TEST BANK For Corporate Finance, 13th Edition By Stephen Ross, Randolph Weste...
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Role of Financial Manager
1. Role of Finance Manager
THE HISTORY OF FAILURES OF ORGANISATIONS IS
INTERESTING. MANY
FIRMS HAVE FAILED, NOT BECAUSE OF INEFFICIENCY OF
PRODUCTION, INABILITY IN MARKETING OR
NONAVAILABILITY OF FUNDS BUT DUE TO THE ABSENCE OF
COMPETENT FINANCE MANAGER
2. โข Finance Manager has to find out from where
can raise the fund.
โข Finance Manager has to think about the
investment decision.
โข Finance Manager has to make financial
forecasting.
โข Finance Manager has to maintain the liquidity
position of the firm.
3. โข Capital Budgeting decision.
โข Dividend decision
โข Working Capital management
โข Cash Management
โข Risk Management , Risk Diversification
โข Portfolio Management
4. โข Finance and Production.
โข Finance and HRM
โข Finance and Marketing
โข Finance and R&D
โข Finance and CSR
5. โข Merger and acquisition
โข Valuation of share and the assets
โข International Finance Management
โข Implication of Govt taxation, interest policy
โข Understanding the role of intermediaries in
finance
6. โข Analyzing the financial health of the
organization
โข Preparing Budget for production, marketing
and finance deptt.
โข Managing payment and receivable.
โข Framing the credit policy.
โข Deciding regarding the source of finance
โข Depreciation and replacement decision
7. โข Hedging and insurance decision.
โข Decision regarding the risk coverage.
โข Decision regarding the investment and the
return
โข Analyzing, interpreting and forecasting after
going through the accounting reccord
8. Disinvestment and Shut down
โข Decision regarding the disinvestment and
closure.
โข Liquidation
โข Sell off
โข Merger
9. โข The expansion and diversification.
โข Measuring investment risk versus return.
โข Size of the firm
10. Objective of the Firm and Approach
โข Profit maximization versus wealth
maximization
โข Finance Manager has to think about the short
term and long term objective if the firm
โข Finance Manager has to decide the capital
structure
โข Finance manager think about the optimum
utilization of the resource for the desired
goal, or efficiency and effectiveness
11. Various Decision Making
โข Investment decision or long term asset-mix
decision
โข Finance decision or capital-mix decision
โข Liquidity decision or short-term asset mix
decision
โข Dividend decision or profit allocation decision
12. โข Maximization of firmโs value.
โข Shareholderโs value maximization
โข Dividend, retention and re-investment
decision.
โข Liquidity and profitability are conflicting
decision
โข Risk and returning decision.
13. Finance manager role in Current Time
โข Understanding the implication of corporate social
responsibility with respect to profitability.
โข Decision on the optimum size of the firm
โข Decision on stock option , perquisites and bonuses.
โข Understanding and applying the modern financial
instruments such as factoring, derivative, credit
derivative, securitization and venture capital.
โข Transfer pricing
โข Understanding the Time Value of Money