19-03-2014, 02:35 PM
Scope or content of finance function can be classified
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Scope or content of finance function can be classified as follows:
I) Estimating financial requirements
ii) Deciding capital structure
iii) Selecting a source of finance
iv) Selecting a pattern of investment
v) Proper cash management
vi) Implementing financial controls
vii) Proper use of surplus
function of financial management into five key areas,
financial planning,
investment project appraisal,
financial decisions,
capital market operations
financial control.
What are the financial decision areas
Modern approach of financial management provides a conceptual and analytical framework for financial decision making. According to this approach there are 4 major decision areas that confront the Finance Manager these are:-
a) Investment Decisions;
b) Financing Decisions;
c) Dividend Decisions
d) Financial Analysis, Planning and Control Decisions
Financial objectives
• Return on capital employed (ROCE) targets
• Shareholders’ returns
• Cost minimisation
• Cash flow targets
Internal influences on FO
• Corporate objectives
• Nature of the product that is sold
• Objectives of the senior managers
• Finance
• Human resources
• Operational factors
• Resources available
External influences on FO
• PESTLE analysis
• Actions of other businesses
• Market factors
• Suppliers