The role of finance in business is one of the most important things that a business must
focus on, if not the most important. Finance is when you use your resources to leverage
different opportunities such as raising capital, borrowing or lending money, and selling or
exchanging items or assets. You are essentially maximizing the value of your business by
making good financial decisions with your money and the resources or assets that you own.
Financial managers are very critical roles for businesses, there can be a few or even
thousands for a business dependent on the goals and size of the business in question. A
financial manager will analyze where a company is at and will usually advise on what the
next best step is in order to maximize profit or make new money. This includes determining
if doing something will positively or negatively affect the business and creating a financial
report to show their findings. Financial tools that managers may utilize are accounting
software like Xero, payroll management, and budgeting tools. I have never used any of
these tools as of yet as I am currently in the logistics field. I am under the weather actually
my whole house is but any who; financial management is planning, organizing, directing
and or controlling the financial activities of a business. Where is profit credit cash and
expenses are the most important. In the business world finance is important because
through finance business are allowed to take risk and grow Equity financing allows for this
to happen an debt financing with these two options the money market is wide open for
investments stockholders bonds etc. and financial management helps keep business in order
if used properly through the use of budget software, accounting systems, payroll
management, tracking expenses I have learned the world of money finance and business
I’m not sure if that is one world or three it’s a much more complex subject that I imagined
the more I dive into my degree program it’s slightly intimidating to be honest but I’m not
sure I understand every bit of it or enough to explain it but it turns out I’m learning more
about what I thought I knew or had some understanding of. i’ve done a little bit of medical
coding and billing I’m not sure if that’s the same thing but I did do some billing for the
chiropractor office that I did internship with years ago but that’s about as far as I’ve gotten
with the experience in dealing with money management programming. One common use of
ratios is to compare them to other companies, industry averages or company forecasted
ratios. Such comparisons are known as benchmarking and is an extremely common (and
valuable) activity. Benchmarking can show a company that their ratios are out of line with
the industry average and help them trouble-shoot problems and focus on how to fix them.
Conversely, ratios that are better than industry benchmarks may be used to convince lenders
to lower their interest rates, for example. lanning and organizing I think are very important
elements when dealing with financial management not only in a business but in personal
lives too. Also, a good financial leader needs to have strong managerial skills in order to
direct and control the financial businesses that are dealt with. These were some good points
you made. Though in business you are allowed to take risk, I think is always good to
proceed with caution. Having contingency plans in place for if problems arise are always a
good idea. I spoke to an Escape Room owner recently about his business. My husband and
I had thought about opening our own. However, after learning the amount of risk he took,
we were not sure if those were the risk we wanted to take. In his case, there were financial
risk mostly. However, he faced risk when he chose location, what marketing strategies to
use, trying to decide if he would design his own rooms or have someone come in to do it. If
he made mistakes and had to close that room down, it could cost money due to losing
customers. Though risk area a given in any business, being prepared for multiple things are
also important. Finance has three main roles in business that is extremely important.
Finance involves borrowing, lending, investing, selling, trading and raising capital. The first
role is planning and budgeting and forecasting, the second role is to plan and shape the
business as needed and last but not least the third role is documenting all financial reports.
The purpose of financial management is to effectively organize, direct and control funds.
Financial management involves activities such as planning, controlling, organizing,
directing and decision-making. Tools that financial managers leverage to access and/ or
monitor health and performance of a business is accounting systems, expense trackings,
budgeting tools, payroll and billing. One main tool that I use and try to stick with more is
tracking my expenses. It has helped me save money and it also helps me track my expenses
and where my money is going each month. I also use budgeting tools, I have an automatic
transfers that takes money from my checking to saving each pay period to help me save
money each month and so far it has been successful in helping me save. The role finance
has in business is extremely important given it’s what the business uses put money in the
pockets of shareholders and employees alike. The finance part of a business would be the
money a company has made and what it’s projected to make In future profits which is what
determines the amount of product or how many employees that individual business needs to
have and how many it can hire to maintain everyday business. I’ve always been interested
in the finance part of business because it intrigues me the differences in what mom and pop
business need compared to those of a major corporation would. Finance has three main
roles in business. The first role is enabling the creation and preservation of value in a
company through planning, forecasting, and resource allocation. The second role is shaping
how the organization will create and preserve value through performance management and
control. The third role of finance in an organization is documenting how the organization
creates and preserves value in a financial report.
Describe the kinds of activities that financial management involves.
Planning-Plan preparing & budgeting
Forecasting-Preparing sales and pricing forecasts
Resource allocation-Figuring out how to get needed resources that will help accomplish
the company’s set objectives
Performance management-Establishing appropriate performance measures for budget and
plan monitoring
Control-Reassessment to reduce differences between the plans and actual performance
Financial reporting-Comprehensive reports that include all the company’s activities and
financial performance throughout the year. This report is prepared for shareholders or
others who are interested in the company.
What kind of tools do financial managers leverage to access and/or monitor the health
and performance of a business? Have you used any of these tools? If so, share your
experience.
Financial statement analysis is a process used to review key financial documents go gauge a
business’ health and performance. There are many different forms that can be reviewed in
order to obtain the needed information. The four most important documents that managers
review are balance sheets, income statements, cash flow statements, and annual reports.
“Balance Sheet: A statement that lists a business’s assets, liabilities, and owners’ equity at
a c specific point in time.
Income Statement: A statement that summarizes a business’s revenues, expenses, and
profits over a period.
Cash Flow Statement: A statement that captures how cash flow is affected by activities
from the balance sheet and income statement, categorized into operating, investing, and
financing activities.
Annual Report: A document that describes the company’s operations and financial
conditions, and typically includes the documents listed above, in addition to other insights
and narrative from key figures within the company (Tim Stobierski, 2020)”
References:
Stobierski, T. (2020, May 5). 13 financial performance measures managers should monitor:
HBS Online. Business Insights Blog. Retrieved October 21, 2022, from
https://online.hbs.edu/blog/post/financial-performance-measures
Chapter 1 the roles of finance function in organisations. (n.d.). Retrieved October 21, 2022,
from
https://www.practicetestsacademy.com/images/CIMA_Courses/E1_2019_Summary_notes/E
1_CH1_The_roles_of_finance_function_in_organisations.pdf
