Final report understanding financial management

The level of financial management of managers is reflected in their financial understanding, not only mastering the financial situation of the business and the market, but also having th

HOCHIMINH CITY UNIVERSITY OF FOREIGN LANGUAGES

AND INFORMATION TECHNOLOGY DEPARTMENTOF INTERNATIONAL BUSINESS ADMINISTRATION

FINAL REPORT UNDERSTANDING FINANCIAL

MANAGEMENT

Nguyen Thi Kim Thoa 22DH122630

Lê Hữu Trung Thiện 22DH123707 Nguyễn Quách Minh Thuận 22DH122655 Class: KQ2215-KQ2216

Instructor: NGO VAN BINH

HCMC, 12/2022

CONTEN

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2 TNTRODUCTION Q 2L 2.1 22H HH 111 n1 1111110111111 11 HH re

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1 ABSTRACT The existence and development of an enterprise in the economy depends on many different factors such as business environment, competition, especially the level of financial management of the business The level of financial management of managers is reflected in their financial understanding, not only mastering the financial situation of the business and the market, but also having the ability to process financial information Financial planning is the process of framing goals, policies, procedures, programs, and interrelated budgets related to financial activities

Keywords: financial management, budgets, financial, management

2 INTRODUCTION Financial management allows organizations to plan and use future projects and finances The realization of capital, assets and things necessary to maximize the return of investments The financial manager is responsible for budgeting, predicting cash flows, and determining how to invest and finance a project They are responsible for how much the product or project is expected to cost and how much revenue is expected to be earned so that the company can invest the appropriate amount in the product or project Financial managers take on a variety of roles and positions while continuing to carry out their primary job responsibilities In addition, financial planning affects the human and physical resources used to enable the company to run its business Therefore, financial planning is the deciding factor whether a company can succeed in its business in some way or not

3 LITERATURE REVIEW 3.1 WHAT IS FINANCIAL MANAGEMENT?

3.1.1 The concept of financial management

Financial management is a business function where it involves investing available financial resources to achieve business success and return on investment (ROI) Financial managers organize, plan, and control business transactions Most of them focus mainly on sourcing capital from various sources be it an entrepreneur's initial investment, sponsorship, public release or any other sources Since then, financial managers are responsible for allocating funds in the most optimal way to maintain stability and ensure greater financial growth Financial management also means applying general management principles to the financial resources of a business

3.1.2 Elements of financial management

Elements You Should Consider For the Financial Management Skills: Teach a key economic subject nowadays which includes company finance, hazard control, M&A, pricing models, and money markets You will learn more about contractual frameworks, global policy, financial decision making, and more.Develop your finance and accounting skills through online courses addressing key financial issues Develop skills in finance and accounting including economic forecasting, cash management and bookkeeping these courses provide plenty of advantages, they do not usually include college credit.Study finance online with lots of introductions and

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Financial management has four known elements:

Financial Planning: As an essential aspect of financial management, it is intended to ensure the availability of appropriate funds at the times needed to meet the needs of a company These needs include short-term requirements such as investments in equipment and supplies, im addition to employee-made payments and credit-based fund sales On the other hand, long-term needs may include the need for financing to make significant improvements to the productive capacity of the company.Financial managers determine the goals that need to be achieved to be able

to meet the needs and growth of the business Therefore, the goal is to define the goals and implement the steps necessary to achieve them

Financial control: The economic supervisor makes sure that every location of the company follows the described plans Research and compare current reports with reports from previous periods

The issues that financial control deals with include:

Are the assets used efficiently?

Are assets protected for the business?

Does the management handle the behavior in the best way in the interests of shareholders in the face of corporate regulation?

Financial Organizing and Directing: When planning, the economic manager determines how to use and organize the employer’s assets to implement the strategies that have been made extra effectively The manager works day-to-day while managing to keep the coordinating results going efficiently The ultimate goal is to use resources efficiently and provide regular monitoring

Financial Decision Making: Decision-making incorporates the other three components (i.e managing, preparing, and directing and organizing) decisions by reviewing information gathered and making decisions for optimal enhancement financial management

The Financial Manager makes decisions between the alternatives

available Decision making occurs concurrently with planning, coordination, and management.All forms of decisions are based on fact, and judgment One of the most important financial decisions is figuring out what to do with the profits a company receives — keep or allocate them In the case of exceptionally high dividends, the company will find itself in a desperate financial situation to reinvest to generate revenue From the above four factors, it shows the importance of financial

management for businesses, bringing many benefits as well as professionalism to a growing business

3.1.3 Objectives of Financial Management:

The financial management is concerned with procurement, allocation and control of financial resources of a concern The objectives can be: To ensure regular and adequate supply of funds to the concern

