Principles of Financial Management

This presentation provides an overview of the principles of financial management, including the approaches, techniques, and factors involved. It also explores stakeholder management and its conflicts, as well as management accounting techniques and fraud detection and prevention.

Principles Of Financial
Management

INTRODUCTION
 Financial management is defined as planning and
controlling financial functions of the organization.
 Planning of Financial Management involve controlling and
directing the financial activities such as procurement
decisions and other associated utilisation of financial
functions for conducting various organisations functions.
 Henceforth, this presentation will emphasis over
approaches, techniques and factors involve in financial
management. Stakeholder management will also be
summarized in this presentation.

Financial management approaches, techniques and factors
Financial Management Approaches: These are referred as the practices used to
manage financial function in context to corporate organization.
 Traditional Approach: Tradition approach of financial management emphasis
over acquisition of resources, financing and manage all assets in order to generate
optimum utilisation from such assets. This approach enables the management in
M&S to take productive decisions in respect to procuring assets and other
resources associated with different company's operations.
 Modern Approach: Modern approach of financial management emphasis over
acquisition, financing, merger, acquisition, cost management, quality
improvement and financial discipline as a part of financial management function.

Techniques of Financial Management
Financial Management Techniques involve financial practices in order to manage the financial
resources of the company in the most optimum manner.
 Ratio Analysis: Ratio analysis is an effective tool used to manage financial resources of
the company. Financial manager analysis different ratios like liquidity ratio, leverage ratio,
efficiency ratio, profitability ratio and market value ratio. All such ratio enable the financial
manager in M&S to control and manage financial sources of the company and also to
analyse operational effectiveness like profitability and other operational aspects.
 Risk Management: Risk managements an effective tool use in Financial Management to
evaluate risk associated with investment decisions of the M&S.

Factors of Financial Management
 Factors involve key drivers involve in finance management decision-making process.
Factors involve in Financial Management can be summarized in the following manner.
 Economical Factor: Economical factor involve country's economic situation. Stable
economy drives the corporate organisations to take aggressive investment decisions like
business expansion, acquisition of other market competitors and many other associated
decisions. Economic situation of country also impact the decision-making in respect to
procurement of funds from different landing companies.
 Government Policy: Government policy in UK is also a major factor work behind the
financial management decision-making. Governmental policies like economic policy,
foreign policy and other associated policies play a key role in decision-making related to
financial management.

Stakeholder Management
Stakeholders are indicated by all external as well as internal entities that carry some kind of
interest in company's operations and business.
 Profitability conflicts: Profitability is a huge conflicts company management needs to
address. Investors of company like shareholders and other investor's expects to have a
huge profitability from company's operations. Stakeholders always demand to increase
prices of products but company management needs to analyse the market situation and
based on that sale prices are decided in order to entertain sustainable profits.
Management uses strategically tool like market analysis, situational analysis, goodwill
analysis, brand management in order to assess the value of company's products in the
market. Based on the outcomes of different strategically tool company management
involve profit margins and sale prices of products.

CONTINUE…
 Corporate Social Responsibility conflicts
(CSR): CSR is also a huge conflict
management of M&S face from its
stakeholders like shareholder's and
investors. As per the government
regulations corporate organizations needs to
address the CSR activities every year.
 Stakeholder demands to have a low
investment in conducting CSR activities as
it involve outflow of company's financial
resources.

Management accounting techniques in cost control and
maximizing shareholder value
 There are different techniques which are used in
management accounting so that the organization can have a
control on the value of shareholders and cost saving.
Management accounting has four techniques which are
budgetary control, capital expenditure, productivity and
ratio.
 Budgetary control helps Marks and Spencer to have a
budget for the expenditures on different aspects of the
company which can be controlled if the company follows
the budget completely.

Fraud detection and prevention
 There are techniques which can help the
organization to go through fraud and prevent
them for a smooth functioning of an
organization.
 It is very important for the corporate entity to
know the employees which are working in
the company so that appropriate decisions
can be made which is going to help the
company have a lot of profit.
 Experts which are hired by organization
should be trustworthy so that the organization
can have a productive functioning.

CONCLUSION
 It can be concluded that approaches involve in financial management like
traditional and modern approach guides the company management to take
decision-making in respect to management of financial resources.
 Techniques like ratio analysis and risk management has also concluded that
guides the management to take profitable investment decisions by analysing about
different factors involve in investment like risk, payback period and others.
 Different factors has also summarized like economic factor and government
policies that also involve in decision-making process related to financial resources
of the company

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