Any company regardless of its size needs money to run its day to day operations. To make money, the organization has to spend money on employee wages and salaries, inventory, and equipment and facilities. Thus the role of a financial manager is critical to the success of a company. The goals of a financial manager include wise planning and making of investment and financial decisions. The main goal, however, is to maximize the value of the firm to its owners (Gitman, Juchau & Flanagan, 2015). These goals consider that the financial manager should make decisions that maximize the total value of the firm. The value of a firm refers to the total market equity of value and market value of debt. Just like owners, debt holders have a claim to the firm. Therefore if the value of the business is maximized, automatically the market value will increase hence more wealth for the shareholders.
In regards to finance, a manager has to make decisions in four major areas which include financing, management of assets, investments and dividend policy(Gitman, Juchau & Flanagan, 2015). In the area of investment, the financial manager has to define the optimal size of the company to consider the risks that it can take in a bid to maximize profits. The financial manager also has the responsibility of designing an efficient strategy that will see to it the company benefits from short term and long term financing. One of the main aspects of organizations is assets. The financial manager must stipulate and ensure the current finances are managed to see more growth of the company’s column of assets. Another financial decision is in relation to the dividend policy. This is of great concern because it determines the amount of money that will be paid to shareholders and at the same time leave the company in good state of operation.
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References
Gitman, L. J., Juchau, R., & Flanagan, J. (2015). Principles of managerial finance . Pearson Higher Education AU.
