Introduction to Financial Management: Budget, Functions of Finance, and Financial Statements

This essay provides an introduction to financial management, covering the concept of budget and its use in organization planning, controlling, and decision making. It also discusses the functions of finance and its relation with marketing, production, and human resources. Additionally, it explores how financial statements are used by stakeholders like owners, managers, suppliers, banks, and HMRC. The essay uses Unilever as a base firm to illustrate the concepts.

INTRODUCTION TO
FINANCIAL
MANAGEMENT

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
Concept of budget and its use in the organisation planning, control and decision making. ...........3
What is budget?...........................................................................................................................3
Use of budget in the organisation planning, controlling and decision making...........................3
Describe and establish the functions of finance and its relation with three other functions in the
organisation like Marketing, production and human resources. .....................................................4
Functions of Finance:..................................................................................................................4
Discuss how financial statements are used by the relevant stakeholders like owner, manager or
other external parties such as supplier, bank and HMRC. ..............................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8
Books and authors.......................................................................................................................8

INTRODUCTION
Financial management is all about an overseeing the fiscal health of a firm and assistance to
make sure about its continuous practicality. It is the practice to make all the planning of a
business and then to make sure about the departments for staying on the track. Unilever has been
taken as a base firm which is a British multinational customer commodities founded by Lever
brothers in 1929. It is operating mostly 190 nations around the world wide and has been a good
quality in the fast moving customer goods sector. This file covers concept of budget with its use
in planning, controlling and decision making of an organisation, various financial functions and
its relation (Ellul and Hodges, 2019). This will also cover the financial statements used by
stakeholders like owner, manager or others.
MAIN BODY
Concept of budget and its use in the organisation planning, control and
decision making.
What is budget?
A budget is an idea of income and cost over a specific upcoming period of time and is used by
governance, firms, and persons. A budget is fundamentally a fiscal planning for a characterized
time period, usually a year that is referred to a great raise in the success of any commercial
enterprise project (Yang, Wang and Ren, 2019). It is a formal idea of an approximated income
and expenditures for all the future outcomes as it is a documentation that a management is
making for the estimation of revenues to reach all the objectives of the firm. The main motive of
a budget is for planning, organising, tracking and to increase the financial condition from
controlling the money saving and an investment for staying in the pursuance of a long time fiscal
objectives.
Use of budget in the organisation planning, controlling and decision making.
A budget is a tool that a manager will utilise for the planning and controlling the utilisation of
insufficient sources which is used to show the goals of the firm and the way a management is
intending to control and using all the sources for attaining all the goals (Usama and Yusoff,
2019). Budget in the Unilever is estimating the revenue, planning an expenditure and restricting
any spending that is not a concept of a planning which makes sure that money is allocating to

those things that is not supporting the strategical goals of the firm. It is used in the firm for
various reasons which is the most important part of planning and control as it is an instrument to
forecasting the profit, allocating all the sources or interconnecting the specific understanding
about a single conception of the firm to an another parts. Budget also help in the management of
decision making of Unilever by giving targets to the different departments, budget control gives
this tool to measure a management performance.
Describe and establish the functions of finance and its relation with three other functions in
the organisation like Marketing, production and human resources.
Finance is an activity concerning with the controlling and planning of all the fiscal sources which
included the the getting and the usage of all the funds which is important for all the effective
operations.
Functions of Finance:
Investment Decision: It is related to the manager of finance who is taking the decision that
where to put all the assets of a firm (Philippas and Avdoulas, 2020). It will help in the evaluating
a new investment in case of a profit and a differences of cutting off rate against new investment
and obtaining investment. It is not only including the allocation of capital to long term assets but
also including the decision of utilising all the funds which are obtained by selling all those which
becomes less in profit and production.
Financial Decision: In this, a firm will take the decision where to increase the funds from as it
contains two main sources in the consideration as equity or borrowed. This function should be
performed by the finance manager to make a good decision as the company is also increasing the
wealth of a shareholder. Also the usage of debt is impacting the risk and returning of a
shareholder so it may improves the returning on the equity funds.
Marketing: It contains a firm that recognise the requirements of consumers and designing of all
the commodities and services that are meeting those requirements (Kassouri, Altıntaş and Bilgili,
2020). In case of finance in Unilever, it is in relation to all the aspect of a firm like profitability,
pricing, feasibility of the task and total fiscal performance which is helpful in the growth of a
commodity, strategy of a price, distribution of channels, promotion and selling of all the targets,
volume of sales and many more.
Human Resources: In the firms like Unilever, human resources in finance assists in allocating
the resources to assist the objectives of a firm, to maintain a balancing among pricing and

