Finance for Non-Finance Managers - The New World of Finance

Finance for Non-Finance Managers

Hindol Datta

Module I

Non-financial manager's concern with finance Scope and Role of Finance Importance of Finance Responsibilities of Financial Managers Distinguish between Accounting And Finance Characterize and Identify the Financial and Operational

Environments Compliance vs. Operations

Non-financial Manager's Concerns

What to look out for and keep in mind! Planning, Problem-Solving and Decision Making What do businesses look for? Know what the numbers mean in compliance and operational

context How do you Plan with financial toolset? Appropriate Data Points and Backups as necessary Strategic Proposals: How finance plays a role Capital Investment: How finance plays a role

Scope and Role of Finance

Finance uses accounting information Financial accounting vs. Managerial Accounting Fund management and performance monitoring Look at current problems and manage prospective issues Fundamental is the return-risk or reward-risk tradeoff Who would benefit?

Marketing and Sales Production Internal Operations Human Resources Investment Analysts

What do Financial Managers do?

Financial Analysis and Planning Investment Decisions Financing and Capital Structure Decisions Manager Financial Resources

Financial Managers attempt to maximize shareholder wealth Present and future earnings (EPS) Timing and risk of earnings assessment Dividend policy Manner of financing

Relationship between Accounting and Finance

Accounting is input and sub-function to Finance Financial responsibilities carried out by the Controller,

Treasurer, CFO The responsibilities are fairly distinctive depending on the

size of the organization Management works with finance in 2 ways

Record-keeping, tracking and controlling financial data Obtain and manage funds to support management objectives Ensure that data is standardized for external reviews and

analysis

Key Personnel Responsibilities

Controller

Accounting

Financial Reporting

Records

Budgeting

Controls

Taxes

Internal Audit

Payroll

Interpretation

Asset Protection

Govt. Reporting

Analysis of Data

Treasurer

Obtain Financing

Banking Relationship

Investment of fund

Investor Relations

Insuring Assets

Relationship mgmt

Financing Mix

Dividend Policies

Pension Mgmt

Cash Management

Credit Appraisal

Matching

Chief Financial Officer

Support Short ?Term Corporate Objectives

Support Long-Term Corporate Objectives

External facing to stakeholders ? Creditors, Investors, Internal Employees

Assessing Risk-Reward tradeoffs

Designing Interfaces across multiple departments

Partnerships and Business Development Support

Tax Strategies , Financing Strategies, Operation Strategies

The Financial Environment

Financial Intermediaries

Efficient transfer of funds from savers to individuals, businesses and governments

Financial Markets are composed of

Money Markets

Short ?Term ( less than one year) debt securities. US Treasury Bills, Commercial Paper, Negotiable Certificate of Deposits

Capital Markets

Long-Term Debt and Stocks NYSE, AMEX and OTC ( over-the-counter )

Financial Assets vs. Real Assets

Financial Assets: Intangible Investments

Equity Ownership in Company, Debt, Rights and Obligations to Exchange

Real Assets:Tangible Investments

Real Estate, Machinery and Equipment, Metals, Oil

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