Role of Financial Manager

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來自 Indian School of Business 的課程

Accounting and Finance for IT professionals

71 個評分

Indian School of Business

Accounting and Finance for IT professionals

71 個評分

課程 3（共 6 門，Specialization Business Technology Management）

This course presents an introduction to the basics of financial accounting and finance for IT professionals. The first part of the course will focus on understanding the most important financial statements, namely, the balance sheet, the income statement, and the statement of cash flows. We will then focus on how we can understand the financial health and performance of the company by examining a number of important financial ratios that are derived from the financial statements of the company. The second part of the course will focus on the basics of finance. This includes the concept of time value of money, discounting cash flows, and capital budgeting. The course will also introduce the idea of real options, how they affect a project’s NPV, and their impact of the decision to accept/reject a project. Lectures on concepts will be supplemented with numerical examples.

從本節課中

Basics of Financial Statements

This module provides a brief introduction to financial statements and various common filings. These are the most important sources for obtaining information regarding a company's performance. Most strategies are indeed based on financial statements. After completing this module you will be able to get the important details from the balance sheets.

Introduction and Courser Overview2:31

Business Organizations4:57

Role of Financial Manager4:20

Introduction to Accounting5:08

The Balance Sheet3:12

Liabilities4:45

Shareholders' Equity4:30

Income Statement4:20

Statement of Cash Flows4:02

Cash Flows from Operations9:19

Cash Flows from Investments and Financing6:20

與講師見面

Ramabhadran Thirumalai
Assistant Professor
Indian School of Business

[MUSIC]

After watching this video you will be able to explain the role of a financial

manager, briefly describe the investment and financial decisions and working

capital management, explain the goal of a financial manager in a corporation.

The financial manager asks as a conduit between the financial markets and

the company.

She raises capital from financial markets through the issuance of debt and equity.

She then invests this capital in profitable investment opportunities

she has identified.

These investments generate profits in the form of cash.

And finally the financial manager decides how much of the cash generated should

be retained by the company and reinvested in the company's operations, and

how much should be paid out to investors.

Retaining and reinvesting profits back into the company's operations

is commonly referred to as plow back.

The manager will not have any control

over how much is paid back to debt holders because those are obligations.

Failure to pay debt holders on time leads to the company going bankrupt and

likely being liquidated.

The only part over which the manager has control

is how much is paid out as dividends to shareholders.

The manager decides if and how much dividends are paid out to shareholders.

Payouts to shareholders are not an obligation.

Managers may decide against paying any dividends if they feel

that the money is better used if invested in profitable investment opportunities.

This is one of the reasons that firms in the information technology industry

usually do not pay dividends.

For example, Google and now it's holding company,

Alphabet Incorporated, has never paid dividends.

Holding cash helps companies, especially in the fast changing and

competitive information technology industry, to quickly invest

in profitable opportunities once the managers identify them.

The role of the financial manager may be categorized into three.

One, the investment decision.

Two, the financing decision.

And three, working capital management.

The investment decision is identifying profitable opportunities

from a number of available investments.

Later in this course we will talk about how a manager determines whether

an investment opportunity is profitable or not.

This is the area of capital budgeting.

Once the manager identifies profitable opportunities,

she needs cash to invest in these opportunities.

The decision on how to raise this capital is the financing decision.

The manager decides how much money should be raised through debt and

how much through equity.

She also decides how much should be raised through various debt channels

like bank loans, bonds, etc.

Similarly, she decides how much should be raised through various equity channels

like common stock, preferred stock, warrants, etc.

Finally, the manager is also responsible for working capital management.

Working capital management ensures that the company has sufficient cash

to meet its short-term operating costs and debt obligations.

This leads to the company maintaining financially efficient operations.

While we have seen what the role of a financial manager, the main goal of

a financial manager in a corporation is to maximize shareholders' wealth.

The shareholders are the owners of the company.

They invest in the company with the primary objective of growing their wealth.

If the manager does not maximize shareholder wealth,

the shareholders will fire the manager.

We have already talked about the agency problem between managers and

shareholders and how offering shares to managers

as part of the compensation package can minimize these agency costs.

Once managers become shareholders, they will work towards maximizing their wealth

and consequently towards maximizing all shareholders' wealth.

Next time, we will talk about what accounting is and

the different types of accounting.

[MUSIC]

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