What Are the 3 Basic Functions of a Finance Manager? (2024)

FAQs

What Are the 3 Basic Functions of a Finance Manager? ›

The financial manager's responsibilities include financial planning, investing (spending money), and financing (raising money). Maximizing the value of the firm is the main goal of the financial manager, whose decisions often have long-term effects.

Finance functions cover Investment (allocating funds to assets for growth), Dividend (deciding on profit distribution to shareholders), Financing (raising capital through equity or debt), and Liquidity (ensuring sufficient cash flow for operations).

Most financial management plans will break them down into four elements commonly recognised in financial management. These four elements are planning, controlling, organising & directing, and decision making. With a structure and plan that follows this, a business may find that it isn't as overwhelming as it seems.

When it comes to managing finances, there are three distinct aspects of decision-making or types of decisions that a company will take. These include an Investment Decision, Financing Decision, and Dividend Decision.

The financial manager's responsibilities include financial planning, investing (spending money), and financing (raising money). Maximizing the value of the firm is the main goal of the financial manager, whose decisions often have long-term effects.

The management process consists of four primary functions that managers must perform: planning, organizing, leading, and controlling.

Finance is typically broken down into three broad categories: public finance, corporate finance, and personal finance. Public finance includes tax systems, government expenditures, budget procedures, stabilization policy and instruments, debt issues, and other government concerns.

The objectives of the finance function include: generating profit, ensuring cash flow and payability, collecting and using financial resources, and managing the company's financial policy .

The definition of financial management is the strategic practice of establishing, controlling, and monitoring all financial resources to achieve your business goals.

The three major functions of a finance manager are; investment, financial, and dividend decisions. Firstly, the investment decision entails determining assets that the firm needs or projects it needs. Under this function, the finance manager makes capital investment decisions and working capital management decisions.

What are the three managerial finance functions key decisions? ›

The three functions of managerial finance are investment, financing and dividend functions. These functions are performed by the financial manager.

The functions of finance involve three major decisions a company must make – the investment decisions, the financing decisions, and the dividend / share repurchase decisions.

Financial managers typically prepare reports, stay abreast of an organization's financial health, oversee budgeting and more. Types of financial managers include treasurers, cash managers, and risk and insurance managers.

Let's expand upon this concept a bit. We can break down financial management activities into three broad categories: capital budgeting, financing and dividend policy.

Financial managers are responsible for developing and implementing a firm's financial plan, monitoring cash flow and managing excess funds, and budgeting for expenditures and improvements.