FINANCIAL MANAGEMENT

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20MB07-FINANCIAL MANAGEMENT �SYLLABUS

Course educational objectives

1.To help the students to develop cognizance of the importance of Financial Management in corporate valuation

2. To enable students to describe how people analyze the corporate leverage under different conditions and understand how people evaluate different corporate methodologies in acquiring of finance.

3. To provide the students to analyze specific characteristics of investment decision and their future action for capital budgeting and learn significance of time value of money.

4. To enable students to synthesize related information and evaluate dividend decision for most logical and optimal solution they would be able to predict and control Debt Equity incurrence and improve results.

5. To discuss the role of the Working capital management for the successful operations of the business.

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Course Outcomes (COs): At the end of the course, students will be able to

CO1: Understand the fundamentals of financial management and making them effective managers.

CO2 : Demonstrate concept of capital structure for effective financial decisions.

CO3 : Apply the capital budgeting techniques to select the project proposals. CO4 : Evaluate various approaches to be followed for wealth maximization of share holders.

CO5 :Illustrate the classification and working capital management.

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Unit – I

Financial Management: Concept - Nature and Scope – Evolution of financial Management - The new role in the contemporary scenario – Goals and objectives of financial Management - Firm’s mission and objectives – Profit maximization Vs. Wealth maximization – Maximization Vs Satisfying - Major decisions of financial manager.

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Unit –II

Financing Decision: Sources of finance – Concept and financial effects of leverage – EBIT – EPS analysis. Cost of Capital: Weighted Average Cost of Capital– Theories of Capital Structure.

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Unit – III

Investment Decision: Concept of Time Value of money – Techniques of Time Value of Money – Nature and Significance of Investment Decision – Estimation of Cash flows – Capital Budgeting Process – Techniques of Investment Appraisal – Pay back period, Accounting Rate of Return, Time Value of Money – DCF Techniques- Net Present Value, Profitability Index and Internal Rate of Return.

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Unit – IV

Dividend Decision: Meaning and Significance – Major forms of dividends – Theories of Dividends – Determinants of Dividend – Dividends Policy and Dividend valuation – Bonus Shares –Stock Splits – Dividend policies of Indian Corporate.

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Unit – V

Liquidity Decision: Meaning - Classification and Significance of Working Capital – Components of Working Capital – Factors determining the Working Capital – Estimating Working Capital requirement – Cash Management Models – Cash Budgeting – Accounts Receivables –Credit Policies – Inventory Management.

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Text Books

• 1. Khan & Jain P.K, Financial management: Text & Problems, Tata McGraw-Hill, New Delhi.
• 2. I M Pandey, Financial management, 9 th edition, Vikas Publishing House Pvt Ltd, New Delhi-2005

Reference

1. Eugene F Brighametal Financial management: Theory & Practices, 9 th edition, the Dryden Press-1999.

2. Van Horne, Financial Management & Policy, 12th edition, Prentice Hall New Delhi.

3. Damodaran, Aswath. John, Corporate finance: Theory & Practices, 2 nd edition, Wiley& sons. 4. Prasanna Chandra, Financial management: Theory & Practices, 7 th edition, Tata McGrail, New Delhi-2004.

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UNIT-I

Learning outcome of the unit-I

• State the meaning , nature & scope of financial management
• Discuss the objectives of the management
• Illustrate the evaluation of the financial management
• Discuss the new role in the contemporary scenario
• Distinguish between Profit maximisation and wealth maximisation
• Major decisions of financial manager

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WHAT IS FINANCE & WHY IS FINANCE

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The word finance was originally a French word. In the 18th century, it was adapted by English speaking communities to mean “the management of money.” Since then, it has found a permanent place in the English dictionary. Today, finance is not merely a word else has emerged into an academic discipline of greater significance. Finance is now organized as a branch of Economics.

Furthermore, the one word which can easily replace finance is “EXCHANGE." Finance is nothing but an exchange of available resources. Finance is not restricted only to the exchange and/or management of money. A barter trading system is also a type of finance. Thus, we can say, Finance is an art of managing various available resources like money, assets, investments, securities, etc.

At present, we cannot imagine a world without Finance

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DEFINITION OF FINANCE

General sense,

"Finance is the management of money and other valuables, which can be easily converted into cash.“

According to Experts,

"Finance is a simple task of providing the necessary funds (money) required by the business of entities like companies, firms, individuals and others on the terms that are most favourable to achieve their economic objectives.“

According to Entrepreneurs,

"Finance is concerned with cash. It is so, since, every business transaction involves cash directly or indirectly.“

According to Academicians,

"Finance is the procurement (to get, obtain) of funds and effective (properly planned) utilisation of funds. It also deals with profits that adequately compensate for the cost and risks borne by the business."

