Financial management
Financial Management (Financial Management) is the overall goal, about the acquisition of the assets (investment) capital facilities (financing) and operating cash flow (working capital), as well as profit distribution management. Financial management is an integral part of business management, according to the financial rules and regulations, in accordance with the principles of financial management, organizational corporate finance activities to deal with an economic management of financial relationships. Simply put, financial management is to organize corporate finance activities to deal with an economic management of the financial relationships.
Basic theory
Capital structure theory research the company funding modalities and structure of the market value of the Company relations theory In 1958 Modigliani and Miller's conclusion is: the perfect and efficient financial market, the enterprise value and capital structure and dividend policy has nothing to do - MM theory. Miller due the MM theory won the 1990 Nobel Prize in Economics, 1985 won the Nobel Prize in Economics.
Modern portfolio theory and the capital asset pricing model (CAPM) Modern Portfolio Theory is a theory of optimal portfolio .1952 Markowitz (Harry Markowitz) proposed this theory, his research concluded that: as long as the different assets between the change in income is not entirely positive correlation portfolio to reduce investment risk. Markowitz To this end won the 1990 Nobel Prize in Economics capital asset pricing model to study the theory of the relationship between risk and return. Sharp the conclusion of the study are: individual asset, the risk-benefit ratio depends on the risk-free rate of return, the risk of the market portfolio yield and the risk of risky assets. Sharp won the 1990 Nobel Memorial Prize in Economics.
The theory of option pricing theory is relevant options (stock options, foreign exchange options, stock index options, convertible bonds, convertible preferred stocks, warrants, etc.) the value or theoretical price determined In 1973 Scholes option pricing model, also known as B-S model .90 options trading has become the main theme of the world's financial sector. Scholes and Merton therefore won the 1997 Nobel Prize in Economics.
The efficient market hypothesis is to study the theory of capital markets securities price information reflects the degree of capital markets in securities prices fully reflect all the relevant information, then the capital markets for efficiency. In this market, the Securities and Exchange impossible economic interests. The theoretical main contributors Fama.
Agency theory is the study of the level of agency costs under the different means of financing and capital structure, as well as how to reduce agency costs, enhance corporate value. Theory major contributor to Jensen and Maike Lin. (6) information asymmetry theory of asymmetric information theory (Asymmetric Information) refers to the internal and external personnel to understand the extent of the actual operating conditions of the company, that there is asymmetric information in the company, this information asymmetry cause different judgments on the value of the company.
The focus of the new era of financial management
First, strengthen co-ordination and cooperation, a clear direction and focus of the state-owned capital operation budget support. The size of the income of the state-owned capital operation budget needs to continue to expand, the need to further clarify the direction and focus of expenditure, need to gradually make an inventory of state-owned capital stock, efforts to make the state-owned capital management budget shortage of important resources and focus on key industries of the national economy, increase investment in research and independent innovation efforts to support the transformation of traditional industries and the development of strategic emerging industries, and promote enterprise transformation and upgrading and development transformation.
Second is to further deepen the reform of state-owned enterprises. To ensure that state-controlled under the premise, to further improve the property rights trading market, listed by overall restructuring, the introduction of strategic investors in the non-public economy in a variety of ways to make an inventory of a large state-owned capital stock, investment diversification and promotion of state-owned enterprises, the formation of property rights clear, flexible management of state-owned enterprises of science internal restraint mechanism, establish and improve the modern enterprise system.
Third, learn from the international experience of corporate financial management and international docking, Chief Financial Officer system, improve the corporate governance structure. At the same time, research director of corporate finance delegate system, clear the position of Chief Financial Officer roles, responsibilities, rights and work requirements to promote the Chief Financial Officer on behalf of the investor to participate in major business decisions.
Fourth, build enterprise financial management certification system, enhance the financial management capacity of enterprises, encourage enterprises to strengthen internal constraints and financial management and control, management innovation.
Financial Planning
Financial planning help companies to set up guidelines for the development of operational and financial plans. Rationalization of the key objectives of the company and to take into account the capital investment. The Company objectives into tangible financial indicators. Investment decisions and the objectives of the consolidated financial statements, financial objectives and financial indicators linked. Then the entire organization around these goals and targets operators.
