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Why is financial management essential to the success of a company? What can potentially happen if the cash flow is not properly managed? I have attached the required reading and lectures.
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Running head: FINANCIAL MANAGEMENT
FINANCIAL MANAGEMENT
Name
Institutional Affiliation
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FINANCIAL MANAGEMENT
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Financial Management
Financial management for the company success
Financial management is one of the key areas of responsibilities of business owners and
managers (Eiteman et al., 2017). It enables them to put into consideration the potential consequences of
their operation decisions on cash flow, profits and the financial condition of the business. All activities
of a business often impact an organization’s financial performance and should therefore be controlled
and evaluated by the business management. Financial management enables a company to correctly
forecast on the cash flow to identify whether there is extra cash that can be used for further investment
in order to gain higher rates of returns. It also helps a business to accurately predict potential cash
deficits at any given time of the year. This can enable the business to employ contingency measures in
securing the required financing in time without interfering with the operations of the business.
Financial management helps in guiding the decision making process by the management by
enabling them to consider the long-term organizational requirements against short term financial need. It
aids in proper and accurate business budgeting and future forecasting. Empirical studies have shown that
proper financial planning and management often makes the management job easier since it prepares
them in advance for the future business difficulties (Eiteman et al., 2017). As such, the management will
be able to plan for the business operations in line with the foreseen constraints. Proper business financial
planning and management involves the adoption of a budget which acts as a guide on the amount of
money that has to be availed for the business operations. This will help the bus...