GEB-4455 Lecture Notes - Lecture 15: United Parcel Service, Trade Credit, Cash Flow
Document Summary
Finance is the function in a business that acquires funds for the firm and manages them within the firm. Finance activities include preparing budgets; doing cash flow analysis; and planning for the expenditure of funds on such assets as plant, equipment, and machinery. Financial management is the job of managing a firm"s resources to meet its goals and objectives. In short, financial managers examine financial data prepared by accountants and recommend strategies for improving the financial performance of the firm. As you can see, two key responsibilities are to obtain funds and to effectively control the use of those funds. Controlling funds includes managing the firm"s cash, credit accounts (accounts receivable), and inventory. Finance is a critical activity in both profit-seeking and nonprofit organizations. Three of the most common reasons a firm fails financially are: undercapitalization (insufficient funds to start the business), poor control over cash flow, inadequate expense control.
