Role of Financial Management in Growth and Expansion of an Organization

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Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK ..............................................................................................................................................3
Section 1:.....................................................................................................................................3
Determine financial management concepts and importance.......................................................3
Section 2:.....................................................................................................................................5
Role of financial statements and ratio in financial management:...........................................5
Section 3:.....................................................................................................................................7
Ratio Analysis........................................................................................................................7
2.Income Statement (Refer Appendix Below).......................................................................8
3. Statement of financial Position (Refer Appendix Below)..................................................8
4. Profitability ratio, Efficiency ratio and liquidity ratio: -....................................................8
Section 4......................................................................................................................................9
Recommendation....................................................................................................................9
CONCLUSION .............................................................................................................................10
REFERENCES..............................................................................................................................11
APPENDIX....................................................................................................................................12

INTRODUCTION
The following report contain role of finance management in growth and expansion of an
organization. Financial management is the term which is used by the firm to implement planning,
organizing, monitoring and controlling for financial undertakings. In simple words, it a vital key
for every firm to run their business effectively and efficiently by utilising financial resources of
the company (Yang, Wang and Ren., 2019). It generally proceeds financial decisions under three
main terms such as investment decisions, financing decisions and dividend decisions. In this
report, concept of financial statements and use of ratios in company financial management are
explained. The calculation of ratios include profitability ratio, efficiency ratio and liquidity ratio
and the financial statement include income statement, balance sheet and cash flow statements.
TASK
Section 1:
Determine financial management concepts and importance
Financial management is a special technique that is followed by every firm or organization to
implement and develop their business in long run. This approach is owned and control by only
those person who have a specific knowledge and skills of financial management of the business.
The person who manage the financial management of the company is refers as financial manager
(Lo and Liao., 2021). It is also a duty of financial manager to target the main goals of the
business operation for increasing the profit and goodwill in the economy and it also help to fix
the ratio between debt and equity.
There are following responsibility of the company financial managers:
 Total amount of capital are needed for business operation.
 To prepare the framework of capital in terms of equity and debt of the company.
 To invest the funds of an organization in the secure and reliable projects.
 To analyse and manage the monetary policy with the help of maintaining the current
ratio.
 To measure the financial control in the form of analysis of ratio, break even point and
cost.
The management of finance is business practice which ensure the company profitability, cash,
credit and expenses, so that company have may suggestion to run out their goal properly.

Financial manager is the person of the organization which directly narrate the information of the
business to top management. It always try to maximize the profit and secure the entity from any
type of loss and bankrupt (Rampini, Viswanathan and Vuillemey., 2021). Different types of
industries are followed this policy such as food industry, hotel industries, construction industries
and many more.
The main role of these managers are explain below:
 Financial Planning: It is the term that is used by the department of the firm to run their
business in most effective and efficient manner. Sometimes, this activity is done with the
help of analysing the previous year financial statement because these statements are
shows the benefits and drawbacks take place during the year. Financial planning is
always done by considering all the areas of business operation which is crucial and
critical. The net profit and loss of the company is fully depend upon the financial
planning.
 To protect funds of the business: It provide support in issuing the funds so that business
utilized more profit or outcome in a given period of time. The finance manager play a
important in these allocation because they assure the funds should be used and allocate
properly. If the result of issuing funds gives positive response then it is said to be
company finance manager is good and wise (Kubick and Lockhart., 2021). This result are
helpful in declining the expenses and maximizing the capital of the company.
 Provide more investment chance for entity: It is the fact that if one particular person
handle and run the work then it is high chance to fulfil the needs. To follow this concept,
the organization appoint only a specific financial manager for acquiring more chances to
explore the investment. It is opportunity that build strength of an enterprise by managing
the stability and growth in a company for a long period of time. Fixed deposit, bonds
mutual funds are the major source of investment in the business that maximize that
maximize the gains.
 Valuation of an organization: The financial management include financial statement and
financial ratio to prepare a good plan for future. Both the activity of planning are also
helpful for the company to analyse the company financial position during the year. It
further critical role in comparing the two or more year position of the company. There are