Chapter 17 - Chapter 17 THE FINANCIAL FUNCTION AND...

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Chapter 11: Strategic Leadership Chapter 17 © Oxford University Press Southern Africa, 2008. All rights reserved. THE FINANCIAL FUNCTION AND FINANCIAL MANAGEMENT
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Chapter 11: Strategic Leadership CHAPTER CONTENT Opening case: Financial management in action Introduction The financial function and financial management Concepts in financial management Objectives and fundamental principles of financial management Cost-volume-profit relationships The time value of money Financial analysis, planning and control © Oxford University Press Southern Africa, 2008. All rights reserved.
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Chapter 11: Strategic Leadership THE FINANCIAL FUNCTION The financial function is concerned with the flow of funds, and in particular with the acquisition of funds (financing), the application of funds for the acquisition of assets (investment), as well as the administration of, and reporting on, financial matters.
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Chapter 11: Strategic Leadership The relationship between financial management, other functional management areas, related disciplines and the environment
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Chapter 11: Strategic Leadership TASKS OF FINANCIAL MANAGEMENT Financial analysis, reporting, planning and control Management of the application of funds, also known as the management of the asset structure Management of the acquisition of funds, also known as the management of the financing or capital structure
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Chapter 11: Strategic Leadership CONCEPTS IN FINANCIAL MANAGEMENT The asset side reflects all positions of the business. Assets are divided into fixed assets and current assets. The liabilities side of the balance sheet reflects the nature and extent of interests in assets. Liabilities are divided into long-term funds, shareholders interest and short-term funds. The balance sheet is an instant photo of the financial position of the business.
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Chapter 11: Strategic Leadership CAPITAL Capital is described as the accrued power of disposal of the goods and services used by business to generate a monetary return or profit. A business need capital for investment in fixed assets – the need for fixed capital. A business needs capital for investment in current assets – the need for working capital.
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Chapter 11: Strategic Leadership INCOME Income consists primarily of receipts resulting from the sale of products and/ or services. Income = units sold x price per unit Income can also be obtained from other sources such as interest on investments.
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Chapter 11: Strategic Leadership COSTS Costs can be regarded as the monetary values sacrificed in the production of goods produced, for example the purpose of resale. Costs can be subdivided according to certain
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Chapter 17 - Chapter 17 THE FINANCIAL FUNCTION AND...

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