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FINANCE

Finance may be defined as the art and science of managing money.

It includes

1.financial service

2. financial instruments.

Finance also is referred as the provision of money at the time when it is needed. Every enterprise, whether big, medium or small needs finance to carry on its operations and to achieve its targets. In fact, finance is so indispensable today that it is rightly said to be the life blood of an enterprise.

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Finance function is the procurement of funds and their effective utilization in business concerns

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MEANING OF FINANCIAL MANAGEMENT

Introduction :

Explain Financial Management by giving a very simple scenario. For the purpose of starting any new business/venture, an entrepreneur goes through the following stages of decision making:-

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MEANING OF FINANCIAL MANAGEMENT

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MEANING OF FINANCIAL MANAGEMENT

While deciding how much to take from each source, the entrepreneur would keep in mind the cost of capital for each source (Interest/Dividend etc.). As an entrepreneur he would like to keep the cost of capital low.

Thus, financial management is concerned with efficient acquisition (financing) and allocation (investment in assets, working capital etc.) of funds with an objective to make profit (dividend) for owners.

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WHAT IS FINANCIAL MANAGEMENT? MEANING

The financial management means:

• To collect finance for the company at a low cost and
• To use this collected finance for earning maximum profits.

Thus, financial management means to plan and control the finance of the company. It is done to achieve the objectives of the company.

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Meaning : Financial management is that managerial activity which is concerned with planning and controlling of the firm’s financial resources. In other words, it is concerned with acquiring, financing and managing assets to accomplish the overall goal of a business enterprise (mainly to maximise the shareholder’s wealth).

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DEFINITIONS OF FINANCIAL MANAGEMENT �

Definitions of financial management

According to Dr. S. N. Maheshwari,

"Financial management is concerned with raising financial resources and their effective utilisation towards achieving the organisational goals.“

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“Financial Management comprises of forecasting, planning, organizing, directing, co-ordinating and controlling of all activities relating to acquisition and application of the financial resources of an undertaking in keeping with its financial objective.

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DEFINITIONS OF FINANCIAL MANAGEMENT

• Another very elaborate definition given by Phillippatus is
• “Financial Management is concerned with the managerial decisions that result in the acquisition and financing of short term and long term credits for the firm.”
• There are two basic aspects of financial management viz., procurement of funds and an effective use of these funds to achieve business objectives.

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PROCUREMENT OF FUNDS

Since funds can be obtained from different sources therefore their procurement is always considered as a complex problem by business concerns. Some of the sources for funds for a business enterprise are

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PROCUREMENT OF FUNDS

(a)Equity: The funds raised by the issue of equity shares are the best from the risk point of view for the firm, since there is no question of repayment of equity capital except when the firm is under liquidation. From the cost point of view, however, equity capital is usually the most expensive source of funds. This is because the dividend expectations of shareholders are normally higher than prevalent interest rate and also because dividends are an appropriation of profit, not allowed as an expense under the Income Tax Act. Also the issue of new shares to public may dilute the control of the existing shareholders.

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PROCUREMENT OF FUNDS

(b)Debentures: Debentures as a source of funds are comparatively cheaper than the shares because of their tax advantage. The interest the company pays on a debenture is free of tax, unlike a dividend payment which is made from the taxed profits. However, even when times are hard, interest on debenture loans must be paid whereas dividends need not be. However, debentures entail a high degree of risk since they have to be repaid as per the terms of agreement. Also, the interest payment has to be made whether or not the company makes profits.

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PROCUREMENT OF FUNDS

(c) Funding from Banks: Commercial Banks play an important role in funding of the business enterprises. Apart from supporting businesses in their routine activities (deposits, payments etc.) they play an important role in meeting the long term and short term needs of a business enterprise. Different lending services provided by Commercial Banks are depicted as follows

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PROCUREMENT OF FUNDS

(d)International Funding: Funding today is not limited to domestic market. With liberalization and globalization a business enterprise has options to raise capital from International markets also. Foreign Direct Investment (FDI) and Foreign Institutional Investors (FII) are two major routes for raising funds from foreign sources besides ADR’s (American depository receipts) and GDR’s (Global depository receipts). Obviously, the mechanism of procurement of funds has to be modified in the light of the requirements of foreign investors.

