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Financial Aspects of Management

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Financial Management entails planning for thefuture for a person or a business enterprise to ensure a

positive cash flow . It includes the administration andmaintenance of financial assets. Besides, financialmanagement covers the process of identifying andmanaging risk.

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y The goal of financial management is to maximize the

current value per share of existing stock.

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y Money and capital markets - which deals withsecurities markets and financial institutions;

y Investments - which focuses on the decisions made byboth individual and institution a linvestors as theychoose securities for their investment portfolios;

y Financial management - or business finance ,whichinvolves decisions within firms.

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y During the depressions of the 1930s -

emphasis shifted to bankruptcy and

Re organisation, to corporate liquidity, and tothe regulation of security markets

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y During the 1940s and early 1950s financecontinued to be taught as a descriptive, institutionalsubject, viewed more from the standpoint of anoutsider rather than from that of a manager

y Late 1950s focus shifted to managerial decisionsregarding the choice of assets and liabilities with thegoal of maximizing the value of the firm

y 1990s to date focus on value maximizationcontinued but two trends have become increasinglyimportant: the globalization of business and theincreased use of information technology

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Financial Structure

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Capital structure refers to the way acompany finances its assets through somecombination of equity, debt, or

hybrid securities .

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y Determine if additional research is needed; identify significantmacro issues or events ; identify assumptions needed for missinginformation

y

Build the forecast

y Test forecast for sensitivity, review forreasonableness and ability to monitor

y

Assess effectiveness of plan in meeting theobjectives (pros/cons)

y Consider alternative solutions

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y Efficiently manage entity resources

y Effectively mitigate risks to attain entity

objectives

y Maintain a sound financial condition within the limitsof available resources

y Comply with applicable policies, laws and regulations.

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Financial Risk

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Risk Management is the name given to alogical and systematic method of identifying,

analyzing, treating and monitoring the risks involvedin any activity or process.

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Responsibilities must be allocated:Responsibilities must be allocated:

Appoint a Risk Management champion withAppoint a Risk Management champion withappropriate qualifications, including experience andappropriate qualifications, including experience and

analytical skills.analytical skills.

Form a Risk Management Committee,Form a Risk Management Committee,representative of operational areas.representative of operational areas.

Conduct Risk Management Workshops.Conduct Risk Management Workshops. Determine operating procedures.Determine operating procedures.

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1.1. Identify commodity or control risks; e.g., highIdentify commodity or control risks; e.g., highduty rates or quantity controls, the demand forduty rates or quantity controls, the demand forprohibited goods, such as drugs, traffic inprohibited goods, such as drugs, traffic in

CITES wildlife.CITES wildlife.2.2. Research existing databases and records onResearch existing databases and records on

commodity and trader histories.commodity and trader histories.

3.3. Evaluate current procedures to identifyEvaluate current procedures to identify

potential control weaknesses.potential control weaknesses.

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y You need to describe or to quantify exactly what thelikelihood and consequence terms means to you.

y This helps in insuring a consistent approach in futurerisk assessment, review and monitoring.

y It promotes common understanding within theadministration.

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y Low & very low level of risks can be normally acceptedsubject to ongoing monitoring

y All other risks are included in the management plan.

The plan catalogues the risks, the level of risks &describes the treatment/.

y The treatment is the action proposed (and perhaps theresources allocated)

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y The party who stands to benefit from an insurancepolicy.

y The party insured.

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The insurance policy that pays first when you have aloss that's covered by more than one policy.

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y This insurance is utilized after the primary insurancehas been exhausted.

y For example if you are in an automobile accident withyour personal vehicle, claims would be made on yourpersonal automobile policy until the limits areexhausted and then on county insurance until those

limits are exhausted.

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Its the evaluation of risk and how monetary value of acompany is effectively used in insurance for themaintenance of risk taking account of all the risk

probabilities .

In the past decades the importance of insuranceevaluation in companies is taken in large importance

specially in software companies due to information,data.

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Insurance is classified in various factors of the risk range.

Size of the company

Time period of goals

Employment policies

Value of company assets

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Thank you