Febė — accounting services

Finance management

Finance management is designated for managers, finance specialists and for those who intend to improve their knowledge in finance management area. Financial reports often astonish at the abundance of indicators and figures presented. But after acquiring necessary skills one can easily translate the figures into a reliable description of processes ongoing in the company and results or changes to be expected in the future.

The main subjects are as follows sources of financial information:

• reports, financial accountability;
• how financial reports should be read and how presented information should be analyses;
• financial indicators which are of greatest interest for investors and interconnection between them choice of company financing sources;
• finance planning and control;
• other subjects.

Why is it necessary to manage finance?

What is meant by finance management?

Is it just a reflection of everyday activities in debit and credit columns? What kind of interrelations are between finance manager and accounting department, personnel management or sales departments and other structural departments of the company?

Besides, we present a review of finance management impact on business operation and reaching the company goals. What kind of information (reports) shall be used in finance management? When taking most business solutions the indicators illustrating the company activities as well as financial indicators are analyses. The effectiveness and soundness of solutions will depend on how reasonable, reliable and timely the presented financial information is. We will present a review of financial information sources in the company, the ways of collection the information and assuring its reliability, the analysis of possibilities to use in the best possible manner the information collected in the company financial accounting for the company management needs and for financial management.

What is learnt from finance analysis?

Literature on finance management issues presents a lot of different financial indicators and recommends plenty of analysis methods. What analysis methods and indicators should your company choose for its financial analysis? The answer depends on activities performed by the company, its development stage and goals. The basis for effective financial analysis lies in capability to interpret and use the indicators right rather than in the indicators themselves. This section presents information on recommended methods of financial analysis and selection of appropriate financial indicators.

In what way business environment influences company finances?

When assessing potential consequences of their decisions the managers must know and understand their finance management environment. This environment comprises financial markets and banks which are functioning within them, leasing companies etc., legal base, applied taxes and the economic status of countries where the business is developed. Finance management also depends on the variety of offered financial tools considering existing and future interest rates. All the above make significant influence on every financial decision.

Is it worth to invest?

We will discuss the fundamentals of investment analysis with focus on its importance to company finance management. The following investment assessment and reasoning methods are discussed and compared: payback method, discounted payback period, average rate of profit and net present value. The main attention is paid to investment analysis by applying net present value method.

Which business financing method is most beneficial?

We will discuss different business financing sources: property of shareholders, loans and intermediate (hybrid) financing means. The forms, characteristics and obtaining ways for every financing source are listed and described. A criterion for determination and making optimal financing structure for certain type of business is defined.

Finance planning and seeking for planned result the main goal of every business institution is profit seeking. This is the target that long-term strategic goals of companies are aimed at and to reach it strategic tasks and business development plans are prepared. Business development planning is closely related to finance planning as the implementation of strategic tasks requires financing recourses. One of the main resources is timely financing. When presenting information about finance planning and control we will analyze finance planning methods, planning frequency and the reliability of made assumptions. We will also review the ways of finance planning updating and implementation control.

Management of working capital.

If you make plans to extend or commence new activity, increase the sales or new season is approaching, you will certainly need additional circulating assets. But here you encounter a question: what amount of additional operating capital is needed, what type of credit to apply for from the bank, how to avoid a mistake? Answers to such questions are of great importance to most company managers. The success in the implementation of strategic tasks may depend on correct answer to the above questions. We will review factors of the company activities which determine the extent of working capital need. By presenting examples we will also discuss the methods applied to determine optimal working capital amount and will indicate the most frequent mistakes made in working capital management.

How to control business risk?

The impact of risk on company worth can be significant. We will review risk types encountered by companies and the ways of risk management. At first we will present the definition of risk and its impact on the company worth, will discuss comparable risk limitation and risk management applications, i.e. operational risk (ex. fluctuation of standard goods prices) and financial risk (currency exchange rates, interest rates), risk insurance tools. 

Why worth to buy (sell) business?

Transactions of company’s merger, purchase and sale as well as joint venture establishment transactions facilitate the implementation of business development plans, assist in building and maintaining competitive advantage and in seeking synergy effect between the company activities and financial resources use. In many cases the shares of companies are bought from existing shareholders by company managers. All these transactions directly influence the company finance status. Thus, before entering into this kind of transactions all pros and cons (primarily financial) shall be well assessed.

Business enterprise or product analysis helps to evaluate business and financial risks. Also locates the weak and strong points, profitable activities or production as well as centers of detriment. Evaluating all this and taking proper solutions enables to improve the well-being of people working for the enterprise as well as earn a bigger profit and enlarge the worth of the enterprise.