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EFFECTIVE UTILISATION OF FUNDS

The finance manager is also responsible for effective utilisation of funds. He has to point out situations where the funds are being kept idle or where proper use of funds is not being made. All the funds are procured at a certain cost and after entailing a certain amount of risk. If these funds are not utilised in the manner so that they generate an income higher than the cost of procuring them, there is no point in running the business. Hence, it is crucial to employ the funds properly and profitably. Some of the aspects of funds utilization are:-

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EFFECTIVE UTILISATION OF FUNDS

• (a)Utilization for Fixed Assets: The funds are to be invested in the manner so that the company can produce at its optimum level without endangering its financial solvency. For this, the finance manager would be required to possess sound knowledge of techniques of capital budgeting.

Capital budgeting (or investment appraisal) is the planning process used to determine whether a firm's long term investments such as new machinery, replacement machinery, new plants, new products, and research development projects would provide the desired return (profit).

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EFFECTIVE UTILISATION OF FUNDS

• (b)Utilization for Working Capital: The finance manager must also keep in view the need for adequate working capital and ensure that while the firms enjoy an optimum level of working capital they do not keep too much funds blocked in inventories, book debts, cash etc.

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NATURE & FEATURES OF FINANCIAL MANAGEMENT

Financial planning: This involves forecasting an organization's financial needs and developing strategies to meet those needs. Financial planning includes the preparation of budgets, cash flow forecasts, and financial projections to guide decision-making and ensure the organization's financial stability.

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Capital budgeting: This involves evaluating investment opportunities and deciding which projects to pursue based on their expected returns. Capital budgeting decisions involve assessing the potential costs and benefits of each project, as well as the risks associated with each investment.

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Financial analysis: This involves analysing an organization's financial statements and other financial data to assess its financial health. Financial analysis includes ratio analysis, which compares different financial ratios to assess an organization's financial performance. Financial analysis also involves assessing an organization's liquidity, solvency, and profitability.

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NATURE & FEATURES OF FINANCIAL MANAGEMENT

Risk management: This involves identifying and managing risks that could negatively impact an organization's financial performance. Risk management includes assessing and mitigating various types of risk, including market risk, credit risk, and operational risk.

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Working capital management: This involves managing an organization's short-term assets and liabilities to ensure it has sufficient cash flow to meet its obligations. Working capital management includes managing inventory levels, accounts receivable, and accounts payable to optimize cash flow.

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Financial reporting: This involves communicating financial information to stakeholders, such as investors, lenders, and regulators. Financial reporting includes preparing financial statements, such as balance sheets, income statements, and cash flow statements, as well as providing other relevant financial information

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SCOPE OF FINANCIAL MANAGEMENT

Financial management has a wide scope. According to Dr. S. C. Saxena, the scope of financial management includes the following five A’s.

• Anticipation
• Acquisition
• Allocation
• Appropriation
• Assessment

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SCOPE OF FINANCIAL MANAGEMENT

• Anticipation: Financial management estimates the financial needs of the company. That is, it finds out how much finance is required by the company.
• Acquisition: It collects finance for the company from different sources.
• Allocation: It uses this collected finance to purchase fixed and current assets for the company.
• Appropriation: It divides the company's profits among the shareholders, debenture holders, etc. It keeps a part of the profits as reserves.
• Assessment: It also controls all the financial activities of the company. Financial management is the most important functional area of management. All other functional areas such as production management, marketing management, personnel management, etc. depends on Financial management. Efficient financial management is required for survival, growth and success of the company or firm.

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SCOPE OF FINANCIAL MANAGEMENT

Financial management has undergone significant changes over years as regards its scope and coverage. As such the role of finance manager has also undergone fundamental changes over the years. In order to have a better understanding of these changes, it will be appropriate to study both traditional approach and modern approach to the finance function.

TRADITIONAL APPROACH:

The traditional approach, which was popular in the early part of this century, limited role of financial management to raising and administering of funds required by the enterprise to meet their financial needs. It broadly covered the following three aspects,

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SCOPE OF FINANCIAL MANAGEMENT

• i) Arrangement of funds from financial institutions.
• ii) Arrangement of funds through issue of financial instruments.
• iii) Looking after the legal
• The traditional approach evolved during 1920 continued to dominate academic thinking during forties and through the early fifties. However, in the later fifties it started to be severely criticised and later abandoned on account of the following reasons:

1. Outsiders looking in Approach:

• This approach treated the subject of finance from the view point of suppliers of funds i.e., outsiders, bankers and investors etc.
• It followed an outsider-looking in approach and not the insider looking-out approach, since it completely ignored the viewpoint of those who had to take internal financing decisions.

