Financial Management for Financial Intelligence - myassignmenthelp

Question: Discuss about theFinancial Management for Financial Intelligence for HR. Answer: Financial management means managing the funds properly and efficiently in order to achieve the goals and objectives of a company. A company cannot run in the best possible manner if the funds are not managed and used effectively. However, the responsibility of carrying out financial management lies in the hands of the financial manager. (Atrill and McLaney, 2009) The role of the financial is basically to take care of the financial health of a company. They play a major role in taking any kind of financial decision..The decision should be taken after the proper analysis of the cost of capital. He checks which is the best and most reasonable way in which the funds could be raised and where these funds should be used and allocated based on various factors. The shareholders invest their money and expect the company to perform excellently well so that they could earn higher returns (Banks and Giliberti, 2008).There arises a conflict between the shareholder and manager when the shareholders demand returns from the company in the form of dividend but the company takes a decision to transfer the profits in the retained earnings and not distribute them in the form of dividends. However, this conflict could be resolved a little using the wealth maximization approach. (Berman, Knight and Case, n.d.) According to the wealth maximization, a company would always aim to earn higher profits in order to fulfil the expectations of the shareholder by providing them higher returns. It is equally important to satisfy the shareholders along with the expansion of business. There are usually three versions which are taken into consideration while talking about the market efficiency. They are strong form efficiency, semi strong form efficiency and weak form efficiency. In the strong form all the information irrespective of whether private or public are considered while accounting for the stock price. In case of semi strong efficiency only certain public information is taken into consideration while accounting for the stock price. Weak efficiency is itself clear from the name given to it. This implies that there is a requirement fundamental analyze the financial statements if the company in order to check whether the stocks are underpriced or over valued. Therefore, these are regarded as the three degrees of the market efficiency. The real rate of interest depends on various external factors such as lending and borrowing capacity in the economy (Berry and Jarvis, 2007). In the current scenario, the firm is will be able to earn a good returns as the rate of return is exceeding the cost of capital but still it is not able to earn the required rate of return. It would be able to earn the required return only if there is some changes in the market or the economy or change in the internals of the company. The internal factor that could bring a change is the change or improvement of technology in the business. Marketability and liquidity of a security is defined as the situation when the security can be easily sold in the market and has the ability to convert into cash within a short span of time. According to the given situation, the security which has been mentioned is easily marketable as the price of the share has fallen and so people with bullish nature would like to invest in such securities (Bhattacharyya, 2011). The investor is selling the security at a loss which could be avoided if he waits for more time but this is completely on his opinion and his requirement for cash. The investor may sell securities because of two reasons.Hence, we can conclude that the security is easily marketable and liquefiable (Bruner, Eades and Schill, 2017). References: Atrill, P. and McLaney, E. (2009).Management accounting for decision makers. Harlow, England: Financial Times/Prentice Hall. Banks, A. and Giliberti, J. (2008).Budgeting. North Ryde, N.S.W.: McGraw-Hill Australia. Berman, K., Knight, J. and Case, J. (n.d.).Financial intelligence for HR professionals. Berry, A. and Jarvis, R. (2007).Accounting in a business context. London: Thomson Learning. Bhattacharyya, D. (2011).Management accounting. Noida, India: Pearson. Bruner, R., Eades, K. and Schill, M. (2017).Case studies in finance. Dubuque, IA: McGraw-Hill Education.