Management and Working Capital
April 7th, 2010
Financial management is the management of financial functions. Functions of financial management:
1. Investment decision: making decisions the use of the funds or the allocation of funds.
- Short term: the use of funds for the operation of the company.
- Long-term: investment in fixed assets.
2. Financial decision: the decisions by the election of funding sources.
- Through the issuance of shares
- Through the obligations.
3. Dividends decision: to determine whether the funds that received and the resulting from the operation will be distributed to shareholders or to be invested again. The goal of financial management: is to maximize corporate value. Benefits of financial management are to understand about what is happening around us, to solve practical problems and also explains various facts and information.
The function of a financial manager is:
1. Analyzing and plans for corporate spending.
2. Managing capital investment in assets.
3. Regulate financial structure and capital structure.
Working capital is the capital that used by the company as operating which its turnover is less than a year through the sale of its production.
The concept of working capital:
1. Quantitative concept (gross working capital): which is the total current asset.
2. Qualitative concept (net working capital): which is an excess of current assets over current debt.
3. Functional concept: which an assets function of the fund for gaining revenue.
Potential working capital is funds that later can be cashed easily.
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