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SCOPE OF FINANCIAL MANAGEMENT

2. Ignored Routine Problems:

The approach gave undue emphasis to infrequent happenings in the life of an enterprise. The subject of financial management was confined to the financial problems arising during course of, incorporation, mergers, consolidations and reorganisation of corporate enterprise. As a result this approach did not give any importance to day-to-day financial problems of business undertakings.

3. Ignored Non-Corporate Enterprise:

The approach focused only the financial problems of corporate enterprise. Non-corporate industrial organisations remained outside its scope.

4. Ignored Working Capital Financing:

The approach laid emphasis on the problems of long term financing. The problems relating to financing short term or working capital were ignored.

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SCOPE OF FINANCIAL MANAGEMENT

• MODERN APPROACH:
• The traditional approach outlived its utility due to changed business situations since mid-1950. Technology improvements, innovative marketing operations, development of strong corporate structure, keen business competition, all made it imperative for the management to make optimum use of available to the financial manager, based on which he could make sound decisions.
• Investment decisions
• Financing decisions
• Dividend decision s

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EVOLUTION OF FINANCIAL MANAGEMENT

Financial management evolved gradually over the past 50 years. The evolution of financial management is divided into three phases. Financial Management evolved as a separate field of study at the beginning of the century. The three stages of its evolution are:

1.The Traditional Phase

2. The Transitional Phase

3.The Modern Phase

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EVOLUTION OF FINANCIAL MANAGEMENT

• The Traditional Phase: During this phase, financial management was considered necessary only during occasional events such as takeovers, mergers, expansion, liquidation, etc. Also, when taking financial decisions in the organisation, the needs of outsiders (investment bankers, people who lend money to the business and other such people) to the business was kept in mind.

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EVOLUTION OF FINANCIAL MANAGEMENT

The Transitional Phase: During this phase, the day-to-day problems that financial managers faced were given importance. The general problems related to funds analysis, planning and control were given more attention in this phase.

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EVOLUTION OF FINANCIAL MANAGEMENT

The Modern Phase: Modern phase is still going on. The scope of financial management has greatly increased now. It is important to carry out financial analysis for a company. This analysis helps in decision making. During this phase, many theories have been developed regarding efficient markets, capital budgeting, option pricing, valuation models and also in several other important fields in financial management.

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Objectives of financial management

GOALS & OBJECTIVES OF FINANCIAL MANAGEMENT

Profit maximization : The main objective of financial management is profit maximization. The finance manager tries to earn maximum profits for the company in the short-term and the long-term. He cannot guarantee profits in the long term because of business uncertainties. However, a company can earn maximum profits even in the long-term, if:-

• The Finance manager takes proper financial decisions.
• He uses the finance of the company properly.

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GOALS &OBJECTIVES OF FINANCIAL MANAGEMENT

Wealth maximization : Shareholders are the actual owners of the company. Hence, the company must focus on maximizing the value or wealth of shareholders. The finance manager should try to distribute maximum dividends among the shareholders to keep them happy and to improve the goodwill of the company in the financial market. The declaration of dividend and payout policy is decided with the help of financial management. A proper dividend policy related to the declaration of dividends or retaining the company's profit for future growth and development is part of dividend decisions. But this is based on the performance of the company and the amount of profit earned. Better performance means a higher value of shares in the financial market. In nutshell, the finance manager focuses on maximizing the value of shareholders.

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OBJECTIVES OF FINANCIAL MANAGEMENT

Proper estimation of total financial requirements : Proper estimation of total financial requirements is a very important objective of financial management. The finance manager must estimate the total financial requirements of the company. He must find out how much finance is required to start and run the company. He must find out the fixed capital and working capital requirements of the company. His estimation must be correct. If not, there will be shortage or surplus of finance. Estimating the financial requirements is a very difficult job. The finance manager must consider many factors, such as the type of technology used by company, number of employees employed, scale of operations, legal requirements, etc.

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OBJECTIVES OF FINANCIAL MANAGEMENT

• Proper mobilisation : Mobilisation (collection) of finance is an important objective of financial management. After estimating the financial requirements, the finance manager must decide about the sources of finance. He can collect finance from many sources such as shares, debentures, bank loans, etc. There must be a proper balance between owned finance and borrowed finance. The company must borrow money at a low rate of interest.

