Lesson 2

The Financial
Manager
 The learners will be able to:
1. Describe who are responsible for financial management within an organization.
2. Describe the primary activities of the financial manager.
3. Describe how the financial manager helps in achieving the goal of the
organization.

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 What is
Financial
Management?
 Finance is an
essential and
indispensable part
of any organization.
Means planning, organizing, directing and controlling the
financial activities of the organization.
It refers to the efficient and effective management of money
(funds) in such a manner as to achieve the goals of the
organization.
 Financial planning
 Cash flow management
 Capital management
 Allocation and utilization
of financial resources
 Risk management
 What is the Goal of the Firm?
Maximization of Shareholders’ Wealth!
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 Roles and Responsibilities

⬗ Shareholders
⬗ Elect the Board of Directors (BOD).

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 Roles and Responsibilities

⬗ Board of Directors (BOD)

⬗ The highest policy-making body in the corporation.
⬗ Primary responsibility – to ensure that the
corporation is operating to serve the best interests of
the shareholders.
⬗ Since the BOD is elected by the shareholders, their
responsibility is to carry out the objectives of the
shareholders.

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 Roles and Responsibilities

⬗ Responsibilities of the Board of Directors (BOD)

⬗ Setting policies on investments, dividends, etc.
⬗ Approving company’s strategies, goals, and budgets.
⬗ Appointing/removing members of top management,
including the President.
⬗ Determining top management’s compensation.

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 Roles and Responsibilities

⬗ President
⬗ Overseeing the operations of a company and ensuring
that the strategies as approved by the board are
implemented as planned.
⬗ Performing all areas of management: planning,
organizing, staffing, leading, and controlling.
⬗ Representing the company in professional, social, and
civic activities.

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 Roles and Responsibilities

⬗ VP for Marketing
⬗ Formulating marketing strategies and plans.
⬗ Directing and coordinating company sales.
⬗ Promoting good relationships with customers and
distributors.

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 Roles and Responsibilities

⬗ VP for Production
⬗ Ensuring production meets customer demands.
⬗ Identifying production processes that minimizes
production cost and make the company cost
competitive.
⬗ Identifying adequate and cheap raw material suppliers.

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 Roles and Responsibilities

⬗ VP for Administration
⬗ Coordinating the functions of administration, finance, and
marketing departments.
⬗ Assisting other departments in hiring employees.
⬗ Providing assistance in payroll preparation

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 Jean-Marc Huet, Unilever

“Finance plays a critical role

across every aspect of our
business. We enable the
business to turn ambition and
strategy into sustainable,
consistent, and superior
performance.”

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Roles and Responsibilities

⬗ VP for Finance
⬗ Financing
⬗ Investing
⬗ Operating
⬗ Dividend Policies

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 Financing decisions include making
decisions on how to fund long-term
investments (such as company
VP for expansions), and working capital
Finance which deals with the day-to-day-
operations of the company (i.e.,
purchase of inventory, payment of
operating expenses, etc.)

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 The role of the VP
for Finance is to
determine the
appropriate
capital structure
of the company.
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 Operating Decisions

⬗ Decisions made to
manage day to day
business, i.e. daily
operations of the
company.

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 Dividend Policies

⬗ Paid by corporations to
existing shareholders based
on their shareholdings in the
company as a return on their
investment.
⬗ It is the role of the financial
manager to determine when
the company should declare
cash dividends.

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 Dividend Policies

⬗ Before a company may be

able to declare cash
dividends, two conditions
must exist:
1. The company must have
enough retained earnings
(accumulated profits) to
support cash dividend
declaration.
2. The company must have
cash.
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Thank You for Listening!
Any questions?

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