To ensure profits for shareholders, it will depend on earning ability, market price of shares, expectations of shareholders

To ensure optimal use of funds Once the coins are purchased, they should be used at the lowest cost

To ensure safety when investing, it is convenient to invest in safe projects so that the appropriate rate of return can be achieved

Plan for a sound capital structure a sound capital structure is required, to maintain a balance between debt and equity

3.1.4 Function of financial management:

Estimation of capital requirements: A financial manager must plan in relation

to the capital requirements of the company It will depend on the expected costs and profits as well as the relevant programs and policies in the future for the company The estimates of the business must be done adequately to increase the earning potential

Determination of capital composition: Once the estimate is complete, the capital structure must be decided by the manager As this involves short-term and long-term debt equity analysis and will depend on the proportion of equity that the company owns, there are additional funds raised from outside

Choice of sources of funds: To buy more capital, a company has many options such as: issue stocks and bonds, can borrow from banks and financial institutions, public deposits are withdrawn in the form of bonds, etc votes, will depend on the relative pros and cons of each source and the timing of funding Capital investment: The financial manager must decide to allocate capital into profitable ventures to ensure the safety of the investment and get regular returns Handling surplus: In particular, the decision on net profit must be made by the financial manager It can be done in two ways:

Dividend declaration: includes determination of dividend rate and other benefits such as bonuses

Retained Profit: The volume to be decided will depend on the company's expansion, innovation and diversification plans

Cash Management: A financial manager has to make decisions regarding cash management Cash is used for various purposes such as payment of wages, salaries, maintaining sufficient inventory, purchasing raw materials, etc

Financial control: In addition to planning and procurement, financial managers also have to use funds but they also have to exercise financial control maybe this is done through many techniques like ratio analysis, cost and profit control etc

3.2 THE ROLE AND PLAN OF FINANCIAL MANAGENMENT

3.2.1 The role of financial management:

Key Roles of Financial Management:

Bookkeeping and Accounting: It is essential to identify, take appropriate action and record the financial details of a company No matter what money is debited from the company's account, an effective financial management accounting system provides the best overview In addition, bookkeeping is intended to record the day-to- day transactions of a company and form the basis of an accounting system The role

of financial managers is now expanding and that is becoming more difficult Furthermore, new tools have emerged that allow financial managers to pinpoint their company's financial strengths and weaknesses To be able to understand these new tools and how to use them, financial managers can take an executive finance course from any reputable institution to update their knowledge

Reporting: Financial statements play an important role as most stakeholders depend on the organization's financial statements before making any decisions And the financial statements will be shared to shareholders by the financial team, who will regularly update and disseminate the latest information And depending on that report, shareholders will forecast when to buy or sell shares Therefore, the accuracy of financial data is essential for decision making

Receivables and Payables: Managing what your company owes its suppliers and what customers owe the company is essential To give a clear view of the amount

of working cash a company should have

Investment opportunities: Financial statements provide the opportunity to invest in the right stocks at the right time With a clear view of the financial health, the organization can take advantage of the most precise opportunities

Risks: To have a robust financial management system it is imperative to maximize profits and minimize risks with liability An effective finance team should incorporate all the essential elements of a company

3.2.2 The plan of financial management:

Definition of Financial Planning: Financial planning 1s the process of estimating the capital required to complete an organization's business activities It is a

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process of formulating financial policy related to the provision of assets, investments, and fund management of an organization Financial planning is the process of formulating goals, policies, procedures, programs, and budgets that refer to financial activities

Financial planning process:

Forecasting financial planning: For any company, financial planning plays an important part in financial planning A short-term forecast projects revenue and expenses over a period of one year or less

A short-term forecast section gives senior management as well as executive managers some sense of the earnings or profit potential of various strategic plans It also helps to prepare the company budget

Working with the budget process: Is a financial plan, in which it relies heavily

on the accuracy of the balance sheet, income statement of cash flows, and financial projections short term and long term The budget becomes the primary guide for a company's financial activities and its projected financial needs Three types of budgets are common in financial planning: capital budgets, cash budgets, executive or master budgets

3.3 DISTINGUISH BETWEEN FINANCE AND FINANCIAL

MANAGEMENT

There is a clear difference between finance and financial management, finance is an economic category that reflects the distribution of social wealth in the form of values arising in the process of formation, creation and distribution distribution of monetary funds of entities in the economy to achieve financial goals objectives of the subjects in each given condition But despite the big difference, there

is a close relationship between finance and financial management Between them there are common points to coordinate for planning and financial management And their ultimate goal is to bring profits to the company