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Fundamentals of Finance - Assignment Example

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In the paper “Fundamentals of Finance” the author discusses the role of financial management, the achievements of Goldenport Holdings Inc. under three different tasks in order to find out whether the management of Goldenport Holdings Inc has performed as per shareholders’ expectations…
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Fundamentals of Finance
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Download file to see previous pages It is the size of the company that decides the role of financial management in a firm. In small firms, financial management is handled normally by the accounting department but in large entities, a separate department under the leadership of its CFO takes care of its financial management. Broadly “the financial manager of a firm plays an important role in a company’s goals, policies and financial success. The financial manager’s responsibility includes financial analysis and planning- determining the proper amount of funds to employ in the firm, i.e. designating the size of a firm and its growth; investment decisions- the efficient allocation of funds to specific assets; financing and capital structure decisions- raising funds on as favorable terms as possible, i.e., determining the composition of liabilities; management of financial resources (such as working capital); and risk management protecting assets by buying insurance or hedging.” (Jae K Shim and Joel G Siegel, page 2)1 From above it is clear that the major activities of financial management surround making investment decisions and also making financial decisions. As per Lawrence J. Gitman (2006, page 12), 2 “investment decisions determine both the mix and type of assets held by the firm. Financing decisions determine both the mix and type of financing used by the firm.” The basic goal or the objectivity of financial management is to maximize the profits and the shareholders’ wealth. When these objectives are achieved, the result is increased in earning per share and dividend declared and received by its shareholders. In view of this background let us analyze the investing and financing role of financial management. ...Download file to see next pagesRead More
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