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OBJECTIVES OF FINANCIAL MANAGEMENT

• Proper utilisation of finance : Proper utilisation of finance is an important objective of financial management. The finance manager must make optimum utilisation of finance. He must use the finance profitable. He must not waste the finance of the company. He must not invest the company's finance in unprofitable projects. He must not block the company's finance in inventories. He must have a short credit period.

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OBJECTIVES OF FINANCIAL MANAGEMENT

• Maintaining proper cash flow : Maintaining proper cash flow is a short-term objective of financial management. The company must have a proper cash flow to pay the day-to-day expenses such as purchase of raw materials, payment of wages and salaries, rent, electricity bills, etc. If the company has a good cash flow, it can take advantage of many opportunities such as getting cash discounts on purchases, large-scale purchasing, giving credit to customers, etc. A healthy cash flow improves the chances of survival and success of the company.

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OBJECTIVES OF FINANCIAL MANAGEMENT

• Survival of company : Survival is the most important objective of financial management. The company must survive in this competitive business world. The finance manager must be very careful while making financial decisions. One wrong decision can make the company sick, and it will close down.
• Creating reserves : One of the objectives of financial management is to create reserves. The company must not distribute the full profit as a dividend to the shareholders. It must keep a part of it profit as reserves. Reserves can be used for future growth and expansion. It can also be used to face contingencies in the future.

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OBJECTIVES OF FINANCIAL MANAGEMENT

• Proper coordination : Financial management must try to have proper coordination between the finance department and other departments of the company.
• Create goodwill : Financial management must try to create goodwill for the company. It must improve the image and reputation of the company. Goodwill helps the company to survive in the short-term and succeed in the long-term. It also helps the company during bad times.
• Increase efficiency : Financial management also tries to increase the efficiency of all the departments of the company. Proper distribution of finance to all the departments will increase the efficiency of the entire company.

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OBJECTIVES OF FINANCIAL MANAGEMENT

Financial discipline : Financial management also tries to create a financial discipline. Financial discipline means:-

• To invest finance only in productive areas. This will bring high returns (profits) to the company.
• To avoid wastage and misuse of finance.

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OBJECTIVES OF FINANCIAL MANAGEMENT

• Reduce cost of capital : Financial management tries to reduce the cost of capital. That is, it tries to borrow money at a low rate of interest. The finance manager must plan the capital structure in such a way that the cost of capital it minimised.
• Reduce operating risks : Financial management also tries to reduce the operating risks. There are many risks and uncertainties in a business. The finance manager must take steps to reduce these risks. He must avoid high-risk projects. He must also take proper insurance.
• Prepare capital structure : Financial management also prepares the capital structure. It decides the ratio between owned finance and borrowed finance. It brings a proper balance between the different sources of. capital. This balance is necessary for liquidity, economy, flexibility and stability

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FINANCE FUNCTIONS�/�MAJOR FINANCIAL DECISIONS

Financial management decisions involve making choices about how to manage the company's financial resources to achieve its goals. Some examples of financial management decisions include:

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FINANCE FUNCTIONS�/�FINANCIAL DECISIONS

Investment Decisions: Managers need to decide on the amount of investment available out of the existing finance, on a long-term and short-term basis. They are of two types:

• Long-term investment decisions or Capital Budgeting mean committing funds for a long period of time like fixed assets. These decisions are irreversible and usually include the ones pertaining to investing in a building and/or land, acquiring new plants/machinery or replacing the old ones, etc. These decisions determine the financial pursuits and performance of a business.
• Short-term investment decisions or Working Capital Management means committing funds for a short period of time like current assets. These involve decisions pertaining to the investment of funds in the inventory, cash, bank deposits, and other short-term investments. They directly affect the liquidity and performance of the business.

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FINANCE FUNCTIONS�/�FINANCIAL DECISIONS

Financing Decisions: Managers also make decisions pertaining to raising finance from long-term sources (called Capital Structure) and short-term sources (called Working Capital). They are of two types:

• Financial Planning decisions which relate to estimating the sources and application of funds. It means pre-estimating financial needs of an organization to ensure the availability of adequate finance. The primary objective of financial planning is to plan and ensure that the funds are available as and when required.
• Capital Structure decisions which involve identifying sources of funds. They also involve decisions with respect to choosing external sources like issuing shares, bonds, borrowing from banks or internal sources like retained earnings for raising funds.

