Money management is a new thing for many young people today, but it has a big influence on young people. If you don’t want to miss this great opportunity, let’s find out together with hosodoanhnhan What is financial management? Please.
What is corporate financial management?
Financial management (financial management) in economics is the planning, organization, direction and control of financial affairs such as: purchases, use of financial funds of the organization, essential jobs.
Corporate financial management has long been associated with accounting and finance. It manifests itself in the management of financial statements. The financial management of the company must always apply the general principles of management to the financial resources of the company.
The financial management of the company is one of the important tasks of the entrepreneurs because good financial management not only helps the company to optimize its profits but also helps the company to overcome the momentum of development.
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Financial management functions in the company
Financial management is important for businesses because:
First: control the financial flow of all work or production and business of the organization
Second: Decide on the existence of the business and the possibility of future growth. Specifically, the tasks demonstrating the particular importance of financial management in the company are:
Financial planning in business
The first role of financial management in a company is to plan its available financial resources on the basis of optimal use of financial leverage in order to improve the capital utilization effect or, in other words, to improve return on invested capital.
Decide on investments and financing
Planning is not enough, executives or financial managers must decide on a course of action to achieve good results, and at the same time select investments and finance investments in assets, technology and people … the case applicable. From there, the benefits are reasonably developed compared to investing in capital assets, machinery or improving the current production process…to meet market demand.
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Most jobs in a company have a financial impact on the company. Therefore, the manager, through the cash flow, can control most of the ongoing activities and the effectiveness of these activities through the financial position.
Principles of Corporate Financial Management
Depending on each area of activity, the type of business as well as the current state policy, companies will each have an appropriate financial management principle. However, in general, there are four principles:
The higher the risk, the greater the profit
The time value of money
An organization that makes decisions to allocate large budgets, in addition to incurring money opportunities, businesses also have to accept less return on investment over time due to inflationary factors.
Taxation is a responsibility that every business must assume. However, this tax will act as a lever to help companies save a lot of money or may also prevent you from achieving the desired goal.
Suppose both companies sell the same product. However, enterprises that benefit from tax incentives such as land use tax and natural resource tax will save more costs than other enterprises.
Loans and equity
In sales activities, senior executives will face many obstacles if they only use equity. Therefore, in order to modify and improve profits, senior managers must be flexible to use more loans to promote faster business growth.
However, senior managers should think carefully before making the decision to borrow unsecured loans to prevent it from becoming a burden on businesses.
Loc Nguyen – General (Reference: friends, bravo, …)
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