Finance– A Vital domain knowledge for today’s managers

-S.SARAVANAN, Assistant Professor

Finance is considered as life line of any organsation and managers with finance knowledge are vital for the efficiently managing the financial resources. The manager’s decision has greater impact on how business is conducted on daily basis and the future goals. The term finance is related with investment decisions of manager’s and how he is able to generate better return for the investment with minimize cost from operation.

The manager constantly interacts with different head of departments and understands how each functional area’s have influence on the financial resources of the company. The manager’s understanding of the various financial instruments helps in distribution of resources efficiently.

Basic of financial knowledge

1. Financial goals of the company
2. Wealth maximization for the shareholders
3. Higher return for capital invested
4. Financial knowledge of funds flow & cash flow
5. Interpretation of company financial statement – balance sheet, P&L Account, Ratios
6. Understanding working capital
7. How to financing working capital
8. Increase the operating cycle
9. Improving the cash flow
10. Understanding – types of cost, cost behavior – fixed & variable cost
11. Regulatory structure of the nation- companies Act, Income Tax, RBI, SEBI
12. Budget control mechanism
13. Cost involved in generating funds for long & short term finance
14. Pricing methods

These are the basic concepts that today’s manager face in financial world of the company. Each manager has to have hands on experience in finding the relationship between the business goals and financial goals. The interpretation of the financial statements will have a greater degree of efficient in managing financial resources. The financial performance of company is based on the profit & expenses, how manager are able to decrease cost with control over the cost in a financial year. Today’s manager should possess decision making skills based on the basics of financial management for better financial health of the company. Understand the basics; follow it meticulously for the growth of the company.