Financial Management: Core Fiscal Policy Actions and Their Impact

This study critically analyzes the effect of Financial Manager's core fiscal policy actions on the major macroeconomic (monetary plus fiscal) policies directed at the accomplishment of the organization's corporate goals.

Financial Management

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
REFERENCES................................................................................................................................6

INTRODUCTION
Financial management corresponds to application to financial belongings of a business to
general managerial concepts. In order to ensure effective operation, careful handling of the
finances of a company ensures quality and consistent operation (Herdjiono and Damanik, 2016).
If budgets are not adequately complied with, a company can face challenges that will have a
significant effect on its expansion and sustainability. The study critically analyses the effect
on Financial Manager's core fiscal policy actions on the major macroeconomic (monetary plus
fiscal) policies directed at the accomplishment of the organization 's corporate goals.
MAIN BODY
Macroeconomic policies generally seek to maximize national income levels by
delivering economical growth in order to improve economic usefulness and living conditions
for participants. There are certain main goals that contribute to income maximization in long
term. Although the goals of numerous national and foreign organizations vary, most adopt the
same as listed follows:
Sustainability- growth rate that encourages living standards to rise without unnecessary
environmental including structural problems.
Full job/employment - where people who could as well as are willing to work are capable for get
one, like frictional, seasonal including structural unemployment (termed as natural
unemployment) is expected to be effect (Shapiro and Hanouna, 2019).
Price stability -where prices remain relatively steady and inflation/fluctuation is not fast. Price
stability does not inherently lead to zero inflation, but instead, stable low medium inflation rates
are also perceived to be desirable. It should be remembered which prices of such items and
services also decline due to changes in production throughout inflation periods, because inflation
is just a reflection of the overall price scales. Inflation, though, is a successful 'economic
stabilization' indicator. In a country, zero inflation always unwanted. (The "Internal Balance" is
being used to characterize economic level leading to complete and inflationary employment.)
External balance-balance of payments/payouts without artificial restrictions. This in other
terms, value of exports is nearly equal to long-term values of imports.

Equal and fair income and asset allocation – equal and fair sharing of the national profits, fairer
than a truly open economy. As with most economic targets, income allocation is an empirical or
legislative challenge in part (Dwiastanti, 2017).
Increased productivity- greater output each unit of labor each hour. As job is just one of many
products and services generated, the production per unit of production factors per hour can also
be represented.
Thermal Equilibrium -balance of payments balance without introduction of artificial restrictions.
In other words, import is substantially equaling to export.
The theory of agency is concept to clarify and address problems related to the collaboration
among management and their members. This partnership most often occurs between owners,
directors and management, as agents. An agent uses principal's services by design. The
management has delegated resources but it does not have any or no regular feedback. The agent
takes decisions but takes little to no responsibility so principal is responsible for all losses. In
part of managers, investment advisors and fund managers become agents and therefore are
responsible for the investments of directors (Ameliawati and Setiyani, 2018). A leasee may be
responsible for preserving and protecting non-property properties. Although lessee is responsible
for managing the properties, they are less interested in securing the properties than owners
themselves.
Common financial corporate objectives involve higher profits, improved profitability, decreased
profits in periods of difficulty and yield on investments. Financial manager should assess where
and how effectively to utilize the accessible funds and what to do to get requisite funding. The
duties of financial manager entail financial management, savings (money expenditure), and
finance (funds raising). Maximize the company's worth is financial manager's primary priority,
whose actions also impact on the longer term. Financial managers take financial decisions on the
basis on financial reports as well as other reports compiled by accounting professionals. Cash
balances, cash inflows, outflows are the priority of financial administrators. They prepare and
track cash flows of the company to make sure that funding is accessible when necessary (Al
Breiki and Nobanee, 2019). Financial manager must therefore weigh the short-term and long-
term implications of the company's decisions to increase its worth. Profits to optimize are one
strategy, but not only one. such strategy favors the pursuit of long-term targets in the near term.

