Understanding Financial Management

Course : Managerial Finance Lecture : Marc Credit Hours : 3 Credits Semester Sessions : 3 Semester, 2021/2022 Session Prepared By : Kenzo LECTURE NOTES Introduction Financial Management is one of the systems overall management. As we know that Every company/organization has certain goals, where To achieve this goal, it is absolutely necessary management. Likewise with financial management.Good and appropriate will lead to achieving goals company/organization. On the other hand, it's not so good financial management will result in disruption overall company operations and ultimately will hinder the achievement of company goals. Based on this picture, we must too find out who played the most role in creating it good and appropriate financial management. The answer is of course is the Financial Manager, because this is the financial manager who will carry out the financial management. Next, we also have to know and understand.understanding financial management, objectives of financial management.and financial management functions in a company. Understanding Financial Management In accordance with the company's functions, we know the existence of various management, for example the production function.implemented with production management, financial functions financial management is carried out and so on, you need to know that each of these functions and management.have different fields of activity, but in The whole is a system or a unity can not be separated. In order to maintain continuity and development business, then every company always needs funds. Fund in a company managed by a financial manager. Fund This can come from within the company, it can also come from outside company. If the funds come from within the company insufficient, then the financial manager is obliged seek and fulfill it from outside the company and beyond.financial managers are also obliged to utilize/allocate the available funds to finance current assets and long-term/fixed assets. Based on this description, management Finance can be interpreted as all activities related to efforts to plan, search and allocate funds to maximize operating efficiency company. Development of Financial Management Until 1950 management activities finances are directed at efforts to maintain and increase company liquidity. This is caused by economic depression due to World War II, so the company experiencing liquidity difficulties. The emphasis of management activities finances in that period were efforts to get funds. New financial reports are required and used by parties outside the company, especially creditors. The head of the company, in this case the financial manager, has not yet utilize financial reports as a tool for assessment the company's financial condition and development led by him. After 1950 more financial management activities focuses on efforts to allocate funds appropriately efficient and effective. The time value of money begins to become attention and application and then portfolio theory begins developed and applied in assessing the risk of an asset. This shows that after 1950, reports Finance is starting to realize its usefulness for internal needs company .