Financial Management Report: Functions, Roles, and Sources

This report delves into the crucial aspects of financial management, exploring the significance of financial functions within an organization, the pivotal role of a financial manager, and the diverse sources of finance available to a company. The report uses Morrisons as a case study, examining the importance of financial functions in identifying financial needs, finding finance sources, comparing finance options, and making investment decisions. It also explains the financial manager's responsibilities, including dividend decisions, market trend analysis, and investment decisions. Furthermore, the report details both internal sources like retained profit and selling assets, and external sources such as bank loans, venture funding, and funds from shareholders, offering insights into their advantages and disadvantages. The conclusion emphasizes the central role of finance in business operations, the importance of financial managers, and the impact of sound financial management on business growth and survival.

Financial management
Report

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK ..............................................................................................................................................3
1. What are the importance of financial functions with in the organisation?..............................3
2. explain the role of financial manager in organisation?...........................................................4
3. Describe different sources of finance in company?................................................................4
CONCLUSION ...............................................................................................................................5
REFERENCES................................................................................................................................6
Books and journal.......................................................................................................................6

INTRODUCTION
Financial management is the activity that are concerned with expenses, cash ,
profitability, indirect expenses, so company can achieve their objectives effectively and
efficiently. As it is concerned with short term working capital management relates to current
assets and liabilities. On the other hand it also involves long term financial management like
capital budgeting. The organisation that was selected in this assignment is Morrisons as it great
supermarket in UK. David Potts is the Chief executive officer of the brand. It have around 494
store in different locations. The topics which is included in this assignment are importance of
financial function in context to organisation, role of finance manager in corporate, different
sources of finance , etc. At last conclusion is given regarding such financial functions and
services (Barr, 2018)
TASK
1. What are the importance of financial functions with in the organisation?
Financial functions as it is financial management part it, concerned with activity of
planning and controlling financial resources. It includes acquiring & fund utilisation activity
which is important for efficient business operation. There are three type of financial functions
such as short term finance, medium term finance, long term finance.
Their Importance in context to organisation
 Helps to identify needs of finance- To start any business whether small or big it is
necessary to know what amount is actually needed to open the business initially. As this
function helps to understand how much invest as initial capital, what amount you already
have & how much need to raise from different sources(Barr, 2018)
 supports to find out different sources of finance-
 After knowing that how much amount you require to raise than various sources are
analysed by organisation Morrisons in context to risk and return. The funds can be
borrow from shareholders, banks, NBFC, from other firms or companies etc.
 Comparison of different source of finance become possible- After finding various
sources to fund comparison is done by finance team of Morrisons on the basis of cost as
well as risk involved. The source which involves less risk and offer high return can be
chosen by the organisation Morrisons.

 Investment- After raising the funds from different sources than it tends to need to invest
them. Investment decision is done in such a manner so that Morrisons gets high amount
of return. Fund procurement cost must be lower as compare to return on investment as it
reflects that wise and correct investment was done (Finkler, 2018)
2. explain the role of financial manager in organisation?
Finance manager: Finance manager involves individual who are experts are also known
as accounting professionals as their responsibility is to reflect and provide true and fair position
of the business to their clients, shareholders, creditors, banks, guarantors etc.
Different role of finance manager:
 make Decisions related to dividend payouts: At what rate dividend is paid to their
shareholders. When it is to pay is decided by finance manager of Morrisons.
 To analyse market trend to find opportunities for business expansion: Smart finance
officers of Morrisons analyse the market and grasp the opportunities which is beneficial
for both company as well as for employees as it help for business expansion and survival. take investment decisions: As finance manager are responsible to take initiative steps
regarding investment . By analysing market trend Morrisons finance executives take
decision regarding where to invest . Whether to make investment in venture capital ,
mutual fund, or deploy money in other profitable projects ( Madura, 2020)
3. Describe different sources of finance in company?
Finance manager stand in corporate in position of Chief Financial officer. It is their
responsibility to handle all the activities which are relates to finance. Every organisation requires
certain sum of money according to size of business. So to run the business effectively in
profitable manner there is need to make arrangement of certain amount time to time. For that
amount is raised and make available from different external and internal sources. Some example
of these sources are explain in detail in below mentioned bullet points as these are as follows-
Internal source of finance -
Retained profit : If in the organisation sudden situation is prevail that need requirement of
money that the saving are used to meet the problems. It is most common method which is

generally follow in every business because every person try to avoid to arrange money from
outside source because it tends to create liability. To overcome with the problem in near future ,
profit is retained in the form of reserves in the company Morrisons.
Selling Assets: Through selling or disposing the assets money can also be generate by
various entities it is the common source to arrange money at short duration of time. As it
involves no formalities which is done in external sources. So if there is no reserves are maintain
by company and has no retained profit than Morrisons generate money through selling assets.
owners capital: By using their own funds employers try to make arrangement of
amount. It is possible only if owner have sufficient amount to meet the demands or needs.
Morrisons adopts this methods wherever it is possible to do.
Disadvantage:-
arranging money through selling assets have great drawback also because sometimes to
satisfy our requirements we sale high value machines in low amount . Some the machines which
was sale are costly and not easily available in market.
External source of finance-
Bank Loan: Through different banks, financial institutions, NBFC, organisation take
loans for specific period , for this there is need to give guarantee by guarantor and to put some
thing which has value more than the loan amount as security to bank. For that bank charge
certain rate of interest from buyer who take loan. As interest amount is the source of income to
banks. So organisation Morrisons take loan from financial institution to meet the requirement of
working capital or for other purpose so that funds are available to do investment and business
runs smoothly.
Venture funding : It is process related to funding in which companies tends to control
and manage the funds of investors who are interested to invest their large amount on some other
business which involves high risk and return. Such firms provide funds to start up in exchange
for equity stake. Different stages of venture funding are seed capital, start-up capital, second
stage, expansion stage, stage of initial public offer. Bus using this method Morrisons can raise
high amount easily.
Through shareholders: By issuing shares to general public , promoters, existing
employees, directors, subscribers to memorandum company can easily raise funds. For that
purpose IPO or FPO can be arranged by organisation. As it is the most common method to raise

funds from investors, shareholders. So Morrisons arrange funds from stakeholders where it
requires large amount (Shapiro, 2019)
Disadvantage:-
to make arrangement of funds by taking loans from banks as it fulfil short term
requirements but also have disadvantage because it involves high rate of interested and
also it consume lots of time in doing formalities and preparing documents.

CONCLUSION
After study it is to be conclude that finance plays a crucial role in every business.
Without money it's not possible to run the business effectively in profitable manner. To handle
all the activities which are relates to money , financial officers or managers are appointed in the
company. They are the key person of the company have power to play a huge role in
organisation. As they are responsible to deploy money in such projects which are profitable or
arrange large amount from different sources so that organisation can run smoothly and leads to
business growth & survival.

REFERENCES
Books and journal
Barr, M.J. and McClellan, G.S., 2018. Budgets and financial management in higher education.
John Wiley & Sons.
Barr, M.J. and McClellan, G.S., 2018. Budgets and financial management in higher education.
John Wiley & Sons.
Finkler, S.A., Smith, D.L. and Calabrese, T.D., 2018. Financial management for public, health,
and not-for-profit organizations. CQ Press.
Madura, J., 2020. International financial management. Cengage Learning.
Shapiro, A.C. and Hanouna, P., 2019. Multinational financial management. John Wiley & Sons.