Financial management in the enterprise

One of the most important components of any financial activity is the creation and use of funds.Therefore, the financial management in the enterprise is an important part of the company leaders have, which is associated with investment decisions, which are based on relevant concepts and methods.

main purpose of financial management is to make profit.At the same time, the company can be quite profitable, but unsustainable.This leads to the fact that managers need to maintain the solvency of the time.Especially important and difficult task is to make settlement activities with shareholders, the owners.Moreover, financial management may have several objectives, which are formed on the basis of life cycle stages of the company, its competitiveness.However, the most effective is considered to be the aim of satisfying the interests of investors and owners by improving their well-being.This is possible by increasing the company's value through the mechanism of formation and use of profit the most effective w

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In order to manage the company's finances to be effective, has developed a number of principles:

  • Firstly, the legal and economic independence.The company, regardless of form of ownership, itself determines the cost sources of cash flows and their direction in order to profit.For these purposes, you can use additional tools, such as the acquisition of various securities, participation in the formation of the initial capital of other companies, the introduction of money on deposit accounts.Today, independent firms must quickly adapt to changing external conditions quickly and prepare a strategic plan.
  • Second, self-financing, which means meeting the full cost recovery required for production work and further implementation, as well as the development of production.First of all, the financial management is carried out through the records of all expenses of the company, including the implementation of credit obligations.
  • Third, financial interest, which is determined by profit.This criterion concerns the state in the broadest sense, collective and each worker of the enterprise - in the narrow.Provided it stimulates the tax system, the appropriate level of remuneration, and so forth.
  • Fourth, the financial liability, which is defined by the presence of a report for the results of monetary relations.For a particular firm financial management of this principle is implemented through a system of penalties, fines, penalties.Moreover, this principle is, and the fact that the deterioration of the financial results in the inability of revolutions uptime.The responsibility of individual subjects is realized through fines, deprivation of premiums.
  • Fifth, the use of financial reserves for security risks.Any activity that is aimed solely at making a profit, linked to the possibility of a risk.The latter, in turn, have an impact on results of operations in the financial plan.

solving complex problems leading to the need for financial planning and budgeting system formation.The methods used to achieve these goals, determines the financial policy of the company.For example, recently in the EU financial management is carried out according to the criteria, aimed at reaching the largest possible value added.Either method requires the use of a wide range of specialist skills and deep knowledge of the application.