A financial manager uses financial information to monitor an organization’s finances. When things are going well, they oversee investments and develop plans to boost the company’s finances. Even in difficult times, they develop short- and long-term financial plans for the firm. Their financial knowledge assists business leaders in making decisions. In this article, we will discuss about goals of finance manager in brief with examples for your better understanding.
This is true for all businesses, regardless of size or stage. Corning has been around for over 160 years. Management considers the big picture and does not change annual earnings to appease Wall Street. Corelle tableware and Pyrex heat-resistant glass cookware were the company’s most well-known products. As a technology company, it now produces specialized glass and ceramic goods. It is a major producer of Gorilla Glass, which is used in smartphones and tablets such as the iPhone, iPad, and Android devices. The company produced optical fiber and cable for the telephone sector. These product lines necessitate large sums of money for extended R&D cycles, manufacturing facilities, and tools. To deepen your understanding of role of finance manager topic, read more extensively.
Goals of Finance Manager
By tracking money, financial management assists firms in meeting their objectives. It is in charge of planning, organizing, and managing an organization’s finances. Financial management decisions include cash flow, investment, financing, and risk management. This assists organizations in meeting their objectives and making money. The goals of finance manager is as follows:
Earnings Focus
EPS maximization entails making the most money after taxes possible given the number of shares available. This goal has the same rewards and requirements as making the company profitable. The nature of earnings and the comparative base are obvious. EPS maximization may lower value since it disregards incentive policy.
Taking Charge
The financial manager controls funds, examines expenses, and adjusts spending to ensure the profitability of the organization. They keep track of these changes and adjustments and compare them to what they expect to assist the company achieve its goals and remain profitable.
Liquidity Max
The ability of a corporation to pay short-term bills is indicated by its liquidity. The company’s current assets and obligations, the rate at which they mature, the quality of its non-cash current assets, its relationships with short-term creditors and bankers, and other factors all have an impact on its ability to do so. A higher current ratio, a perfect match between the maturities of current assets and current liabilities, and a healthy, “moving”/sup> mix of current assets are all advantageous.Current assets and knowledge of creditors assist a firm in maintaining liquidity.
It should also help bankers. All of these are costly and risky to acquire.Goal that is good but not ideal. To fulfill their daily obligations, all groups require money. Ultimately, the company lost money. A cash-rich company can take advantage of unexpected chances such as purchasing a large quantity of items at a low cost, lending money to people who owe you money on call when interest rates are high, paying off short-term debts while taking advantage of cash bargains, and so on. There are numerous advantages. Too much liquidity can drain cash resources, therefore avoid it. Indeed, possessing too much wealth and making money are diametrically opposed goals that must be balanced.
Cash Flow
Cash flow is the actual amount as opposed to the company’s expected income and expenses. Financial managers must manage their cash flow. It is irresponsible to rely on customer payments to pay debts early. Cash management practices ensure that a company has enough cash to cover expenses while remaining financially stable. This is accomplished by having sufficient credit and cash.
Maximizing Profits
Profit conceals more than it reveals because it is absolute. Profit must be directly related to sales, capacity, production, or capital investment. When discussing profit in terms of size or scale, profit becomes more significant. Profitability is represented by relative profit. More specific methods of calculating profit include profit per rupee of sales, production, investment, and so on. This makes this goal superior than making the most money. ROI is a broad technique to calculating how much money you make for every rupee spent. ROI stands for return on investment. Profit divided by sales equals profit per rupee of sales. The number of capital turns is calculated by dividing sales by investment. The first statistic represents a company’s profitability, while the second represents its activity. The first, second, or both methods can maximize ROI.
This goal receives the same high marks as profit maximization. With one exception, this goal gets nearly the same negative scores as profit maximization. Profit maximization has no foundation. To maximize revenue, profit must try to sales and/or investments. The scale is relative. As a result, it exceeds the profit growth target. Because of ongoing problems, this goal is also “qualified.”
Following the Law
The financial manager is responsible for ensuring that all legal financial obligations are met. If it is a public corporation, it must pay sales and income taxes, provide employee benefits, comply with state and federal wage rules, and file with the SEC. In addition, the finance manager must guarantee that the corporation follows business regulations. A financial manager may delegate these legal responsibilities to in-house workers or tax and CPA specialists.
The Report
Financial managers guarantee that the organization complies with legal reporting requirements. They accomplish this by adhering to all regulations and presenting accurate financial reports. Businesses are required to provide financial information to the government for tax purposes and to keep public records. Giving correct information improves the reputation of the company. This is good goals of finance manager.
Profit Maximization
Profit maximization is the goal of financial management. It is the difference between what you make and what you spend. To maximize profitability, you can maximize revenue, decrease expenses, or maximize both. Additionally, price and scalability allow for profit maximization. If demand does not fall as quickly, you can make the most money by raising prices. One technique for maximizing profitability is to use demand factor price-elasticity to enhance sales. The amount by which numbers vary, how cost-conscious people are, and how the inputs market is performing all have an impact on cost reduction. To optimize profitability, several factors must be in place.
However, making a lot of money isn’t ideal. You are aware of the limits. For starters, wealth is vague. Profit can be separated into four categories: total profit, profit before taxes, profit after taxes, net profit, and divided profit. As a result, the profit connection must be obvious. Second, describe whether the profit growth will be long-term or short-term. Long-term and short-term profit plans are not the same. Third, scale doesn’t concern profit maximization. Profitability and business size must go hand in hand. Otherwise, success and efficacy cannot properly understand. Time and profit must relate as well.Inflation causes money to lose value. The rupee is worth more now than it will be tomorrow or the next day. When attempting to maximize earnings, the value of money over time is overlooked.
Keeping Costs down
Setting spending limits and decreasing expenses is not enough to keep costs under control. A financial manager must design RFPs, tendering processes, and purchasing policies for contractors, vendors, and suppliers. This is the only way to assure the best price-to-quality ratio for the company. A finance manager will also evaluate the company’s existing and future resource requirements to determine whether it should outsource or conduct it in-house. The financial manager is in charge of managing the company’s debt and taxes in order to minimize interest and taxes.
Setting up
Unlike accountants, financial managers plan for the long term and delegate bookkeeping to staff. These plans may use to manage costs, production, and debt service, as well as sales, profit margins, and cash profits. Business owners that have extra cash must figure out how to spend it wisely. He may also discover ways for the company to raise capital in order to expand or acquire other businesses. To construct these plans, he will need a master budget or a budget variance analysis. This budget should include the company’s balance sheet, accounts payable and receivable, cash flow, and profit-and-loss statements. However, the finance manager will check this budget variance analysis on a regular basis to ensure that the company’s performance matches its forecasts. If not, he will make suggestions.
FAQ
What is a Good Goal for a Boss to Work On?
Your management require this next level of expansion. Also, they must learn how to manage larger groups and assign tasks. This includes growth coaching, building the right culture, and facilitating professional advancement.
What Goals can be Reached?
With your time, talents, and self-esteem, you may attain practical goals. Setting attainable objectives may assist you in determining what you want and what you are capable of doing.
Why is it Important to have Goals?
Setting goals allows you to create new habits, focus, and advance in your life. Goals can also assist you in focusing and feeling in control. them cannot be controlled if they are not measured, and poor management will not improve them.
Conclusion
Finance is in charge of an organization’s finances. Financial managers must determine how much money is required, when it is required, how to use available finances, and how to obtain it. Financial managers plan, invest, and raise capital for their organizations. The primary purpose of the financial management is to increase the value of the firm, and their decisions have long-term consequences. To summarize, the topic of goals of finance manager is vital for creating a fair and equitable society.
