Financial manager

Financial managers are responsible for the financial health of an organization. They produce financial reports, direct investment activities, and develop strategies and plans for the long-term financial goals of their organization. The financial manager develops and controls the financial plan. He also forecasts the economic conditions the companies’ revenues, expenses and profits. The financial managers’ job starts and ends with the company’s objectives. He reviews them and determines the funding they require. The financial manager compares the expenses involved to the expected revenues. It helps him to predict cash flow. He plans a strategy to make the ending cash positive. FM can trim expenses or ask the customers to pay faster. The FM also chooses financial techniques (long – or short term). At the end of the fiscal year the FM reviews the company’s financial status and plans the next year’s financial strategy.

A financial manager has to make estimation with regards to capital requirements of the company.

Once the estimation have been made, the capital structure have to be decided. This involves short- term and long- term debt equity analysis. This will depend upon the proportion of equity capital a company is possessing and additional funds which have to be raised from outside parties.

For additional funds to be procured, a company has many choices like-

* Issue of shares and debentures * Loans to be taken from banks and financial institutions *Public deposits to be drawn like in form of bonds.

The finance manager has to decide to allocate funds into profitable ventures so that there is safety on investment and regular returns is possible.

The finance manager has not only to plan, procure and utilize the funds but he also has to exercise control over finances. This can be done through many techniques like ratio analysis, financial forecasting, cost and profit control, etc.

16. BUDGET SYSTEM

A budget is a detailed plan outlining the obtaining and use of financial and other resources over some given time period. It represents a plan for the future expressed in formal quantitative terms. The state budget is a plan of obtaining and use of financial resources to provide with the functions which are carried out by the state authorities of Ukraine.

Most firms prepare yearly budget from short-term and long-term financial forecasts.

There are usually several budgets established in a firm: an operating budget, a capital budget, a cash budget and a master budget.

An operating budget is the projection of money allocation to various cost and expenses needed to run or operate the business.

A capital budget consists of the firms spending plans: the purchase of such assets as property, buildings, equipment.

A cash budget is the projected cash balance at the end of a given period. It is important for managers in borrowing, debt repayment, cash disbursements, and short-term investment expectations.

A master budget ties in all the above mentioned budgets and summarizes the proposed financial activities of the firm.