Companies require material or financial human resources, whether small, medium or large. Finance consists of three interrelated areas: The role of finance will be oriented to financial resources, because money is a resource to acquire assets, cancel immediate and long – term obligations.
Principles of Financial Administration
To generate cash flows needed revenue for cash sales and portfolio recovery, contributions from shareholders or owners, contracting loans, sale of assets unproductive, among other items. These funds will be used to purchase inventories, assets fixed payment obligations, dividends, etc.
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Financial Markets: A large number of finance specialists choose to work in financial institutions, such as banks, finance companies, insurance companies, mutual’s and brokerage houses.
Investments: Other specialists choose to work in consultancies, in which they are dedicated to advising the individual investors on the best way to invest their funds.
Management Financial: The widest of the three areas and offers the largest number of employment opportunities. The administration financial is very important in any kind of company or business, it includes industrial, commercial and service companies, both private sector and the state.
To achieve an efficient administration , it is necessary to have clear understanding of what the goals and policies of a company, which usually are determined by shareholders in coordination with the group are administrative confer duties and responsibilities, delegation of authority sufficient oriented Maximizing the interests of the owners by maximizing available resources and invested capital.
The administrators financial seeing that their companies are successful, they must ensure employees, suppliers, creditors and especially by customers, who are the very significantly influence the value of the company.
Relationship with the Economy
Economic principles, although generalizations are somehow imprecise quantitatively, since they come from the observation of social behavior, however, the theoretical knowledge of economic science is fundamental to the work of the financial analyst. Knowledge of the country’s economic situation and trends in the global economy will help the financial manager to make decisions.
The activities of companies are influenced by the economic environment, not only in the country where they are located, but also the international context.
Relationship with Accounting
The study of finance is closely linked with accounting, because it is associated with budgets, plans, preparation and interpretation of financial statements. However, there are basic differences between accounting and finance, the first refers to the treatment given to funds, while the latter reorients decision-making.
Financial accounting has primary interest in the historical aspects of external information that is, providing financial information to external personnel to the company, such as investors, creditors and government. To protect these personnel, financial accounting is governed by so-called generally accepted accounting principles (GAAP) and specifically in our country by Ecuadorian Accounting Standards (NEC).
Accounting management is providing information to managers internally responsible for the planning and control of operations of the company that make different decisions, administrative . Due to internal use, accounting management is not subject to the PCGAa the NEC; without these meaning away so absolute or total accounting regulations.
The need for Funds
Every company, when it needs funds to finance the asset and thus be able to continue with normal operations, faces the dilemma of selecting between two basic types of financing, internal and external.