revenue where a human resource will start hiring, recruiting and motivating all the individuals to
advance those similar objectives in the chosen firm.
Production: This department is the main responsibility to give the commodities which requires
raw materials or labours and many more (Dwi Sihono and WIDARTI, 2021). To pay all the
expenditures, production department requires money and fund which will be completed by
finance department. In case of Unilever, finance and production departments are related with
each other and are related with the skilled and unskilled labour, storing all the finished
commodities and many more.
Discuss how financial statements are used by the relevant stakeholders like owner,
manager or other external parties such as supplier, bank and HMRC.
Mostly, financial statements are used by each of the stakeholders like managers or owners as for
tracking the performance, budgets to make all the decision, inspire the teams and maintaining a
good pictorial mind set. External stakeholders are using fiscal accounting to see the present state
of the firm which is used to give most of the data or information required by the exterior user of
the fiscal accounting as these are the formal reports giving data on a financial place of a firm,
inflow and outflow of a cash and the outcome of an operations (Rozikin and Sholekhah, 2020).
In case of Unilever, financial statements give a screen shots of corporation's fiscal health,
providing insights into the working and cash flow which is very significant to give information
about the revenue or profit of the firm.
Financial accounting is also a base to understand a management accounting which is using both
fiscal and non fiscal information as a fundamental to make the decision in a firm with the motive
to equip all the decision makers for setting and in evaluating the objectives of the firm by
recognising what information they are needed.
Investors are the most common external user of fiscal statements in both credibility and equity
decisions with the use of applicable financing information in the firm's fiscal statements, which
is involving the balancing sheet and an income statement. Taxation government are also using a
fiscal statement as a basis to assess the amount of tax which is used as paying for a firm.
Suppliers are required to know if they will be paid so new suppliers are also needed in the
reassuring about the fiscal health of a firm before agreeing to supply all the commodities.
Banks are using the financial statements of all the firms that are applying for a credit (Oladimeji
and Aina, 2018). The reason is for the judgement of fiscal health of a firm and to take the

decision for extending the credit or not. HMRC is all about the taxation authority of the
governance of UK which is an accountable to collect all the tax, to pay advantages for a child, to
enforce all the taxes, and custom regulations and to force the payment of a minimising wage by
workers. This will need a published data for the reason of taxation in their economical model to
assess and help in the understanding of future working and performance.

CONCLUSION
It is concluded from the above report is that financial management is one of the most important
concept of a business and for starting and to run a business in a successful manner there is a
requirement of a good understanding in the financial management. It assists in taking all the
decisions related to finance in the firm which is used to make a guideline to earn a good profit in
a less price. It also helps in the increment of wealth in the shareholder and for controlling the
aspects of finance related to the business.

REFERENCES
Books and authors
Ellul, L. and Hodges, R., 2019. Reforming the government budgeting system in Malta: Pressures
promoting or hindering the reform. Journal of Public Budgeting, Accounting &
Financial Management.
Usama, K.M. and Yusoff, W.F., 2019. The impact of financial literacy on business
performance. International Journal of Research and Innovation in Social
Science, 3(10), pp.84-91.
Philippas, N.D. and Avdoulas, C., 2020. Financial literacy and financial well-being among
generation-Z university students: Evidence from Greece. The European Journal of
Finance, 26(4-5), pp.360-381.
Rozikin, A.Z. and Sholekhah, I., 2020. Islamic Financial Literacy, Promotion, and Brand Image
Towards Saving Intention in Sharia Bank. Iqtishadia, 13(1), pp.95-106.
Oladimeji, O. and Aina, O.O., 2018. Financial performance of locally owned construction firms
in southwestern Nigeria. Journal of Financial Management of Property and
Construction.
Dwi Sihono, R. and WIDARTI, R., 2021. Effect of Profitability Financial, Ratios Return on
Assets, Return on Equity, Gross Profit Margin and Inflation Level of Stock Return
Manufacturing Company Recorded Activities in LQ 45. Research Journal of Finance
and Accounting, 12(24), pp.49-64.
Kassouri, Y., Altıntaş, H. and Bilgili, F., 2020. An investigation of the financial resource curse
hypothesis in oil-exporting countries: The threshold effect of democratic
accountability. Journal of Multinational Financial Management, 56, p.100639.
Yang, Q., Wang, Y. and Ren, Y., 2019. Research on financial risk management model of internet
supply chain based on data science. Cognitive Systems Research, 56, pp.50-55.