Back to: Financial Management
Hello, class!
Welcome back. I hope you found last week’s topic enlightening. Today, we will focus on the functions of a financial manager, which builds on our understanding of the objectives of financial management.
Get your pens ready—this is one of the most practical topics in the course.
Lesson Objectives:
By the end of this lesson, students should be able to:
Identify the key functions of a financial manager.
Explain the role of financial managers in achieving business goals.
Understand how financial decisions impact the organisation.
Functions of a Financial Manager
Who is a Financial Manager?
A financial manager is responsible for overseeing the financial health of an organisation. They ensure that resources are allocated efficiently and financial goals are achieved.
Core Functions of a Financial Manager:
Financial Planning and Forecasting:
Estimating the capital required for business operations.
Budgeting and preparing financial forecasts.
Investment Decision (Capital Budgeting):
Deciding where to invest the firm’s resources.
Analysing potential investment opportunities for profitability.
Financing Decision:
Determining the best financing mix (equity, debt, or both).
Sourcing funds at the lowest possible cost.
Dividend Decision:
Deciding how much profit should be retained and how much should be distributed to shareholders.
Liquidity Management:
Ensuring the business has enough cash to meet day-to-day expenses.
Managing working capital effectively.
Risk Management:
Identifying and mitigating financial risks such as market fluctuations, interest rates, and currency risks.
Financial Reporting and Analysis:
Preparing financial statements.
Analysing reports to inform strategic decision-making.
Other Supportive Roles:
Advisory Role – Advises top management on financial matters.
Compliance – Ensures adherence to laws, tax policies, and corporate governance standards.
Summary:
The financial manager plays a central role in guiding an organisation toward financial stability and growth. From investment and financing decisions to managing cash flow and risk, the financial manager must combine analytical skills with strategic insight.
Class Activity / Discussion:
Assume you are the financial manager of a medium-sized Nigerian company. What three key decisions would you make in your first month on the job? Write a short report to present next class.
Evaluation (Assessment Questions):
List and explain five functions of a financial manager.
Why is financial planning an important role for financial managers?
Describe how a financial manager manages risk in an organisation.
What is the difference between financing and investment decisions?
Explain how a poor dividend decision might affect a business.
School Admin? Grow your school faster with Africa's most trusted school management software
Get more class notes, videos, homework help, exam practice on Android [DOWNLOAD]
Get more class notes, videos, homework help, exam practice on iPhone [DOWNLOAD]