them with conceptual and analytical insights of capital funds, and using the suppliers of funds.

GOALS AND OBJECTIVES/ROLES OF FINANCIAL MANAGERS

Since it concerns the cultural flows of money as well as any claim against money, the financial managers following decisions are made in a much more coordinated manner directly responsible for the control process.

Financial managers are concerned about

a. The bank’s financial planning

b. Obtaining funds

c. Managing allocation

d. Financial management

e. Interpretation.

FINANCIAL MANAGEMENT

This fundraising entails organising and ensuring that the finances required to carry out the plan’s operations are available. The acquisition of funds is the second fact of a financial manager.

Each has distinct cost features, such as maturing availability and capital supplier.

Based on these variables, the bank’s financial manager must identify the optimal mix of financing for the banking business.

As a result, the financial manager is responsible for developing and implementing appropriate financial policies in the best interests of the organisation.

The primary goal of such policies is to plan, coordinate, motivate, and hold people accountable for efficient resource management. An efficient financial manager thuds, serve as a great assistance to the decision-making process, making a significant contribution to the pale of economic progress.

The primary job of a financial manager is to apply a theory of assessment to investment finance and dividend decisions in order to maximise wealth. The financial manager researches the analytical techniques as well as the environment in which financial decisions are made.

The financial manager is responsible for maintaining correct financial records, generating reports, monitoring the cost position, providing methods for bill payment, processing monies in assets, and attaining the best financial mix in connection to the overall development of the organisation.

The role of a financial management is invisibly confronted with issues like as profitability, liquidity, and risk factors, all of which have an impact on both the internal and external environment.

Only competent financial decisions based on analysis, planning, and control actions can thus aid in the optimisation of operational value. One of the driving objectives of a commercial enterpriser that governs its resource allocation and other financial managers is the optimisation of earnings and share holder wealth.

Finally, the financing manager must be aware of the available sources of financing for the firm and be directed by time, selection, and combination of these elements. That is the financial manager’s dilemma,

and the principles’ problem is one of profitability and liquidity, whereas appropriateness is the concept of time balancing between assets and liabilities, that is, employing short-term obligations to finance long-term assets.

1.2 STATEMENT OF THE PROBLEM

The search for answers to the following questions provided in order to clarify the tasks of a financial manager, which is the prospective rank of a student studying fiancé, has increased unnoticeably.

What is managing finance? Perfuming functions aimed to achieve pontific goals. When and how does finance meet the firm’s goal? What is the financial manager’s definition of a fare-price and how is it related to his firm’s return and investment capital, one might logically ask,

why are we interested in these cash flows, if they do not affect profit, why can their profit effect not be taken into account directly in the analysis? What tools and procedures are accessible to him, and how can his performance be measured? Do they have any operational significance on a broad scale? So, how can managerial finance be used to further logical goals?

Following the identification of these questions, the provision of probable answers to the aforementioned query defines the scope of this project.

As previously indicated, the financial management must develop a rationale for answering the following three questions.

How big should a business be and how rapidly should it grow?
What should this liability’s composition be?
What form should it keep its assets in?

The above-mentioned questions are relevant to three board decision areas of financial management, investment financial manager, and it is critical that the key researchers caudated on a specified company serve dual purposes.

This not only acts as the tool’s paint in answering the questions, but it is also requested to reveal the extent to which the company’s financial management is carrying out his duties in accordance with the project.

1.3 RESEARCH QUESTIONS

What approach does the organisation utilise to predict the funds needed to support increasing volume sacks and also prepare for profit?

What are the financial ratios used in evaluating and comprehending the outcomes of their business operations?

1.4 THE SIGNIFICANCE OF THE STUDY

The goal of this project on the role of financial management in a business organisation is to provide practising financial managers, treasurers, finance students, and readers with a fundamental grasp of financial decisions. The financial manager makes the best financial judgements possible by doing the following.

a. Asset management in the present

b. Decision on capital budgeting

c. Dividend determination

d. monetary decision

A. ACTIVE ASSET MANAGEMENT

Financial management has both the right and the need to manage long-term assets efficiently in order to protect the organisation from liquidity insolvency.

Current asset investments have an impact on the firm’s profitability, liquidity, and risk. If the company does not invest enough money in current assets, it may become illiquid. However, it would reduce profitability because idle current assets would yield nothing.

To assure that it would not generate any money. Infect he should establish solid current asset management procedures to ensure that neither insufficient nor superfluous funds are put in current assets.

B. DECISION ON CAPITAL BUDGETING

Capital budgeting is a firm’s investment decision to invest its funds in long-term projects in anticipation of future rewards flowing over a number of years.

These options could be to mechanise a process, replace a machine with a more current type, choose between two machines, produce new items, or expand the business.

It has the following characteristics:

1. putting present funds to use for future gains

2. The investment era that includes long-term activity.

3. The possible benefit that will accrue to the firm over time.

C. DECISION OF DIVIDENDS

The optimal dividend payout ratio must be determined by the financial management. He should think about dividend stability, equity dividends, and cash dividends. Financial managers must determine whether to disperse all profits or keep the remainder.

D. BUSINESS DECISION

To meet the firm’s investment needs, the financial manager must decide when, how, and from whom to acquire cash. The critical challenge facing him is determining the appropriate mix of equity and borrowed resources.

Once the financial manager has determined the ideal combination of debt and equity, he must raise the required amount through the best accessible sources.

1.5 HYPOTHESIS OF RESEARCH

Ho; The corporation has no procedures for anticipating additional finances needed to maintain the increasing volume of sales and also prepare for profitability.

HI: The corporation employs strategies for anticipating additional money required to support the increased volume of sales and earnings.

Ho: There are no financial ratios used in analysing and comprehending the outcomes of their business activities.

HI: Financial ratios are utilised in analysing and comprehending the outcomes of their business operations.

SYNOPSIS OF THE REST OF THE STUDY

The basic ideal of this work “the role of financial manager in a corporate organisation” examines the following points:

The first chapter provides a comprehensive overview of the issue from a historical standpoint, organisational goals, a statement of problem, goals and objectives, the relevance of the study, limitations and delimitations, and research hypothesis.

Chapter two is a review of the literature from a broad perspective on financial rationing and profit planning, management of current assets, budgeting and investment analysis, managing the financial structure, and management of short, medium, and long term financing.

The third chapter discusses the research approach that was used and consulted from the sources listed below.

Personal interviews, secondary data sources, surveys, hypothesis testing, and empirical analysis of the named company are all used.

However, Chapter 4 discusses the results through financial ratio analysis, hypothesis testing, and the implications of the conclusions.

Chapter five, on the other hand, examines the summary, conclusion, and suggestions, which are then followed by the bibliography, glossary, and appendices.

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