MGM101H5 Chapter Notes - Chapter 12 - 13: Uptodate, Unsecured Debt, Certified Management Accountants Of Canada
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MGM101H5 Full Course Notes
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Document Summary
Finance is a critical activity in both profit-seeking and not-for-profit organizations. The value of understanding finance: undercapitalization (insufficient funds to run a business, poor control over cash flow, inadequate expense control. Financial planning: means analyzing short-term and long-term money flows to and from a firm, overall objective: optimize the firm"s profitability and make the best use of its money, three steps: Once a company forecasts its short and long-term financial needs (step 1) and compiles budgets to show how it will allocate funds (step 2) the final step in financial planning is to establish financial controls (step 3) The need for operating funds (mcama: managing day-to-day needs of a business, financial managers must ensure that funds are available to meet daily cash needs without compromising the firm"s opportunities to invest money for its future. Money has time value: the interest a firm gains on its investments is important in maximizing the profit it will gain.
