Download Financial Management

FINANCIAL MANAGEMENT
THE SUPERVISOR
AS A FINANCIAL
MANAGER
Presented by: Orville J. Mighty
April 27, 2017
LEARNING OBJECTIVES
At the end of this session participants should be
able to:
• Differentiate between Financial Management and
Accounting.
• Explain how management decisions impact financial
performance of a firm.
• Analyse the supervisor’s role as a Financial Manager.
LEARNING OBJECTIVES
At the end of this session participants should be
able to:
• Observe ethical principles in financial
operations.
• Appreciate that all supervisory
decisions have financial implications.
WHAT IS FINANCIAL MANAGEMENT ?
DIFFERENCE BETWEEN FINANCIAL
MANAGEMENT & ACCOUNTING?
FINANCIAL
ACCOUNTING
The systematic and
comprehensive recording,
summarizing , analyzing
and interpretation of
financial transactions.
DIFFERENCE BETWEEN FINANCIAL
MANAGEMENT & ACCOUNTING?
FINANCIAL
MANAGEMENT
The effective and
efficient management of
organizational resources
to achieve organizational
objectives.
OBJECTIVES OF FINANCIAL
MANAGEMENT
The objectives of financial management
includes ensuring:
• adequate supply of funds for the
organization
• optimal utilization of funds
• a sound capital structure
PRIMARY OBJECTIVE OF
FINANCIAL MANAGEMENT
The PRIMARY
objective of financial
management is to
maximize the stock
price of a firm.
PROBLEMS WITH PROFIT MAXIMIZATION
The goal is to maximize wealth,
not just profit. Since profit
maximization:
• is a short term perspective
• ignores riskiness of various
projects
• ignores the time value of
money
EFFECTS OF POOR FINANCIAL
MANAGEMENT
• Cash flow problems
• Inadequate resources
• Inability to exploit
opportunities
• Staffing issues
• Business failure
SCOPE OF FINANCIAL MANAGEMENT
Evaluation of Risk
Capital Budgeting
Financing & Investments
Time Value of Money
GROUP ACTIVITY
In groups of five (5),
discuss how supervisors
can help to enhance the
financial performance
of their organizations.
(25 Minutes)
GROUP ACTIVITY
Resource Acquisition & Allocation
Staffing Concerns
Quality Control
Risk Identification
MANAGERIAL DECISIONS
STRATEGIC & OPERATIONAL DECISIONS
What products or services to deliver & how these are done
INVESTMENT DECISIONS
Asset acquisition, expansion etc.
FINANCING DECISIONS
How to finance investments – debt or equity
THE SUPERVISOR’S ROLE AS A FINANCIAL
MANAGER
Planning and Forecasting
Making Investment and Financing Decisions
Coordination and Control
Risk Management
RISK DEFINED
A risk is any deviation from
what is expected.
• It includes all types of
uncertainty
• It includes upside volatility
(opportunities)
RISK CATEGORIES
Demand Shortfall
Customer
Retention
Pricing
Regulation
STRATEGIC
Debt and Interest Rates
Poor Financial
Management
Liquidity Problems
Foreign Exchange
Movements
OPERATIONAL
FINANCIAL
Management
Capacity
Supply Chain Issues
Cost Overruns
Employee Issues
RISK ANALYSIS
Risk Analysis is a process
that helps you identify and
manage potential
deviations that could
potentially impact on the
chosen solution.
QUALITATIVE RISK ASSESSMENT
A heat map is a type
of status report with
color coding used to
score the level of
key risks.
RISK TREATMENT
Risk
Avoidance
Risk
Acceptance
Risk
Transfer
Risk
Mitigation
QUESTION TIME