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FINANCE FUNCTIONS�/�FINANCIAL DECISIONS

Dividend Decisions: These involve decisions related to the portion of profits that will be distributed as dividend. Shareholders always demand a higher dividend, while the management would want to retain profits for business needs. Hence, this is a complex managerial decision.

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DIFFERENCES BETWEEN PROFIT MAXIMIZATION AND WEALTH MAXIMIZATION

Profit maximization and wealth maximization:

1. Focus: Profit maximization focuses on generating the highest profits possible in the short term, while wealth maximization focuses on creating long-term value and increasing the net worth of the company.
2. Time horizon: Profit maximization focuses on short-term goals, while wealth maximization takes a long-term perspective.
3. Perspective: Profit maximization considers the interests of the shareholders, while wealth maximization takes into account the interests of all stakeholders, including customers, employees, and the wider community.

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DIFFERENCES BETWEEN PROFIT MAXIMIZATION AND WEALTH MAXIMIZATION

4.Sustainability: Profit maximization may sometimes result in unethical practices that sacrifice long-term sustainability for short-term gains, while wealth maximization takes a more sustainable approach that considers the impact of the company's decisions on all stakeholders.

5.Decision-making: Profit maximization may lead to decisions that prioritize immediate profits over long-term value creation, while wealth maximization considers the long-term impact of decisions on the company's assets and overall net worth.

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MAXIMIZATION AND SATISFYING IN FINANCIAL MANAGEMENT

1. Objective: The objective of maximization is to achieve the highest possible outcome, while the objective of satisfying is to achieve an acceptable level of outcome while balancing the needs of various stakeholders.
2. Approach: Maximization involves making decisions that prioritize achieving the highest possible outcome, while satisfying involves making decisions that consider the needs of various stakeholders and balancing them with financial outcomes.
3. Timeframe: Maximization often focuses on short-term gains, while satisfying considers the long-term impact of decisions.

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MAXIMIZATION AND SATISFYING IN FINANCIAL MANAGEMENT

4.Risks: Maximization may involve taking greater risks to achieve higher returns, while satisfying focuses on managing risks and balancing the needs of various stakeholders.

5.Values: Maximization may prioritize financial outcomes over other values, while satisfying considers a broader range of values, such as social responsibility and ethical considerations.

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NEW ROLES AND RESPONSIBILITIES FOR FINANCIAL MANAGERS- CONTEMPORARY SCENARIO

1. Financial analysis and planning: Determining the proper amount of funds to employ in the firm, i.e. designating the size of the firm and its rate of growth.
2. Investment decisions: The efficient allocation of funds to specific assets.
3. Financing and capital structure decisions: Raising funds on favourable terms as possible i.e. determining the composition of liabilities.
4. Management of financial resources (such as working capital).
5. Risk management: Protecting assets.

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• Role of Finance executive in today’s World vis-a-vis in the past

Today, the role of chief financial officer, or CFO, is no longer confined to accounting, financial reporting and risk management. It’s about being a strategic business partner of the chief executive officer, or CEO. Some of the key differences that highlight the changing role of a CFO are as follows:-

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NEW ROLES AND RESPONSIBILITIES FOR FINANCIAL MANAGERS- CONTEMPORARY SCENARIO

In the contemporary scenario, financial management has seen the emergence of new roles and responsibilities for financial managers. These new roles reflect the changing nature of the business landscape and the increasing complexity of financial operations. Here are some of the key areas where financial managers are taking on new roles:

1.Strategic planning: Financial managers are increasingly involved in the strategic planning process,(Mission and vision of the firm ,setting goals and objective's)providing input and analysis to help the organization make informed decisions about long-term goals and objectives.

2.Risk management: Financial managers are responsible for identifying and managing risks, such as financial, operational, and reputational risks, to ensure the organization's stability and sustainability.

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NEW ROLES AND RESPONSIBILITIES FOR FINANCIAL MANAGERS- CONTEMPORARY SCENARIO

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3.Technology integration: Financial managers must keep up with advancements in technology and identify opportunities to integrate new tools and platforms into financial operations, such as artificial intelligence, blockchain, and automation.

4.Sustainability and social responsibility: Financial managers are increasingly responsible for ensuring the organization operates in a sustainable and socially responsible manner, considering the impact of financial decisions on the environment and society.

5.Data analysis and reporting: Financial managers must be able to analyze and interpret financial data to provide accurate and timely reports to stakeholders, including investors, regulators, and internal management.

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