AFM131 Lecture 10: Finance_Study_Notes

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM131
• Professor: Bob Sproule

Document Summary

Controlling funds (funds management) collecting funds (credit management) advising top management on financial matters. Financial management: managing firm"s resources to meet goals and objectives. Three most common ways for firms to fail financially: undercapitalization - insufficient funds to start, poor control over cash flows - matching cash inflows to cash outflows. Inadequate expense control - expenses too high in relation to revenues. Finance is all about managing the funds of a business (interpretation of financial data versus accounting - preparing accounting data) preparing budgets doing cash flow analysis obtaining of funds for long-lived assets (see figure 17. 1 on page 520) Financial managers: examine financial data prepared by accountants and recommend strategies for improving financial performance. Each reporting unit would be headed by a management who would be required on an annual basis to submit an operating budgeting. Each unit"s operating budget would then be approved, at the board level.