finance functions
TRANSCRIPT
FINANCE FUNCTIONS
FINANCE FUNCTIONS
TRADITIONAL CONCEPTS
MODERN CONCEPTS
Traditional Concept Of Finance Function
Primary responsibility of a finance manager is to raise necessary funds to meet operating requirements of the business
Criticismsi. Narrow approachii. Over emphasized on non recurring problemsiii. Concentrated attention to problems of
corporation financeiv. Laid more stress on problems of long term
financing
MODERN CONCEPT OF FINANCE CONCEPT
Procurement of funds as well as application of funds
Finance manager is concerned withi. All financial activities like planning, raising,
allocating and controlling funds andii. Problems of incorporation, liquidation,
consolidation, re organisation.
MODERN CONCEPT OF FINANCE FUNCTION
RECURRING FINANCE
FUNCTION
NON RECURRING FINANCE
FUNCTION
RECURRING FINANCE FUNCTION
PLANNING FOR
FUNDS
RAISING OF
FUNDS
ALLOCATION
OF FUNDS
ALLOCATION
OF INCOM
E
CONTROL OF FUNDS
i. Planning for funds
Task of finance manager in a new or going concern is to formulate financial plan for the firm
He has to aim at synchronizing the cash inflows and cash outflows
Two methods of estimating funds requirementsi. Balance sheet methodii. Cash budget method
ii. Raising of funds
Procurement of capitali. Security Issues orii. Borrow money from financial institutions
iii. Allocation of Funds
In allocating the funds consideration must be given to the factors such as Competing use, immediate requirements, managements of assets etc
While managing cash the finance manager should profitability and liquidity of the corporation
Managing fixed assets, inventories
iv. Allocation of Income
Allocation of annual earningsRetaining the income for financing expansion
of business or distribution to the owners as dividend as a return of capital
NON-RECURRING FINANCE FUNCTION
Refers to those financial activities that a finance executive has to perform very infrequently