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    The Functions of Financial Management The Functions of Financial Management

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    This document discusses the functions of financial management. It defines financial management as concerning the analysis, planning, acquisition, and utilization of funds. The goal of the firm is to maximize shareholder wealth through increasing share price. Management acts as an agent for shareholders. Corporate governance represents the system that manages and controls corporations, with the goal of shareholder wealth maximization. The board of directors is responsible for setting policy, advising executives, and overseeing strategy and financial reporting.

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    The Functions of Financial Management The Functions of Financial Management

    Uploaded by

    Joe
    24 views9 pages
    This document discusses the functions of financial management. It defines financial management as concerning the analysis, planning, acquisition, and utilization of funds. The goal of the firm is to maximize shareholder wealth through increasing share price. Management acts as an agent for shareholders. Corporate governance represents the system that manages and controls corporations, with the goal of shareholder wealth maximization. The board of directors is responsible for setting policy, advising executives, and overseeing strategy and financial reporting.

    Original Title

    Chapter 3-A

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    This document discusses the functions of financial management. It defines financial management as concerning the analysis, planning, acquisition, and utilization of funds. The goal of the firm is to maximize shareholder wealth through increasing share price. Management acts as an agent for shareholders. Corporate governance represents the system that manages and controls corporations, with the goal of shareholder wealth maximization. The board of directors is responsible for setting policy, advising executives, and overseeing strategy and financial reporting.

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    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    24 views9 pages

    The Functions of Financial Management The Functions of Financial Management

    Uploaded by

    Joe
    This document discusses the functions of financial management. It defines financial management as concerning the analysis, planning, acquisition, and utilization of funds. The goal of the firm is to maximize shareholder wealth through increasing share price. Management acts as an agent for shareholders. Corporate governance represents the system that manages and controls corporations, with the goal of shareholder wealth maximization. The board of directors is responsible for setting policy, advising executives, and overseeing strategy and financial reporting.

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    You are on page 1of 9

    Chapter 3

    The
    The Functions
    Functions of
    of
    Financial
    Financial
    Management
    Management
    1
    The Role of
    Financial Management
     What is Financial Management?
     The Goal of the Firm
     Corporate Governance
     Organization of the Financial
    Management Function

    2
    What is Financial
    Management?

    Concerns the Analysis


    and Planning, Acquisition
    of Funds, and Utilization
    of Funds.

    3
    What is the Goal
    of the Firm?

    Maximization of
    Shareholder Wealth!

    Value creation occurs when


    we maximize the share price
    for current shareholders.
    4
    Role of Management
    Management acts as an agent
    for the owners (shareholders)
    of the firm.
     An agent is an individual
    authorized by another person,
    called the principal, to act in the
    latter’s behalf.
    5
    Corporate Governance
     Corporate governance: represents the
    system by which corporations are
    managed and controlled.
     Includes shareholders, board of
    directors, and senior management.
     Then shareholder wealth maximization
    remains the appropriate goal in
    governing the firm.
    6
    Board of Directors
     Typical responsibilities:
     Set company-wide policy;
     Advise the CEO and other senior executives;
     Hire, fire, and set the compensation of the CEO;
     Review and approve strategy, significant investments, and
    acquisitions; and
     Oversee operating plans, capital budgets, and financial
    reports to common shareholders.
     CEO/Chairman roles commonly same person in US,
    but separate in Britain (US moving this direction).

    7
    Organization of the Financial
    Management Function

    Board of Directors

    President
    (Chief Executive Officer)

    Vice President VP of Vice President


    Operations Finance Marketing

    8
    Organization of the Financial
    Management Function

    VP of Finance
    Treasurer Controller
    Capital Budgeting Cost Accounting
    Cash Management Cost Management
    Credit Management Data Processing
    Dividend Disbursement General Ledger
    Fin Analysis/Planning Government Reporting
    Pension Management Internal Control
    Insurance/Risk Mngmt Preparing Fin Stmts
    Tax Analysis/Planning Preparing Budgets
    Preparing Forecasts
    9

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