What is the implication of the global crisis to financial managers?

- Contribution and role in so far as directing the firms operation and nations economic increasingly
significant
- financial manager must maintain and sustain economic capability of an enterprise or nation
-must be equipped with the necessary tools essential in finding ways and mean to cushion and hedge the
effects of significantly negative outcomes of risk and among other things relating to B,FOREX,E, DT & I
Goals in Financial Management
~yield the highest possible profit~
Drawbacks:
Changes in profit may also mean changes in risk
It does not fully take into account the timing when the profit/gain would be received
Accurate measuring of the key ingredient in this approach, which is profit
GOALS:
Maximization of the value of the firm (Valuation Approach)
Maximization of Shareholders Wealth
Social Responsibility and Ethical Behavior
Valuation Approach maximization of overall value of the firm
Need
o
o
o

to consider aside profit:

Risk attached in the investment proposal or companys operation
Time design as to when and how the profits will flow into the company
The quality and reliability of the profits reported by the firm

Maximization of Shareholders Wealth

-focus on amplification of long-term wealth of the shareholders not day-to-day movement of stock market
price
What actions should a financial manager makes n order to maximize the value of the companys stock?
Does it mean that maximizing profit results to maximizing the companys stock values?
Profit increase= share net income decrease=EPS diminished by P/share
Profit maximization not only stock value maximization considering other thing being constant
Social Responsibility and Ethical Behavior
Help diminishing unemployment
Gives services to the community
Salary distribution, hiring practices, product safety, minority training, anti-pollution measures, pricing of
products
COMPULSORY how ~Government agencies & industry~
Functions of Financial Management - balancing act between income and risk (risk-return trade-offs)
Financial Managers Responsibilities
1. Forecasting & Planning work together with other in formulating strategic plan
2. Making Crucial Investment and Financing Decision - decide and determine : appropriate
3. Coordinating and Controlling efficient operation
4. Trading in Financial markets hands on dealing-trade equity securities in the financial market: either
making
or losing money for investors part
5. Risk Management financial risks: price of commodities, currency exchange rates, interest rates
fluctuate
Natural calamities: floods, fires, earthquake
FORMS OF BUSINESS ORGANIZATION
1. Sole proprietorships
2. Partnerships
3. Corporations

Sole proprietorships
-inseparable from the
business

ADVANTAGE
Simplicity in decision making
Easy and inexpensive
Few government regulations
Not subject to corporate income
taxes

DISADVANTAGE
Difficult to come up sizable amount
of capital
Unlimited personal liability

Partnerships
- articles of partnership
-common but not limited
to professionals
Corporations
-articles of incorporation

LLP
-limited liability
partnership
-one general partner and
the rest limited partner

Low cost
Ease of formation

Unlimited life
Changes in ownership or death
doesnt dissolve
Ease of transferability of ownership
Limited life
General partner liable not up to
their personal properties

Unlimited liability
Limited life
Difficulty of transferring ownership

Limited partner do not take control

in operation
LP are liable