Financial Management or also known as “Business Finance”

 Means the management and control money and money related operations within
businesses. Companies have finance departments that are responsible for these
functions.
 Refers to the financial input that goes into general business decisions. Most projects
involves money and assessing called “capital budgeting” falls to financial management.
 Involves the relationship between finance and other departments in the day to day
management of the firm since other departments are dealing in money too.
[Spend to perform a job and their success is defined in terms of money.]- make an
organizational chart. Example: Manufacturing –Produce a huge quantity of product.
Keep costs low and maintaining reasonable level of inventory. Finance should call the
attention of the manufacturing if it performs opposite output as expected.
 There’s also a theoretical aspect to finance. Financial theory has grown out of
economics. Observe the world of business and government and attempt to model and
explain behavior in abstract terms. Helpful in areas of investment and business decision
making.

CFO “Chief Financial Officer/ VP of Finance”

Responsibilities and functions:
- How to set up the finance functions in the new venture
- How to do its accounting
- What banks to use
- Secure funding to support the project either from bank or by issuing securities
- Form a judgment about the feasibility of the project in terms of whether it will be
profitable enough to justify its own cost

Finance Department
- Has accounting function but has broad definition or scope in Finance.
- Responsible for its own activities but has a responsibility for the operation of other
department as well. Has an oversight responsibility for the effective management of the
money other departments spend. Involves looking over everyone else’s shoulder to
make sure they’re using money effectively.
- Divided in two major groups:
Accounting Department headed by Controller = accounting functions
Treasury Department headed by a Treasurer = finance functions such as financial
 analysis, financial planning, capital budgeting

- Concentrate on cash flows

- The language of finance is accounting because financial transactions are recorded within
the structure of accounting systems. All finance professionals need some knowledge in
accounting.
Example professions:
Financial Analyst- investigates companies and make recommendations about their
investment value. They have to decipher complex financial statements without missing
any of the detailed implications that may be buried in the notes and numbers.
Stockbrokers- sell securities on the basis of a broad knowledge of what’s going on in
various industries and expectations generated by the report of analysts. They can get by
without more than an ability to read basic financial statements.

Activities:
- Keeping records
- Paying Employees and Suppliers
- Receiving customer payments
- Borrowing money
- Purchasing assets
- Selling stocks
- Paying dividends