Financial planning consists of three activities: (1) set goals; 2. Establish tangible indicators; measure and adjust the goals and targets. In the financial planning process, the key is to establish the link of the consolidated financial statements and operations planning. Key financial planning and forecasting a consistent income statement, balance sheet, cash flow, and ultimately the formation of financial indicators.
Financial planning and forecasting typical workflow is usually started from the establishment of financial goals, financial goals usually associated with short-term and long-term goals (3-5 years), and is often associated with the tangible fixed target. Financial statements on financial goals and then use the integrated model. Revenue, profitability and cash flow may be considered as a key financial and non-financial indicators. Good model, senior managers often in conjunction with the Board of Directors of its review. Approval, the financial statements are presented in the form of a group of financial indicators to the entire organization.
The rest of the organization to use financial indicators to create tactical and operational planning for the ensuing year. Planning is usually based on the driving factors connected with the sales volume, product mix and other key business factors. Review and through the planning, bound to the consolidated financial statements to ensure that planning to achieve the company's goals. Through a series of repeated, resources and planning need to be updated in order to achieve financial goals. Throughout the process, to continue operations planning to convert a group of financial data.
Budget
Regardless of whether the financial manager recognize that the forecasting process are likely to exist ills. Obsolete processes and tools combine to make the mistake of prediction accuracy and quality of the majority of the world's forecasting process exist ills. Successfully treated with this "epidemic" requires two steps. First, the financial manager should be to identify and resolve prediction problem common symptoms, recognizing the shortcomings of their own. Secondly, the recognition of this, the financial manager can take measures to achieve a more healthy forecasting practice, and, ultimately, into a more flexible and profitable organization.
The predicted seven symptoms include: semantic confusion, visual disturbances, accuracy, paranoia, system overload, prosperity syndrome, lack of coordination and anti-social behavior. By identifying and addressing the predictive symptom of the problem, companies can experience the benefits of the "health" of the forecasting methods. Planning software must support recognized best practices to enhance the timeliness of the planning, the reliability of the information, and key personnel in the organization-wide participation. Best practices requires the planners to use of certain critical strategic and tactical.
IBM Business Analytics software provides decision-makers to achieve practical insight needed to better results. IBM also provides business intelligence, predictive and advanced analytics, financial performance, strategic management, regulatory, risk and compliance, as well as analysis of the application constitutes a comprehensive, unified portfolio of products and services.
Example: You have successfully landed on the Nasdaq Han Ting Hotel Group, to maintain the momentum of development of the rapid expansion of the number of stores in recent years. In early 2011, the Han court IBMCognosTM1 establish a comprehensive budget management system, improve the decision-making capacity, build a deeper insight into the business development. The second analysis time is the the Hanting selected the IBM Cognos [1] the most important reason. The IBM Cognos TM1 is also very easy to use and maintain, and offers three user interface of Excel, Web, etc.. In addition to the completion of the comprehensive budget for the financial tasks, Han Ting Hotel Group also plans a comprehensive budget management platform based on the IBM Cognos TM1 upgraded to become integrated comprehensive performance management platform.
Management cycle
Financial control and financial budgets are closely linked, the budget is an important basis for control, the control is a means of implementing the budget, they are composed of corporate financial management cycle.
The key elements of the financial management cycle including:
(1) to develop financial decision-making, development of action plans for a variety of financial issues, which is developing a project plan.
(2) the development of the budget and standards for the planning of the production and business activities intended plans and standards for the specific figures, that is, during the development of plans.
(3) record the actual data, that is, the actual circulation of capital and turnover recorded, it is usually the functions of accounting.
(4) should be up to standard, that is calculated according to changes in the actual situation of the level of work that should be achieved. Such as the standard cost of the actual volume of business, the actual volume of business budget limits.
(5) standard versus actual comparison of the two amounts to determine the difference, in order to achieve exceptional circumstances.
(6) The difference between the analysis and investigation, that is large enough difference depth investigations and studies to find the specific reasons for the differences.
