The concept of financial management

Financial management is the management of asset purchase (investment), financing (financing), operating cash flow (working capital) and profit distribution under a certain overall goal. Financial management is an integral part of enterprise management. It is an economic management work to organize enterprise financial activities and handle financial relations according to financial laws and regulations and financial management principles. To put it simply, financial management is an economic management work to organize enterprise financial activities and deal with financial relations.

The main contents include: financial objectives and functions, the concept of valuation, market risks and returns, multivariate and factor valuation model, option valuation, capital investment principles, risks and real options in capital budget, etc. There are mainly the following points:

1, fund-raising management

The funds raised by enterprises can be divided into two categories.

(1) The equity capital of an enterprise can be obtained by absorbing direct investment, issuing stocks, and retaining earnings within the enterprise.

(2) Debt funds of enterprises can be obtained by borrowing from banks, issuing bonds and accounts payable.

2. Investment management aims at cash outflow for the purpose of recovering cash and obtaining income.

3. Working capital management

(1) Keep the cash balance.

(2) Strengthen the management of inventory and accounts receivable and improve the efficiency of capital use.

(3) Reduce consumption, improve production efficiency and save costs by formulating various expense budgets and quotas.

4. Profit distribution management

(1) Determine a reasonable distribution policy.

(2) Correctly handle various financial relationships.

Basic principles of financial management:

1, the balance between risk and return-extra risk needs extra income to compensate.

2. Time value of money-a dollar today is more valuable than a dollar in the future.

3. The measurement of value should consider cash instead of profit.

4. Incremental cash flow-only increments are relevant.

There are no projects with particularly high profits in the highly competitive market.

6. Effective capital market-the market is sensitive and the price is reasonable.

7. Agency problem-the interests of managers and owners are inconsistent.

8. Taxes affect business decisions.

9. Risks are divided into different categories-some can be eliminated by decentralization, while others cannot.

10, moral behavior is to do the right thing, and there are moral puzzles everywhere in the financial industry.

The focus of financial management:

1. Strengthen overall coordination and cooperation, and clarify the support direction and focus of the state-owned capital operating budget. The revenue scale of state-owned capital operation budget needs to be continuously expanded, the direction and focus of expenditure need to be further clarified, and the stock of state-owned capital needs to be gradually revitalized. Efforts will be made to make the state-owned capital operating budget focus on solving the shortage of important resources in key industries of the national economy, increase support for R&D investment and independent innovation, transform traditional industries and develop strategic emerging industries, and promote the transformation and upgrading of enterprises and the transformation of development methods.

2. Further deepen the reform of state-owned enterprises. On the premise of ensuring state-owned holding, we should further improve the property rights trading market, revitalize the huge state-owned capital stock, promote the diversification of state-owned enterprises' investment subjects, form an internal restraint mechanism of state-owned enterprises with clear property rights, flexible mechanism and scientific management, and establish and improve the modern enterprise system through various ways such as overall restructuring and listing, and introducing strategic investors such as the non-public economy.

3, learn from international experience, realize the international docking of enterprise financial management, establish the chief financial officer system, and improve the corporate governance structure. At the same time, study and establish the appointment system of corporate financial director, clarify the position, function, responsibility and authority and work requirements of the financial director, and promote the financial director to participate in major business decisions on behalf of investors. The fourth is to build an enterprise financial management ability certification system, improve the enterprise financial management ability, promote enterprises to strengthen internal constraints and financial control, and realize management innovation.

: The main links of the financial management cycle include:

(1) Make financial decisions, that is, make action plans for various financial problems of enterprises, that is, make project plans.

(2) To formulate budgets and standards, that is, to formulate plans and standards with specific figures for various production and business activities during the planned period, that is, to formulate periodic plans.

(3) Record the actual data, that is, record the actual capital circulation and turnover of the enterprise, which is usually the function of accounting.

(4) Calculate the standard that should be achieved, that is, calculate the working level that should be achieved according to the changed actual situation. For example, the standard cost of actual business volume, the budget limit of actual business volume, etc.

(5) compare the standard with the actual situation, that is, compare the above two amounts to determine the difference, thus realizing the exception.

(6) Analysis and investigation of differences, that is, in-depth investigation and study of differences to find out the specific reasons for differences.

(7) Action, that is, taking action according to the causes of the problems, correcting the deviation and making the activities develop according to the established goals.

(8) Evaluation and assessment, that is, according to the differences and their causes, the performance of the executed person is evaluated and assessed.

(9) Incentive, that is, according to the results of evaluation and assessment, rewards and punishments are given to the executors to motivate their work enthusiasm.

(10) forecast, that is, after encouragement and action, economic activities will change, and it is necessary to re-forecast according to new economic activities, so as to provide a basis for the next decision.