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 e 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
