Foundation of Financial Management
Posted by Steven in cash flow, cash inflow, cash out flow, depletion, depreciation, Foundation of Financial Management, liquidity, net profit
Before laying foundation of Financial Management lets discuss about the most commonly used terminologies in financial language are Cash flow & Liquidity . Cash flow is the measure of company's financial health which equals Cash Receipts minus cash payments over a given period of time; or equivalently , net profit plus amounts charged off for depreciation , depletion and amortization, where as Liquidity is the financial term that refers to the cash or assets that can be readily converted to cash. It’s a company’s potential ability to meet obligations or to seize opportunities. Having access reasonable amount of cash is good thing for a business. But too much liquidity may mean the company is missing out on investment possibilities.The foundation of the financial management can be laid with the help of these following elements
. A basic knowledge of accounting practices and principles is worth the effort that it takes to learn them.
. Learning how to work with the funds in your business will help you understand cash flow and how liquidity affects your ability to manage your department.
. Understanding the true cost of things and their true worth will ultimately bring greater value to your operation.
. Good financial controls flow from sound understanding.
Am pretty much sure that by now you would have well versed in basic concepts of Financial management.