What when there was no researches and development in highly technological and competitive
business sector. In short term, income would be higher as research and developments would be
quite costly. However, because of its scarcity of new items, it could loss its competitive potential
in longer run.
Decision making allows to make use of capital necessary to accomplish the entity 's aims, unless
a corporate entity can continue for any period unless a certain degree of financial output is
accomplished. Thus, financial accounting ultimately offers financial decision-making analytical
structure. Financial decision can be categorized as: Long-Term Finance Decisions and Short-
Term Finance Decisions. There are three key financial decisions generally : - 1. Long term
Investment Decisions 2. Financing Decisions 3. Dividend Decisions (Okanazu, 2018).
Investment decisions are regarded as a strategic decision about how the business funds
are spent in various assets. Decisions on investment could be shorter or longer-term. A long-term
investment decision is termed as capital budgeting, requiring immense longer-term investment
sums and irreversible even at immense costs. Shorter-term investment
decisions refer to decisions regarding working capital, that impact a company nearly every day.
this involve decisions on money, stock and accounts receivables.
A financial decision concerns borrowing from different sources of longer-term funds
such as share capital, preferred stock, debentures, banking mortgages, etc. It is also a judgement
on the corporation's 'capital framework (Raykov, 2017).
Dividend decision corresponds to financial decision involving shareholders' allocation of
the benefit received by the corporation (dividend) including how much can be held in respect of
potential contingencies (Madura, 2020).
The primary goal of fiscal as well as monetary policy are to reduce cyclical economy
cycle variations. Governments have frequently depended in recent times on fiscal policy to
achieve lower inflation. But there are good reasons in recessions for using monetary policies to
bring about economic growth as well. Fiscal strategies include adjusting public funding and
fiscal policies. This indicates a change in the spending status of the countries. For instance.
Expansive economic policy entails tax cuts, expanded government investment and expanded
budget deficits. Public expenditure is part of the Commercial. Monetary policy entails

manipulating demand as well as money supply, especially by using interest rates. Unorthodox
strategies such as free market activities and quantitative expansion will also entail fiscal policy.
Monetary policies are usually enforced by central bank independently of itself. Management
should consider these policies as to avoid any adverse condition in business. Without considering
these policies if manages take decisions relating to investment, financing or dividend related then
such decision may lead to unfavorable circumstances for business such impact the liquidity
position, market share, creditability in market etc. Thus, management must incorporate such
policies in business and managerial decision as to improve effectiveness of decisions (Siminica,
Motoi and Dumitru, 2017).

REFERENCES
Books and Journals:
Herdjiono, I. and Damanik, L.A., 2016. Pengaruh financial attitude, financial knowledge,
parental income terhadap financial management behavior. Jurnal Manajemen Teori dan
Terapan| Journal of Theory and Applied Management, 9(3).
Shapiro, A.C. and Hanouna, P., 2019. Multinational financial management. John Wiley & Sons.
Ameliawati, M. and Setiyani, R., 2018. The influence of financial attitude, financial
socialization, and financial experience to financial management behavior with financial
literacy as the mediation variable. KnE Social Sciences, pp.811-832.
Madura, J., 2020. International financial management. Cengage Learning.
Dwiastanti, A., 2017. Analysis of financial knowledge and financial attitude on locus of control
and financial management behavior. Management and Business Review, pp.1-8.
Al Breiki, M. and Nobanee, H., 2019. The role of financial management in promoting
sustainable business practices and development. Available at SSRN 3472404.
Okanazu, O.O., 2018. Financial management decision practices for ensuring business solvency
by small and medium scale enterprises. Acta Oeconomica Universitatis Selye, 7(2),
pp.109-121.
Raykov, E., 2017. The liquidity-profitability trade-off in Bulgaria in terms of the changed
financial management functions during crisis. Management: journal of contemporary
management issues, 22(1), pp.135-156.
Siminica, M., Motoi, A.G. and Dumitru, A., 2017. Financial management as component of
tactical management. Polish Journal of Management Studies, 15.