Presented by Ms Charmain J. Francis. Financial Management is about planning Income and Expenditure,...

AN INTRODUCTION TO FINANCIAL MANAGEMENT

Presented by Ms Charmain J. Francis

What is Financial Management?

Financial Management is about planning Income and Expenditure, and making decisions that will enable you to survive financially.

Financial Planning

Making sure that the organisation can survive

Financial Planning


Making sure the money is being spent in the most efficient way

Financial Planning



1. A mother is trying to decide whether to buy her daughter a new dress now, or wait until next summer so that she does not grow out of the dress too soon.

Financial Planning



2. A school governing body is working out how much money they have, because they want to buy new desks for the Grade 1 classroom.

Financial Planning



3. The treasurer of the church is working out how much it will cost to make certain improvements to the sanctuary.

Financial Planning



Making sure that the money is being spent to fulfil the objectives of the organisation

Financial Planning



Making sure that the money is being spent to fulfil the objectives of the organisation

Being able to plan for the future of the organisation in a realistic way.

Financial PlanningCASH FLOW STATEMENT

For 12 month period January to December 2011

2011

January February March April May June July August September October November December Total

Begining Cash balance $0.00 $46,700.00 $27,244.00 $15,524.00 $56,404.00 $104,356.00 $142,176.00 $189,996.00 $237,816.00 $264,536.00 $293,229.00 $324,972.00

CASH INFLOWS $ 131,000.00 $ 101,000.00 $ 101,000.00 $ 141,000.00 $ 151,000.00 $ 151,000.00 $ 151,000.00 $ 151,000.00 $ 136,000.00 $ 132,250.00 $ 132,250.00 $ 101,000.00 $ 1,579,500.00

AVAILABLE CASH $ 131,000.00 $147,700.00 $ 128,244.00 $ 156,524.00 $ 207,404.00 $ 255,356.00 $ 293,176.00 $ 340,996.00 $ 373,816.00 $396,786.00 $425,479.00 $ 425,972.00

CASH OUTFLOWS $ 84,300.00 $ 120,456.00 $ 112,720.00 $ 100,120.00 $ 103,048.00 $ 113,180.00 $ 103,180.00 $ 103,180.00 $ 109,280.00 $ 103,557.00 $ 100,507.00 $ 105,632.00 $ 1,259,160.00

Net Increase (Decrease) In Cash $46,700.00 -$19,456.00 -$11,720.00 $40,880.00 $47,952.00 $37,820.00 $47,820.00 $47,820.00 $26,720.00 $28,693.00 $31,743.00 -$4,632.00 $ 320,340.00

Ending Cash Balance $46,700.00 $27,244.00 $15,524.00 $56,404.00 $104,356.00 $142,176.00 $189,996.00 $237,816.00 $264,536.00 $293,229.00 $324,972.00 $320,340.00

Financial Accountability


Being able to give an account of the way the money is spent to:

a. Donorsb. Boards and committees members, and c. The people whom the money is meant to

benefit


Financial Responsibility

a. Not taking on obligations the organisation cannot meet

b. Paying staff and accounts on timec. Keeping proper records of the money that

comes into the organisation and goes out of the organisation

Financial Decision-making

INVESTMENTS

Financial Decision-making INVESTMENTSa. What is the investment for?

Types of investment: Capital Expense Increase inventory New product line New outlet New staffing or staff development and training House and/or Land, car Education Fixed deposit (for returns)


INVESTMENTS

a. What is the investment for?b. What are the risks associated with that

investment?


INVESTMENTS Risks

Business Risk


INVESTMENTS Risks

Business Risk Valuation Risk


INVESTMENTS Risks

Business Risk Valuation Risk Force of Sale Risk


INVESTMENTS


investment?c. What is the cost/benefit of that investment?

Financial Decision-makingCost Benefit Analysis - Purchase of New machine

Purchase of Machine .................... -$20,000includes interest and taxes

Installation of Machine ..................... -3,125including screens & removal of existing machines

Increased Revenue .......................... 27,520net value of additional 100 units per hour, 1 shift/day, 5 days/week

Reduced Labour Costs ....................... 18,5853 operators salary plus labour o/h

New Operator ................................. -8,321salary plus overhead. Includes training

Utilities ............................................ -250power consumption increase for new machine

Insurance ......................................... -180premiums increase

Square footage ...................................... 0no additional floor space is required

Net Savings per Month ........................... $14,229


INVESTMENTS


investment?c. What is the cost/benefit of that investment? d. What resources are necessary to ensure the

success of that investment?


RESOURCES

BUSINESS:- Cash Expertise Staffing EquipmentINDIVIDUAL:- Funding Expertise Time Residual Income


FINANCING

Short-Term (from 1 day to 1 year) Long-Term (from 1year 1month to

25years)

Financial Decision-makingFINANCING

Short-Term (from 1 day to 1 year) • Bank overdraft• Trade credit• Credit card• Lease• Bank loans

Financial Decision-makingFINANCING

Long-Term (from 1year 1month to 25years)• Term Loans from Banks• Shares• Debentures• Retained earning• Public Deposits


Famous Quotes and Inspirational Sayings

Always live within your income, even if you have to borrow money to do so – Josh Billings

Before borrowing money from a friend it's best to decide which you need most – Joe Moore

Being rich isn't about money. Being rich is a state of mind. Some of us, no matter how much money we have, will never be free enough to take time to stop and eat the heart of the watermelon. And some of us will be rich without ever being more than a pay check ahead of the game – Harvey B Mackay

Honour the LORD with your substance, and with the first fruits of all your increase: So shall your barns be filled with plenty, and your presses shall burst out with new wine. (Proverbs 3:9,10)

THANK YOU!!!!!

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BUDGETING

Presented by Ms Charmain J. Francis. Financial Management is about planning Income and Expenditure,...

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