(7) to take action to take action according to the cause of the problem, and correct them, so that the development of activities in accordance with the established target.
(8) evaluation and assessment, based on the difference between its causes, the executor of the results of the evaluation and assessment.
(9) incentives, rewards and punishments according to the results of the evaluation and assessment of the executor to motivate their enthusiasm for the work.
(10) predicts that the incentives and action, the economic activities change, according to new economic activity status predicted to provide a basis for the next stage of decision-making.
Costs
1, the cost of the project
Manufacturing costs. The manufacturing cost is actually consumed in the production process of industrial enterprises direct materials, direct labor and manufacturing costs.
Expenses for the period: Period cost of business for the organization of production and business activities can not directly attributable to the cost of a product. Including management fees, finance charges and sales costs. Expenses for the period recognized directly in profit or loss, offset from the current year's income.
Administrative expenses: Administrative expenses refers to the the corporate administrative department for the organization and management of production and business activities of the costs, including wages and benefits, union funds, employee education expenses, labor insurance, unemployment insurance, research and development expenses, business hospitality, real estate tax, land use tax, technology transfer fees, technology development costs, amortization of intangible assets, bad debt losses.
Finance costs: Finance costs and various expenses incurred by the enterprises to raise funds, including interest expense, net foreign exchange losses, the financial institution charges and other costs incurred for the financing.
Selling expenses: Selling expenses enterprises sell their products, semi-finished and the provision of services, and other various expenses incurred in the process as well as the provision of a dedicated sales organization, including the burden of enterprises should be transportation costs, handling charges, packing charges, insurance premiums, exhibition fees, advertising fees, sales and service costs, the sales department staff salaries, employee benefits and other expenses.
2, cost management main content
Cost projections. Cost forecast is based on cost and a variety of technical and economic factors dependencies, combined with prospects for business development and to take various measures through the analysis of the relevant factors affecting the changes in the cost estimates, the use of scientific methods, the future cost levels change The trend to make scientific estimates.
Cost decision. Cost decision means in order to achieve the target cost, to obtain a lot of information on the basis of, with the help of some means, methods, calculations and judgment, compare various possible options for the different costs, choose a technologically advanced, economically rational excellent The program of the process.
The cost of the scheme. The cost of the plan is predetermined corporate planning period to complete production tasks required to spend the amount of fees, and to determine the level of the cost of a variety of products and reduce the cost of the task in monetary terms.
Cost accounting. Costing is based on the principle of Accounting principles and provisions of the cost of the project, in accordance with the books and records, imputation and allocation of the cost of using appropriate cost calculation method, calculated the cost of the finished product and the final cost of the product, and The appropriate accounting treatment.
Cost control. Cost control in the course of business, in accordance with the required standards regulating the various factors that affect the cost, production cost control within the predetermined range, including prior cost control, the daily cost control and cost control afterwards.
Cost assessment. Cost assessment is the cost of the accounting period the actual completion of the amount planned targets, fixed targets, budget targets were compared to evaluate the achievements and a level of responsibility of each cost center cost management, inspection cost management objectives reached a important part.
Cost analysis. The cost analysis is based on the cost accounting information and cost planning data and other relevant information, the use of a range of specialized methods to reveal the completion of cost estimates and cost plans, to identify changes in the degree of influence of a variety of factors affect the plan or budget, seek reduce costs, and cost-saving way to a special task.
Precautions
Among the modern enterprise management, financial management is one involving a wide range, comprehensive and constraints are strong systems engineering, it is a form of value movement of capital decision-making, planning and control of the integrated management, enterprise management core content. "Boss" magazine said part of business managers in financial management activities, re-use value of the physical management, the integrated management of light value; emphasis on production cost management, cost control light funds; the heavy current income, Light risk control; heavy post-hoc analysis, light prior prevention, which resulted in corporate financial management chapter, disorder, and planted a hidden danger to the financial work, the more common problems are mainly the following aspects:
The ineffective budget in advance, post-mortem analysis is not in place. Many business managers without prior careful analysis of the data collection and preparation of the budget, things did not budget for the completion of strict examination, ex-post evaluation and analysis are not in place also important issues facing enterprises.
