Role of a finance manager
Finance is the life-blood of business. With
the objective of maximizing the wealth of share holders the finance managers
strategically use both short and long term funds to help the growth of the
company. The finance mangers make a wide variety of decisions of raising
the funds and optimum utilization of the same.
The main responsibilities of finance
1. Raising Funds: The finance
manager estimates the requirement of fund. He looks into the purpose and timing
of the fund by using various techniques like budgeting and costing.
2. Financing Decision: The finance
manager after careful analysis chooses the right proportion of the mix of fund.
The decisions of long term or short term capital, debt or equity finacing, etc
is made accordingly. The money raised will be adequately allotted to long term
investment like fixed assets or to working capital requirements.
3. Financial Analysis: After
allotting of the funds the efficiency of
the funds and further steps of improving their use is analyzed using tools like
ratio analysis, cash flow, intra firm comparison, budgetary control, etc.
4. Cash Management Decisions: The
manager needs to ensure that there is an adequate fund for running the
operations. He also needs to ensure that idle cash is not there with the
5. Dividend Decisions: The Finance
manager is responsible for paying the dividends and the retention in the
business. The requirement of future fund, earning capability, cash flow, etc
needs to analyzed before making the decisions.
6. Negotiation: The finance manager
needs to negotiate with financial institutions, banks, etc to get the best deal
for the company.
7. Analysis of Market: The
objective of the financial manger is to maximize the wealth of the shareholders
hence he needs to monitor the prices of the stocks and securities in the market
and base his actions accordingly.
The importances of the financial managers
are increasing in the recent arena with the changing economic scenario. The
companies are expanding and then there is changes happening daily for which the
finance manager should be prepared to navigate the company.