Introduction
Despite what most of people think, being the financial manager of a corporation is not counting the profits and the losses of the firm. In fact, being the financial leader involves not only responsibility, but also the ability to conduct the analysis of the current state of company’s affairs and provide the strategy for the further company financial actions. Because of the numerous issues that the financial management of the company touches upon, the entire entrepreneurship depends on the clockwork of this mechanism.
It is obvious that the manager and the company are intertwined with the strongest bonds. Coordinating the financial environment in the company and maintaining the high level of revenue, the financial manager plays the crucial role in a company. Coordinating the level of interest rates and making the financial statements, i.e. financial decisions to help the company benefit, a financial manager is responsible for the company financial profit. It can be assumed that with help of the financial manager, the company growth can be encouraged considerably.
One of the examples of the financial management that could be analyzed is the budget issue in the USA. Cutting the budget in the country to decrease the spending of the state could be considered as the financial management aimed at increasing the country income and create more efficient plan for the state and the private entrepreneurship (Wall Street Journal).
Time and Money: The Key Concept
Another important concept connected with the financial management, the relation between time and money makes one of the most important pieces of the financial manage work. Trying to make the company benefit in the shortest time lapse, a financial manager contributes to the fastest development of the entrepreneurship.
Considering the most important financial issues, one must mention the cash flow; a recurrent cycle, it reprints the efficiency of the company and clarifies the current state of the company’s affairs. Creating the scheme for the company financial development, the financial manager is to take the interest rates into account, otherwise the most deplorable consequences, like the company bankruptcy, might take place. It must be marked that the scheme of bond valuation, the specific formula, helps to realize the probable profit o the given bond or stock. At this point, the most precise calculations must be conducted, for even the slightest mistake might have the most dramatic results on the entrepreneurship and on the state of the company’s affairs. For instance, in the case with USA and the world politics, one can claim that the drops of the currency value in China is bound to result in considerable complicacies for the country’s economical and financial state of affairs.
Capital and Money: Watch the Difference
One of the biggest mistakes in the financial management would be considering the capital and the money synonyms. In fact, they have certain issues in common, yet they are far from being the same notions. Speaking of the capital, one must take into account that the planning of the capital – the capital budgeting – is one of the most important aspects of successful financial management.
Considering the capital budgeting, one must keep in mind that it is highly dependent on the company operating activities and thus on the cash flow of the entrepreneurship (Wall Street Journal).
Involving the evaluation of the cash flow and the capital budgeting, the assessment of the company financial state in general and the given project economics in particular is practically impossible without such ingredient as capital rationing. Splitting the finances of the company into the pieces that are suppose to serve each its own purpose, yet together making the profit of the entire company, they are inseparable indeed. Calculating the cost of the capital, one can figure out the scheme for the further capital management. To draw an example of the way in which the state of the capital influences the politics of the given entrepreneurship or even a country, one can mention India: according to the Wall Street Journal, the country refused from the political debates to focus on its current financial state due4 to the capital flow in the country (Wall Street Journal)
Matching the Theory and the Practice
It must be mentioned that financial management involves the art of raising the company capital. Analyzing the input of each company’s stakeholder and calculating the dividend of each participant, on has to adhere to the specific dividend policy. Without this element, the fair corporate finance is impossible. With help of the effective financial management, one can enhance the strengths of the company so that it could practice the international influence, which will trigger the financial management on a higher level of performance – the international financial management. For instance, the secured regulations that the USA offered to prevent the financial crisis from happening can be considered an efficient financial planning ad forecasting on both the level of home and foreign policy, which means that the financial management often triggers international interaction (Wall Street Journal).