Book Review of Principles of Managerial Finance By Lawrence J Girman

Book Review of Principles of Managerial Finance By Lawrence J Girman

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Book Review Principles of Managerial Finance By Lawrence J. Gitman (7 th Edition) Finance can be defined as the art and science of managing money. Virtually all individuals and organizations earn or raise money and spend or invest money. Finance is concerned with the process, institutions, market and instruments involved in the transfer of money among and between individuals, businesses, and governments. The major areas of finance can be summarized by reviewing the career opportunities in finance. These opportunities can be divided into two broad parts: financial services and managerial finance. Financial services: The part of finance concerned with design and delivery of advice and financial products to individuals, business, and government. Managerial finance: Concerns the duties of the financial manager in the business firm. Career Opportunities in Financial Services are: Banking and related institutions, Personal financial planning, Investments, Real estate and Insurance. Career Opportunities in Managerial Finance are: Financial analyst, Capital budgeting analyst/manager, Project finance manager, Cash manager, Credit analyst/manager and Pension fund manager. The financial manager’s activities can be related to the firm’s basic financial statements. His or her primary activities are (1) Performing financial analysis and planning, (2) Making investment decisions, and (3) Making financing decisions. Financial management is a goal-oriented activity. The goals of the financial manager are to maximize profits, to maximize shareholder wealth and to preserve stakeholder wealth. Financial institutions and markets are important elements in a firm’s operating environment. Financial institutions are intermediaries that channel the savings of individuals, businesses, and governments into loans or investments. Financial markets provide a forum in which suppliers of funds and demanders of loans and investments can transact business directly. The two key financial markets are the money market and the capital market. Primary market is a financial market in which securities are initially issued; the only market in which the issuer is directly involved in the transaction. Secondary market is a financial market in which pre-owned securities are traded. 1
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Every corporation has many and varied uses for the standardized records and reports of its financial activities. The four basic financial statements are the income statement, the balance, the statement of retained earnings, and the statement of cash flows. The income statement provides a financial summary of the firm’s operating results during a specified period. The balance sheet presents a summary statement of the firm’s financial position at a given point in time. The statement of retained earnings reconciles the net income earned during a given year, and any cash dividends paid, with the change in retained earnings between the start and end of that year. The statement of cash flow provides a summary of the cash flows over the period of concern, typically the year just ended. Depreciation is an important accounting
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