Role of a financial Manager

Essay by sorrentocat March 2005

download word file, 3 pages 5.0

The role of any business financial manager is to ensure the business develops its investment activities to their maximum potential, whether this is in share dealings or if it is investment in plant, machinery or production capabilities. The purpose of maximizing investment potential is to generate maximum profits to reward shareholders. This is often done by implementing cash management strategies to ensure that the company has money to grow and is investing (or divesting) in ways that maximizes profitability. They may use accounting (historical) information, but their primary role is to oversee the preparation of financial reports that help with strategic planning and decision making. They direct future investment activities through strategic planning, business development, and alliance management.

Financial managers are often concerned with the acquisition, financing and management of assets with some overall goal in mind. The goal is of course decided by the firm and is implemented through them.

Of the three activities that they are most concerned with, acquisitions is the most important and daunting task that they do. The goal when buying another entity is to increase assets that will help increase the bottom line.

Another important role financial managers perform is determining how assets will be financed or how the funds be physically acquired. They are to determine the best type of financing, taking into consideration mixes that can be applied to maximized profits and minimize losses. A good understanding of financing options is important especially when you need to free up cash for investment purposes.

Financial managers have varying degrees of operating responsibility over assets. Their goal is to manage existing assets efficiently with great emphasis on current assets than fixed assets. Fixed assets are the assets the company owns that allow daily business activities to take place. Current assets on the other...