Financial management focuses on the resource pool to support the company’s processes and activities involving finances to run smoothly. Being familiar with the underlying concepts in the management of the company’s financials cuts operating cost and capitalize on profits. In this course, the three (3) key concepts I have learned are:
Budgeting
Reporting
Cash Flow Management
Budgeting is the number one fundamental in financial management (Brigham & Ehrhardt, n.d.). Money should be spent with a plan, or else the company is bound to run into loses connected with overspending or under-spending in a critical project. It should not just be estimates but preplanned formula in allocating funds in different areas of the business. An annual master budget comes in handy for the projection of the company’s income, expenditure, cash flow, and losses and returns. A monthly or quarterly variance analysis will help determine how accurate the budget projections were made.
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Reporting follows suit in the ladder of importance. It is meant for decision making in the most key aspect of the business, for instance, sales, hiring, as well as pricing and distribution strategies (Brigham & Ehrhardt, n.d.). Reporting provides precise data on the steps the business will take and how this will impact the company. The business should conduct regular financial reporting to determine its financial position.
The last salient aspect of financial management is Cash Flow Management (Brigham & Ehrhardt, n.d.). The major setback the company can encounter is poor management of cash flow which makes the business flop. Cash flow record that is accurate statement minimizes errors in business process and prevent production slowdowns.
Propose two (2) applications of knowledge that you have learned in this course to your current or a future position.
In this course, the two knowledge applications that I learned that I would apply to my current or future positions come to terms with; the financial integrity dilemma, as well as corporate governance ( Karadag, 2015) . As a prospect financial manager, ethics is a significant building block in finance as it upholds high transparency levels in the business processes alongside disclosing a right financial statement through reports to ensure ethical dealings in the company.
Similarly, another application is in corporate governance which deals with the policies as well as procedures a company adopted, in the long run affecting the management and several stakeholders interests ( Karadag, 2015) . The framework of the corporate governance policies considers various company premises, integrating strategic goals with financial goals focused on promoting controls and accountability.
References
Brigham, E. F. & Ehrhardt, M. C. (n.d.). Financial Management: Theory and Practice 15th Edition
Karadag, H. (2015). Financial management challenges in small and medium-sized enterprises: A strategic management approach. EMAJ: Emerging Markets Journal , 5 (1), 26-40.
