Corning, a technology conglomerate that specializes in glass and ceramic products, has been in business for over 160 years. The company’s management takes a long-term view and doesn’t prioritize pleasing Wall Street’s quarterly earnings. Although Corning is best known for its kitchenware products such as Corelle dinnerware and Pyrex glass cookware, it is now a major supplier of Gorilla Glass used in smartphone and tablet screens for companies like Apple and Google. The company has also invested heavily in research and development (R&D) and manufacturing infrastructure to support various product lines, such as optical fiber and cable for communication. In this post, we will explore the goals of a finance manager and delve into related topics.
The job of the financial manager is to look at financial data to keep track of the cash flow of the company. Even though business is booming, management puts a high priority on financial stability by directing investments and making plans for the future. When the company’s finances aren’t doing well, they come up with plans to improve them right away and over time. Financial advisors are often asked to help top-level executives make decisions. To learn more about the importance of finance manager, read this article.
Top 10 – Goals of Finance Manager
Capital is the money that a business has saved up. This includes cash, accounts receivable, investments, stock, and other assets that can be turned into cash quickly. Capital is used for operations and risk mitigation. One type of capital is the money that shareholders put into businesses. This page discusses goals of finance manager in detail.
Legal Compliance
The main job of a financial manager is to make sure that the company follows all laws and rules that have to do with its finances. The company must pay sales and income taxes, provide employee benefits, comply with state and federal wage laws, and report to the Securities and Exchange Commission (SEC) if it is a public corporation.
The financial manager is also responsible for making sure that the company follows any laws or standards that are in place. To meet these regulatory requirements, a CFO may put together an in-house team or talk to tax lawyers and accountants who work outside the company.
EPS Maximization
Maximizing EPS requires maximizing profits in relation to outstanding equity shares. In terms of what is good and needed, achieving this goal is equivalent to making the most money.
There is a lot of detail about both the type of return and the basis for comparison. Maximizing EPS can hurt value regardless of dividend policy. The goals of finance manager are centered around ensuring the organization’s financial stability and profitability.
Reporting
The job of the CFO is to make sure that the company files its tax returns and other required reports on time. They are successful because they always make accurate financial reports and stay on top of changes in the law.
For tax and public record purposes, the government requires businesses to report their financial information. Accurate reporting is important for the reputation of the business.
Reduce Expenses
Cash flow, as opposed to expected income and expenses, shows how much money actually comes into and goes out of a business. The main job of a financial manager is to keep an eye on the company’s cash flow.
A business shouldn’t be careless by counting on customers to pay back loans early. To ensure timely payments, the company must have available cash and credit. One of the primary goals of finance manager is to manage the organization’s cash flow effectively to ensure that it has sufficient liquidity to meet its obligations.
Controlling
The financial manager ensures company profitability via budgeting, spending monitoring, and implementing necessary changes. These people keep track of how the actual results compare to what they predicted so that the company can meet its goals and stay profitable in the long run.
Maximizing Profits
The stated goal of financial management is to make as much money as possible. When sales are higher than costs, there is a profit. Profit maximization means either bringing in more money while cutting costs or cutting costs while bringing in more money. To make the most money, you can use pricing and scaling strategies.
If the price goes up without a decrease in the number of buyers, one can make the most money. To make the most money, you need to increase your sales, which is influenced by the price. To cut costs, keep track of how prices change, how long it takes to figure them out, and how the inputs market is doing. So, a number of things must work together to get the best results and make the most money.
Making the most money is not always advisable due to several factors. Firstly, “profit” encompasses various types such as gross profit, profit before taxes, profit after taxes, net profit, and divisible profit, which must be specified to avoid ambiguity. Secondly, it is crucial to determine whether the goal is to maximize short-term or long-term profit, as both have distinct objectives, strategies, and approaches.
Thirdly, profit maximization overlooks economies of scale, which is the relationship between a company’s size and its profitability. As a result, it is impossible to draw valid conclusions about performance or efficiency. Additionally, time and money are interlinked, and inflation affects the value of money over time. Profit optimization doesn’t account for the worth of time.
Liquidity Maximization
A company’s liquidity refers to its ability to pay short-term debts based on factors like liquidity ratio and asset quality. Achieving high liquidity requires maintaining a good current ratio, a healthy mix of current assets, and matching asset maturity with obligations. To keep liquidity high, companies keep many assets current and collaborate with creditors and bankers, which can be expensive and risky.
Sufficient profit and liquid assets are essential for a company’s success and to seize opportunities. Striking a balance between making a profit and having extra cash on hand is crucial. Another goals of finance manager is to develop and implement financial policies and procedures that support the organization’s objectives while complying with regulatory requirements.
Planning
A financial manager’s role differs from that of an accountant as they focus on long-term financial planning and delegate day-to-day accounting tasks. Financial plans may include objectives for debt service, production costs, and profit margins, in addition to revenue, profit margin, and gross profit. When a company has extra cash, the financial manager determines the most effective use, and obtains funds for growth or acquisition.
By analyzing the balance sheet, cash flow records, profit and loss statements, and reports on accounts payable and receivable, the financial manager creates a master budget or budget variance analysis. Regularly checking the budget variance analysis allows the manager to assess if the company meets its targets, and if not, determine necessary changes.
Return on Investment
Profits alone can be misleading and mask important information. To determine a good profit margin, consider factors such as sales volume, capacity utilization, output, and capital spending. Profitability is measured by the amount of money earned, such as profit per unit or per rupee invested. A better goal than simply making the most money is to aim for a high return on investment (ROI).
To calculate ROI, one divides the return on investment by the average amount invested. To maximize profitability, one can use both profit per sale and ROI together. Another goals of finance manager is to manage relationships with external stakeholders, such as banks, investors, and auditors.
This goal gets the same good reviews as the goal to make the most money. The low scores for this goal are, with one exception, the same as those for the goal of making the most money. Profit maximization has no foundation. However, to maximize profits, one must connect profits with sales and/or expenses. It is a relative scale because of this. The goal of maximizing shareholder value, on the other hand, is lower on the list. However, because additional constraints remain in place, the appeal of this goal is also “qualified.”
Cost containment
Managing expenses is more than just setting limits on how much you can spend and making plans to save. A CFO is also in charge of making purchasing policies, RFP processes, and bidding procedures for outside vendors. There’s no other way for a business to make sure it’s getting the most for its money.
A financial manager will also look at the company’s current and future needs for resources to decide if it’s better to do things in-house or hire help from outside. Financial manager manages company’s debt and taxes to minimize interest and tax payments.
Frequently Asked Questions
What Types of Goals can you Reach?
A goal is achievable if you can work towards it given your current mental and emotional state, level of motivation, amount of time you have, and skills. Setting goals that you can reach will help you figure out not only what you want but also what you can do.
What is a Good Goal for a Manager to Work On?
This brings us to the second most important goal for developing managers. In addition to delegating work, they will need to learn the knowledge and skills needed to effectively manage growing teams. This includes coaching for development, creating the right culture, and helping employees move up in the company.
What is a Clear Goal?
Goals that are both clear and measurable are said to be “precise.” Studies have shown that if you write down your goals, you are three times more likely to reach them. It is a better indicator of success than motivation that comes from inside.
Conclusion
The health of a company’s bottom line is directly related to how well it manages its money. So, financial management should be seen as a key part of being a good leader in a business. Financial management involves setting both short-term and long-term goals for the company’s money. Financial administration systems handle tasks such as accounting, bookkeeping, investments, and risk management. Continue reading to become an expert on goals of finance manager and learn everything you should know about it.
