Financial Concepts and Their Applications

Financial Concepts and Their Applications Essay example
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Finance & Accounting
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Financial managers play an important role in any organization. They are responsible for an organization’s financial resources. They are guardians of these funds and have a responsibility to invest these funds in a way that yields the highest possible return and at the same time providing liquidity to an organization. …

Introduction

Good financial decision making can make or break an organization. Hence, the role of a financial manager is vital to any firm and they are the heart of an organization. Market prices are great indicators for a financial manager. They are usually signals that help the financial managers in planning and controlling, mergers and acquisitions, deciding on financial policy and a lot of other things. A good financial manager does not make decisions based on intuition. Instead, a good decision is only made after a careful examination of the markets and a lot of other external influences. Market prices are one of the external influences that have to be dealt with. Market prices guide the financial managers to set their financial policies and where to invest their funds. If a price of a commodity or an investment is rising, it is better that the financial manager move his funds or resources to that investment and make capital gains by selling those investments when the market has peaked or the investment prices start falling. Similarly, market prices are also very useful in mergers and acquisitions. ...
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