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Financial Management Concept
Financial management is one of the
traditional management functional areas found in any organization and to
which belong the analyses, decisions and performances related with the
financial means needed for the organizations’ activity. By this the
financial role includes all of the tasks connected with obtainment, use
and control of financial resources as a way to guarantee, on one side,
the stability of the organizations’ operations and, on the other side
the profitability.
Financial management goals: The
large actions goals and financial management’s decisions can be
synthesized as follows:
. Assure the company a balanced financial
structure and that doesn´t place the organization in financial risk
neither at short or long term. This balance can be measured by the
comparison between the capital applications made and the sources of such
capitals.
. Assure the profitability of the capitals
invested (either own capitals, or outside capitals). This profitability
can be verified comparing the value of the results obtained with the
values of the own capitals invested.
. Guarantee the stability of the
organizations’ operations assuring the existence of the financial
capitals necessary either for the current activity, either for the
achievement of investments in capital assets.
Activities integrated in the financial
duty: In a brief statement can be integrated the following
activities in the financial role:
. The determination of the financial
resources needs (planning of the financial resources needs, inventory of
the resources available, prediction of released funds and the
calculation of external financial needs). This kind of activity is
generally designated by treasury management.
. The achievement of funding (to finance
the current activity or to finance investments) in the most benefic way
taking into account the purpose of the funding, the costs, deadlines and
other contractual conditions, tax conditions, the impact of the
company’s financial structure, among others. To this activity can be
given the designation of funding sources analyses.
. The insightful application of the
financial resources, including the treasury excess, as a way to obtain a
balanced financial structure and adequate levels of efficiency and
profitability. The main variables to take into account in the
application of financial resources should be the potential return of
that application, its liquidity level and the associated risk.
. Economical and financial analyses,
including the gathering of information and its’ study as a way to obtain
safe answers about the company’s economical and financial situation.
. The economical and financial viability
analyses of investments, as a way to support the decisions about its
execution.
Besides the mentioned activities, can
still be considered as an integral part of the financial role activities
of more administrative scope such as accountancy activities, clients´
account management, suppliers and other debtors and creditors, invoicing
management, among others.
Translated from Portuguese
by Susana Saraiva, Portuguese-English and English-Portuguese translation
specialist. Contact: spams@sapo.pt.
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