Financial Management & Improving Automotive Industry - Essay Example

Activity The video provides a better understanding of financial management and its importance in any firm or company. It also explains the significant roles of financial statements like the balance sheet in the success of a company. By using the actions within the soccer team Ajax Amsterdam, the financial operations of a company can be illustrated. Just like any company, financial management is very important not only because this will tell much about how its resources are managed but also it can determine the company’s financial position in the future.

Financial statement analysts can use financial statements to evaluate the performance of a company. For example, by using balance sheet they can tell the company’s financial position at a specific point in time as it shows the assets and liabilities of the company. Solidity, liquidity and rentability or reliability of the company can also be reflected from the balance sheet. Profitability or the return on assets is another aspect of the company that is measured by the financial statement like the balance sheet.

Profitability ratios show the combined effects of liquidity and asset management. If the solidity, liquidity, rentability or reliability and profitability ratios all look good, then the market value of the company is high. Cash is important for the operation of the company but at the same time variable due to several factors like the cash flow. Thus, there should be cash planning, cash management, and cash reserve involved in a company’s financial management. Cash flows can be from operative, investment or financing activities.

Cash flow analysis is important for the company as this will provide clues about its financial position. Evaluation of investment projects will help the company to evaluate performances of each investment project and tell whether it will improve or not the financial position of the company. This will help financial managers to analyse ways of improving their financial performance. Capital budgeting is also about planning expenditures on assets whose cash flows are expected beyond one year.

Just like in cash management, there is a need for strategic management and planning for the capital. The growth of the company and its ability to remain competitive and to survive will depend on how its finances are budgeted and managed. Activity 2 In any industry the need to develop the efficiency of production and of the working environment of the company is necessary to ensure that the organization is able to meet its needs. The automotive industry, the main focus of the video, elaborates on the various methods applied in order to improve the competitive edge of the company.

There are various tools and techniques that were shown that helped in the enhancement process. The significant conclusion was that ultimately there is no one sure way that can be recommended to apply for every company. It is a matter of trying out methods and primarily the involvement of each member to participate in the program and finding out what works and what does not. The commitment from everyone will determine success. The enumeration serves only as guide that needs reinforcement. The video “Delivering Continuous Improvement: the Automotive Industry” identified the possible tools and techniques that may be adopted in shop floors.

This includes visual management where workers are videoed to see what they are doing and whether they are working accordingly. Another promising tool is the implementation of the 5Cs representing 1. Clear out, 2. Configure, 3. Clean and Check, 4. Conformity, and 5. Custom and practice. The seven wastes is aimed at eliminating unnecessary hindrances in the workplace. The practice of standardization makes it a part of company culture to follow procedures. Emphasis was given on the need of developing key people who will perform the key roles of the improvement process.

Here, three main functions belong to the expert engineer, the supplier development manager and the change agent. All of whom must take part and assume responsibility. There is no dispensing of the enthusiasm that must be revitalized in order to attain the goals of the company. The practitioners acknowledge that this is a vital ingredient ascertains accomplishment. When there is interest to apply the changes then it becomes infectious and the probability for its realization becomes even more of a possibility including is continuance.

BibliographyDelivering Continuous Improvement: The Automotive Industry. Films Media Group, 2001. Films On Demand. Web. 11 September 2011. .Financial Management. Films Media Group, 1999. Films On Demand. Web. 11 September 2011. .