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Understanding Financial Management: Principles, Objectives, and Strategic Impact

This course delves into the essential concepts of financial management, emphasizing its nature and purpose within organizations. It covers the interrelationship between financial objectives and corporate strategy, highlighting the effects of stakeholder dynamics on corporate goals. Key topics include investment decisions, working capital management, financial analysis, and the implications of financing and dividend strategies. Gain a comprehensive understanding of how effective financial management contributes to achieving organizational objectives while ensuring compliance and optimal use of resources.

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Understanding Financial Management: Principles, Objectives, and Strategic Impact

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  1. Section A: Financial Management Function Designed to give you knowledge and application of: A1. The nature and purpose of financial management A2. Financial objectives and relationship with corporate strategy A3. Stakeholders and impact on corporate objectives

  2. A1: The nature and purpose of financial management Learning Outcomes • Nature and purpose of financial management. • Relationship between financial management and management accounting.

  3. Nature and purpose of financial management Financial management: efficient and effective management of moneyforaccomplishment of organisation’s objectives. Flow of finance

  4. Nature of financial management all decisions are interdependent Nature of financial management Investment decisions Working capital (WC) management decisions Financial analysis Financing decisions Dividend decisions • equity finance • debt finance • optimal level of WC • form of WC • funds for WC • acquisition of non-current assets • retention of funds generated • distribution to shareholders • forms the basis for making financial decisions

  5. Financial management Financial accounting Management accounting Investment management SOFP (balance sheet) Budgeting Funding management SOCI (Income statement) Product profitability Working capital management Statement of cash flows Short term cost analysis and control Dividend policy Statutory Compliance Aids decisions, perf mgt & control Uses past and future information Uses past information Uses past, present and future information Relationship between financial management and financial and management accounting

  6. Recap • Nature and purpose of financial management. • Relationship between financial management and management accounting.

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