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Financial Management 214 Summary $8.32
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Financial Management 214 Summary

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This document summaries the whole semesters work. It is a summary of both the chapter slides and the textbook notes including various formulas, calculations and ratios needed. The structure of the financial statements require for the module are included as well.

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  • May 28, 2023
  • 18
  • 2022/2023
  • Summary
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, FINANCIAL MANAGEMENT 2I4
AareER-XE

managementcreates wealth by effective utilisation of enterprise's resources to generate income... cash



to I wealth, business activities need to generate an acceptable return on capt. Investment


higher return: higher share price

·
all fin decisions should contribute to wealth maximisation:


investment in assets:Capital budgeting (LT) -Wht should be done we profit?
·

pay dividend

buy-back
·

shares
how to
manage working capital
·
reinvest back in the firm

assets:capital
financing structure




ROLE OFF INANCIAL MANAGER



more the
managing cash flow keeping eye on books



use financial tools + principles to solve business problems


assist mangment in making the
right decisions: · capital investmentdecision
·

financing decision

·mangmento f working capt.
·
dividend decision

not just to max. Profitbutmanage risk as well




FINANCIAL ECONOMICS
·
macro econ - its impact on the business
·
focus on working of fin. mrkts institutions
+




anticipate effecto fon company since it'll no significanteffecto n fin. Situation per formance
+
on the enterprise
Which enterprise finds itself
-

. econ. environ. the




FINANCIAL ACCOUNTING
·

reporting of fin. data according to guidelines
focus:d iff. frm fin.
·




Mangmnt
. focus:o n profit + historical data

3
primary objective compiling fin. Statements according to IFRS




FINANCIAL MANAGEMENT
·
micro econ. Ivl i.e. Win enterprise

·focus:
on decision making mangmut of
+

decisions
·
focus on cash flow creating value in future




INVESTINGING DECISION
to make t o determine which investments in assets required
-




ist decision fin.
tht manager needs
-


·




·
decision w/ regard to NC assets (vehicles, machinery, factories, buildings, etc) assets
cur rent
+



(cash, inventory, TR, etc) the enterprise requires: needs to be made
task of fin. Manager... identification,
eval. implementation of
I
profitable projects
investments:c onsidered
-

·

only profitable




FINANCING DECISIONS
finance investments
and importantdecision
how to
.




·
whn making w i tht fin.
decisions: manager attempts to implement optimal capital structure


DIVIDEND DECISION
be reinvested as reserves / ifthey're going to be distributed btwn SH
·
decision whether earnings:g oing to


·
decision-making continuous
process: [in enterprise's situation:constantly occur]




capital redemption:non-distri. reserve into which amts: transferred following redemption purch of company's own shares of
out distri profits or in certain circumstances from proceeds of a fresh issue of shares

, FINANCIAL MANAGEMENT 2I4
-MaR
FNO




I
FINANCIAL POSITION ON GIVEN DATE
.
economic resources avail. SFP


assets, liab. equity
· +




I
year(
FINANCIALPERFORMANCEFORSPECIF PER zinFinal SPI
·

Profit + LOSS




years)
CHANGES IN FINANCIALPOSITION FOR CERTAIN PERIOD (Financial
SCF


operating, investment financing activities
· +




REQUIREMENTS


understandable logical
-




relevant(enable to eval historic, current,
a


future changes)


significant (if exclusion leads to incorrect decision)


timely (during period in much it can no effect (



Reliable



accurate



objective


comparable


fin. Statements according to
accounting guidelines (IFRS)


diff. guidelines interpretations to report same item


standardised fin. Statements




statement
of financial
position

ASSET:NON-CURRENT



capt. Investment applied to
generate income
-




PPE @CV
·
cOSt

·


accum. dep.


intang, assets (non-physical u sed to
but gen. Turnover (
.
good will
·

patent rights
·

manufacturing licenses

·
trademarks
·
computer software

·
NB:difference amortization us impairment


financial assets
·
investments in associates
50%
·38!;
·other share investments
·
20%

cOSt
·




·
loans granted (interest bearing)




ASSETS:CURRENT


relatively shot period:1yr

converted into cash w/ relative ease

inventories (required for operations)

TR (CR SAICS)
other receivables

casht cash equivalents
DreDm+S
ST fin. assets ST loans investments
+




EQUITY +
LIABILITIES



forms c apt. used to
of finance assets
equity
NCL +CL




Ord. SH equity:
ord. Share capt.- issued shares x ave issue price

· SH position of ownership. When buy-bck
there:

non-distri, reserves
>future redemption of capt.

·
I be distri. As div. ·
reval reserve, capt redemption reserve



distri, reserves
in SPL
4 in GR=> transfer of gen. reserve
,

·
distri, to ord. SH via. div. RE, general reserve

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