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Role of Finance
By-Prof.Binny Bhogal Rawat
THE HISTORY OF FAILURES OF
ORGANISATIONS IS INTERESTING. MANY
FIRMS HAVE FAILED, NOT BECAUSE OF
INEFFICIENCY OF PRODUCTION, INABILITY
IN MARKETING OR NONAVAILABILITY OF
FUNDS BUT DUE TO THE ABSENCE OF
COMPETENT FINANCE MANAGER
Finance Manager has to find out from
where can raise the fund.
Finance Manager has to think about the
Finance Manager has to make financial
Finance Manager has to maintain the
liquidity position of the firm.
Capital Budgeting decision.
Working Capital management
Risk Management , Risk Diversification
Finance and Production.
Finance and HRM
Finance and Marketing
Finance and R&D
Finance and CSR
Merger and acquisition
Valuation of share and the assets
International Finance Management
Implication of Govt taxation, interest
Understanding the role of intermediaries in
Analyzing the financial health of the
Preparing Budget for production,
marketing and finance deptt.
Managing payment and receivable.
Framing the credit policy.
Deciding regarding the source of finance
Depreciation and replacement decision
Hedging and insurance decision.
Decision regarding the risk coverage.
Decision regarding the investment and
Analyzing, interpreting and forecasting
after going through the accounting
Disinvestment and Shut down
Decision regarding the disinvestment and
The expansion and diversification.
Measuring investment risk versus return.
Size of the firm
Objective of the Firm and
Profit maximization versus wealth
Finance Manager has to think about the short
term and long term objective if the firm
Finance Manager has to decide the capital
Finance manager think about the optimum
utilization of the resource for the desired
goal, or efficiency and effectiveness
Various Decision Making
Investment decision or long term asset-mix
• Finance decision or capital-mix decision
• Liquidity decision or short-term asset mix
• Dividend decision or profit allocation
Maximization of firm’s value.
Shareholder’s value maximization
Dividend, retention and re-investment
Liquidity and profitability are conflicting
Risk and returning decision.
Finance manager role in
Understanding the implication of corporate social
responsibility with respect to profitability.
Decision on the optimum size of the firm
Decision on stock option , perquisites and bonuses.
Understanding and applying the modern financial
instruments such as factoring, derivative, credit
derivative, securitization and venture capital.
Understanding the Time Value of Money