MANAGING FINANCIAL SYSTEM

Managing Financial System

Managing Financial System

1. what's meant by finance?

Finance is the set of activities dealing with the management of funds. More specifically, it is the decision of collection and use of funds. It is a branch of economics that studies the management of money and other assets.

2. what's the purpose of a financial statement?

For a business enterprise, all the relevant financial information, presented in a structured manner and in a form easy to understand, are called the financial statements. They typically include four basic financial statements:[1]

Balance sheet: also referred to as statement of financial position or condition, reports on a company's assets, liabilities, and Ownership equity at a given point in time.

Income statement: also referred to as Profit and Loss statement (or a "P&L"), reports on a company's income, expenses, and profits over a period of time. Profit & Loss account provide information on the operation of the enterprise. These include sale and the various expenses incurred during the processing state.

Statement of retained earnings: explains the changes in a company's retained earnings over the reporting period.

Statement of cash flows: reports on a company's cash flow activities, particularly its operating, investing and financing activities

3. what analytical techniques are applied to various financial problems?

Financial statement fraud is a "new face on the block," and the intent to conceal and take advantage by false suppression of the truth of assets, liabilities, cash flow, sales and profitability is creating a new level of risk for corporate America. With this new level of risk, the credit department must have a new level of analytical comprehension and intellect to uncover these devious techniques. The threat of financial fraud has greatly impacted the corporate community worldwide.

Those companies falling in the category of high risk are impacted by the following conditions:

Weak Solvency - weak liquidity ratios, highly leveraged condition and overcapitalization.

Weak Efficiency - slow turnover of accounts receivable, accounts payable and inventory, turnover, or substantially inadequate cash flow/working capital to sustain growth and/or reinvestment.

Weak Profitability - deviations in profitability or unprofitability.

4. whats meant by a market analysis, feasibility study & financial analysis?

A Marketing analysis is a documented investigation of a Market that is used to inform a firm's planning activities particularly around decision of: inventory, purchase, work force expansion/contraction, facility expansion, purchases of capital equipment, promotional activities, and many other aspects of a company.

Market analysis as used by investors involves looking at numerical data ...