Role of Financial Manager in achieving the goal of a firm

Role of Financial Manager

The personnel who is responsible to take decision regarding with financial activities of a firm is considered as a financial manager. There is no doubt about the importance of a financial manager. Financial planning is considered as the most crucial task of financial manager. Financial planning refers to determine the required amount of fund as well as to identify the disbursement sectors. After completing the financial planning, Financial Manager needs to identify the sources from where the required fund will be collected. There are two sources; external sources and internal sources. External source refers to borrow funds from banks or other financial institutions. On the other hand internal source refers personal fund or capital, retained earnings etc. Usually newborn firm uses internal sources for financing their projects as to get fund form external sources is easier for established firms. Financial manager needs to be more caution at the time of collecting required fund to maintain optimum capital structure as it helps the firm to keep its share price high. Optimum capital structure refers the desired ratio of loan and equity. Financial manager is also liable to invest the fund in profitable sector.

Financial Function

Financial planning, source identification, raising of required fund and investment of fund in profitable sectors are considered crucial functions of a financial manager. Besides the above task as a financial manager he is also responsible for some others financial activities such as distribution of profit, protection of capital, managing fund, forecasting future profit, cost control, pricing etc. 

To accomplish the above mentioned responsibilities the financial managers need to acquire a vast knowledge about pros and cons of financial matters. The success of a firm most depends on the decision of the financial manager.

In case of a largest organization the Authoritative word “Financial Manager” split into many terms such as Treasures,Cash managers, Controllers, Credit managers, Risk managers, Insurance mangers etc. That way, no matter how the word financial managers broken all the personnel involve with the department have equal contribution to achieve the ultimate goal of the firm.