Financial management is effective management of monetary resources of the organization. It helps the organization to plan, organize, direct, monitor, and control the financial activities efficiently and run the operations smoothly. I have learned different concepts of financial management in the class.
I have learned that financial ratios play are useful in accessing the business performance and provide information about the company’s financial situation. The application of financial ratios allows examining the financial structure of the organization and comparing it with other competitors. I have understood that it helps the financial analyst to implement different strategies and improve financial structure, leverage, interest coverage, and liquidity. The organization can take effective decisions to manage the cash and pay debts promptly. It provides information about the assets utilizations and its management in an effective manner. It provides information about company’s stock and issuing stock to manage the company share in the market. It allows the organization to take the right decision and increase its sales, assets, and profit .
Cost-benefit analysis of cash management is an important topic that I learned in the class. It helps the organization to review the detailed outline of the gain and potentials risk. It provides information about the costs and benefits of any project and helps the organization to identify the make effective decision. I have found that every organization needs proper cash management to identify the amount of money, whether it is optimum, excessive, and deficit.
I have observed in the class that every organization needs to compute its average collection period and receive payments promptly. The application helps the organization to determine the necessary average number of days and convert the receivable into cash. It can identify the problems in the cash flow. The organization can meet the timely customer collections and payment of its own expenses.
I have understood that economic order quantity plays an important role in minimizing the ordering cost and total holding cost of the organization. It is an important function of financial management that helps the company in inventory management. The application maintains sufficient inventory level according to the customers’ orders and improves customer services.
I have learned that the credit policy decision plays an important role in the organization. It is the basic decision for the extension of the business credits to its customers and other business. The effective credit policy increases the company’s sales and creates a good relationship with the customers.
I have understood various concepts of present value (PV) and future value (FV) and learned about the time value of money. It helps the organization to measure the present and nominal future sum of money and provide assumptions about the interest rate. I have found that the future value provides the amount of money using the number of periods and the implied interest rate to compute the quantity of a future sum of money based on the present value today.
I have learned different concepts of maturity and bond prices in the class. It helps the organization to calculate the risk when it is investing in the bonds. It provides the information about prices of the bonds and returns with yield.
I have understood the features of various securities that decrease the risks and increase the opportunities. It helps the organization to increase its profit and design prospectus for future development. The financial securities help in financial planning and finance growing.
I have found that payout ratios identify the sustainability of the organization’s dividend payment and consider future earnings expectations. Retained earnings are net profit that increases the worth of the organization, and it is used for investments and other growth opportunities.
I have understood the concepts of dividend tax calculation that play an important role in managing the organization portfolio. The application helps the organization to compute the tax and identify the payable dividend tax. It identifies the marginal tax rates, calculations, and effect of taxes on the organizational growth .
\
Works Cited
Gitman, Lawrence J. Principles Of Managerial Finance, 11/E. India: Pearson Education India, 2007. Print.
Rodgers, Paul. Commercial Awareness and Business Decision Making Skills: How to understand and analyse company financial information. Burlington: Butterworth-Heinemann, 2007. Print.
