DID YOU KNOW THIS? THE ROLE OF FINANCE. COMPARING THE ACCOUNTANT AND THE FINANCIAL MANAGER. The role of an ACCOUNTANT is like a skilled technician who takes measures of a company’s health and writes a report. FINANCIAL MANAGERS examine the data prepared by accountants and make recommendations to top management regarding STRATEGIES FOR IMPROVING THE COMPANY’S FINANCIAL STRENGTH. A manager cannot make sound financial decisions without understanding accounting information. The need for careful financial management remains an ongoing challenge in a business throughout its life . The MOST COMMON WAYS FOR FIRMS TO FAIL FINANCIALLY are : UNDERCAPITALIZATION, or not enough funds to start with. POOR CASH FLOW , or cash in minus cash out. INADEQUATE EXPENSE CONTROL . THE IMPORTANCE OF UNDERSTANDING FINANCE . The text describes a small organization called Parsley Patch, begun on a shoestring budget. When the owners expanded into the health-food market, sales took off. Neither woman understood cash flow procedures or how to control expenses, and profits did not materialize. They eventually hired a CPA and an experienced financial manager, and soon they earned a comfortable margin on operations. Financial understanding is important to anyone who wants to invest in stocks and bonds or plan a retirement fund. WHAT IS FINANCIAL MANAGEMENT? FINANCE is the function in a business responsible for acquiring funds for the firm, managing funds within the firm, and planning for the expenditure of funds on various assets. Without a carefully calculated business plan, the firm has little chance for survival.
Posted on: Fri, 30 Aug 2013 08:39:48 +0000
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