The degree of information technology is not high, lack of financial innovation. Which the modern enterprise management, enterprise financial management model by the limitations of the network technology, the use of more decentralized management mode, high degree of electronic and can not be shared between the upper and lower levels of financial information, regulatory information feedback lag, inefficiency, there is no development a financial management information system that can adapt to e-commerce environment.
The financial structure is not perfect, the organization set unreasonable. Most of the corporate financial institutions set intermediate level, inefficient; part of business managers in financial institutions set is not enough scientific, some not even set up a specialized financial institutions.
The internal control system is imperfect, the lack of awareness of risk management. Part of the enterprise financial operations are not up to standard, powers and responsibilities are not in place, the internal control system and other basic financial management system is not perfect. Some enterprises lack of risk management and control mechanisms.
Cost management is not standardized, asset management is scattered. Expenses, poor management of some enterprises not established or not the implementation of "a pen" approval system. On asset management, some companies there is no regular inventory of assets, physical asset register does not match the physical management and account management has a lot of loopholes.
Extensive cost accounting, cost control is lax. Some corporate cost accounting is very extensive, various general summary of product cost accounting, is not conducive to strengthening cost control; Some business managers to focus only on the cost control of the production process, before, during lower control unnecessary waste .
In financial management, which should focus on avoiding the emergence of the problem, only to strengthen financial management in the day-to-day corporate management will increase the competitiveness of enterprises, improve the ability to resist the market risk, expanding corporate profits, orderly and norms of financial management precondition for sustainable development.
Module Financial Management Overview
Project an understanding of financial management
Task a financial management objectives coordination and link analysis
Task two financial management environment analysis
Financial management of the project two values
The task a capital time value of applications
Task II risk measurement and control
Module II funding management
The project awareness financing management positions
Set of tasks financing management positions and objectives analysis
Task 2 analysis the funding management business scope and workflow
Project II capital demand forecast
The task a ratio to predict the demand for funds
The task two funds habit to predict the demand for funds
The select project financing channels and means of financing
Task an understanding of our current financing channels and methods
The task of financing and select
The tasks short-term financing and long-term financing portfolio strategy selection
Project funding decisions
The mission funding costs analysis
Task II funding risk analysis
Task three to determine the optimal capital structure
Module three investment management
The project recognized investment management positions
Set up the tasks an investment management positions and objectives analysis
Task II understand the range of investment management business and workflow
Project II Project Investment Decision Analysis
The task project investment cash flow analysis
Task II Project Investment Decision
Task Three project investment decision evaluation applications
Project III Securities Investment Decision Analysis
The task a securities investment evaluation
Task two securities portfolio
The module working capital management
Project to meet working capital management positions
The task working capital management positions set objectives analysis
Task II understand working capital management business scope and workflow
Project II Cash Management
Task a cash management motivation and cost analysis
Task II development of cash receipts and payments strategy
The Project III receivables management
Task one accounts receivable cost analysis
Task II determining credit policy
Task Three Debtors
Fourth item inventory management
Task inventory cost analysis
Task two inventory control
Module 5 Income Distribution Management
The project recognized income distribution management positions
Task income distribution management positions set objectives analysis
Task II understand the range of income distribution management business and workflow
The project income distribution principles and factors analysis
Task income distribution and to factor analysis
Task two income distribution price impact and price theory
Project income distribution policy
Task factor analysis of the income distribution
Task two income distribution policy analysis
Project income allocation decisions
Task a non-joint-stock enterprise income allocation decisions
Task two joint-stock enterprise income allocation decisions
Module VI Financial budget
The project recognized financial budget management positions
Set the task of a financial budget management positions and objectives analysis
Task II understand the financial budget management business scope and workflow
Project II to establish a financial budget system
The task of drawing financial budget system diagram
Task II to select the method of preparation of the financial budget
Project the three preparation of financial budget
Tasks of day-to-day operational budget
Task Second statements budget
Project financial budget management
Task of a financial analysis of budget implementation
Task two financial budget adjustments and incentive
Module Seven financial control
Module eight financial analysis