Lecture-1-Understanding+Public+Financial+Management

Without money and its successful management a firm

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: not survive much less grow and prosper. In today’s rapidly changing business environment, financial management is more complex than in any time in history. In attempting to define financial management one of the In first problems we encounter is that of terminology. Confusingly, as so often the case in finance and Confusingly, accounting, multiple terms can be used to describe the same thing. For example, financial management is alternatively called, ‘business finance’, ‘managerial finance’, and ‘corporate finance’. finance’, 99 All of these terms refer to the management of the All essential investing and financing activities which business firms must undertake to produce the goods and services which people require. and One possible definition of financial management is One simply: ‘the ways and means of managing money’. A more formal definition would be: Financial Management is an integrated decisionmaking process concerned with determining, making acquiring, allocating, and utilizing financial resources, usually with the aim of achieving some particular goals or objectives. or 10 10 10 Goals of Successful Companies The objective of this course is to provide students with the The knowledge and skills they need to run successful companies, so we start our sketch with some common characteristics of successful companies. In particular, all successful companies are able to accomplish two goals. successful 1. All successful companies identify, create, and deliver 1. products or services that are highly valued by customers, highly so highly valued that customers choose to purchase them from the company rather than from its competitors. This happens only if the company provides more value than its competitors, either in the form of lower prices or better products. products. 2. All successful companies sell their products/services at 2. prices that are high enough to cover costs and to compensate owners and creditors for their exposure to risk. In other words, it’s not enough just to win market share and to show a profit. The profit must be high enough to adequately compensate investors. to 11 11 Key Attributes of Successful Companies First, successful companies have successful skilled people at all levels inside the company, people including (1) leaders who develop and articulate sound strategic visions; (2) managers who make value-adding decisions, design efficient business processes, and train and motivate work forces; and (3) a capable work force willing to implement the company’s strategies and tactics. and Second, successful companies have strong successful relationships with groups that are outside the relationships company. For example, successful companies develop For win-win relationships with suppliers, who deliver high-quality materials on time and at a 12 12 Key Attributes of Successful Companies Third, successful companies have sufficient capital to execute their plans and support their capital operations. For example, most growing companies must pu...
View Full Document

Ask a homework question - tutors are online