What Is Federal Financial Management?

Corporate financial management is the management of asset purchase (investment), capital financing (funding), operating cash flow (working capital), and profit distribution under certain overall goals.

Enterprise financial management

(Management term)

Financial management (Financial Management) is about the purchase of assets (investment), the financing of capital (funding) and the management of assets under a certain overall objective.

First, scientific modern financial management methods.

According to the actual situation of the enterprise and market needs, it adopts a variety of methods such as financial management and information management, focusing on forecasting, measuring, and balancing the economics of the enterprise, and seeking a combination of management methods and corporate needs.

Second, clarify market development.

All goals and methods must be achieved through the operation of the market, which is a competitive place where the fittest survives. The operation of an enterprise's financial management system must be targeted to adapt to and manage the ever-changing market demands in order to achieve the company's rapid development.

Third, accounting information.

The accounting data and information of an enterprise are a reproduction of the history of the enterprise. These data and information have considerable reference value after being sorted, calculated, and analyzed. Therefore, the content reflected by the accounting information must be true, complete, and accurate.

Fourth, social integrity mechanism.

Require specific operators and performers to abide by laws and regulations in social and economic operations, strictly observe conventions and rules, and constantly establish an honest and reliable reputation of the company. No vagueness is allowed, because the level of corporate commandment indicates the development and decay.

1.Maximize output value

2. Maximize profits

3.

1. Financing management

2. Investment management

3. Working capital management

4. Profit distribution management

(1) Capital Structure Theory (Capital Structure Theory) is a theory that studies the relationship between the company's financing methods and its structure and the company's market value. In 1958, Modigliani and Miller's research concluded that: in a sound and efficient financial market In the past, corporate value has nothing to do with capital structure and dividend policy-MM theory. Miller won the 1990 Nobel Prize in Economics for his MM theory, and Modiglia won the Nobel Prize in Economics in 1985.

(2) Modern portfolio theory and capital asset pricing model (CAPM) Modern portfolio theory is the theory of the best investment portfolio. In 1952, Harry Markowitz proposed this theory. His research conclusion is: as long as The change in returns between different assets is not completely positively correlated, and the investment risk can be reduced through the combination of assets. Markowitz won the 1990 Nobel Prize in Economics for this. The capital asset pricing model is a theory that studies the relationship between risk and return. The study of Sharp et al. Concluded that the risk-return ratio of an individual asset depends on the risk-free rate of return, the risk-return ratio of the market portfolio, and the risk of the risky asset. Sharp therefore won the 1990 Nobel Memorial Prize in Economics.

(3) Option Pricing Model Option pricing theory is a theory about the value or theoretical price of options (stock options, foreign exchange options, stock index options, convertible bonds, convertible preferred stocks, warrants, etc.) In 1973, Scholes proposed an option pricing model, also known as the B-S model. Since the 1990s, options trading has become the main theme of the world's financial field. Scholes and Morton won the 1997 Nobel Prize in Economics.

(4) Efficient Markets Hypothesis (EMH) Efficient Markets Hypothesis (EMH) is a theory that studies the extent to which securities prices reflect information on the capital market. If the capital market fully reflects all relevant information in the securities price, the capital market is said to have efficient. In this market, it is impossible for securities trading to obtain economic benefits. The main contributor to the theory is Fama.

(5) Agency Theory Agency theory is to study the level of agency costs under different funding methods and different capital structures, and how to reduce agency costs and increase company value. The main contributors to the theory are Jensen and McCollin.

(6) Information asymmetry theory (Asymmetric Information) Information asymmetry theory refers to the fact that people inside and outside the company have different degrees of understanding of the company's actual operating conditions, that is, information asymmetry exists among relevant personnel of the company. Different judgments on the value of the company.

Principle 1: Trade-offs between risk and return-additional risks need to be compensated for additional risks

Principle two: the time value of money-today's dollar is more valuable than future dollar

Principle three: The measurement of value should consider cash rather than profit

Principle 4: Incremental cash flow-only increments are relevant

Principle 5: There are no particularly profitable projects in the competitive market

Principle 6: Effective capital market-the market is sensitive and the price is reasonable

Principle 7: Agency Issues-Inconsistent interests of managers and owners

Principle 8: Taxation influences business decisions

Principle 9: Risks are divided into different categories-some can be eliminated through decentralization, some are not

Principle ten: ethical behavior is to do the right thing, and there are moral confusions everywhere in the financial industry

• Fully understand the value creation points of finance itself

• Master the forward-looking financial control methods guided by capital market forecasting goals

• Make your finance team the decision-making think tank your general manager trusts

• Imitate the successful value creation experience of others, and comprehensively improve the influence of the Finance Department in the company

• Improve the overall working relationship between the finance department and horizontal departments

China's enterprise financial management system has been gradually established with the establishment of a market economic system in line with the transformation of business operating mechanisms, and also has specific manifestations.

First, in terms of cost control, the manufacturing cost method is adopted for accounting. Combining with the economic responsibility system of enterprises, a cost control system combining the manufacturing cost method and the target responsibility system has been gradually established.

Second, in terms of financial analysis, in line with international practice, a standardized financial statement system has been established, and a financial analysis system that meets China's national conditions has been initially formed.

Third, in terms of the fund management system, gradually establish and improve the capital system, and implement the principles of capital preservation and appreciation and capital preservation. At the same time, the traditional

The goal of corporate financial management is the fundamental purpose that corporate financial activities and financial relationships need to achieve. It determines the basic direction of corporate financial management and is the starting point of corporate financial management. From the perspective of its evolution process, corporate financial management objectives directly reflect changes in the financial management environment, reflect the equilibrium of interest relationships among corporate interest groups, and are a comprehensive reflection of the interaction of various factors.

Corporate financial management facing the era of knowledge economy is a major theoretical and practical subject of corporate financial management in the new situation. Here are some ideas.

1. Change the concept of corporate financial management

The rise of the knowledge economy has shifted the main elements of corporate wealth creation from material capital to knowledge capital. Corporate financial management must not only focus on physical assets and financial capital, but must change concepts:

To understand intellectual capital, that is, to understand the source, characteristics, and composition of intellectual capital

For a long time, the evolution of corporate financial management, whether in terms of rules, content, or organizational form, has been very slow. However, with the continuous deepening of market-oriented reforms, financial management has changed in terms of space, time, and efficiency. In particular, the functions of financial management have been greatly expanded.

China's "Twelfth Five-Year Plan" proposes that the "innovation-driven, transformational development" strategic goal should be run through the entire process and all links of economic and social development, and financial needs are urgently required to give play to its inherent functions. Take Huawei as an example. In the past, the financial department was mainly engaged in traditional financial accounting management. When the company was small, it was also possible to control risks artificially. However, with the transformation and development of the company, the scale became larger, the business became more complex, and the supply chain With longer and more diversified customers, financial risk will be difficult to control without a financial management that supports globally.

It can be seen that no matter the external environment or the company's own development, higher requirements for the timeliness, accuracy and effectiveness of financial information are required; as an important part of corporate management, financial planning needs to be strengthened to ensure capital acquisition and optimize allocation And efficient use; it is necessary to prevent investment risks and strengthen the supervision of the entire process of investment and operation; to control risks, implement refined management, effectively control operating costs, and ensure operating income; reduce decision-making risks, increase the usefulness of decision-making information, and improve the Performance management level. Therefore, financial management transformation is imperative.

Every company attaches great importance to financial management. The size of the company is different, and the nature of the company is different. The settings of financial institutions, staffing, and positions within the organization are not the same. However, from the perspective of the functions that corporate finance should have, regardless of the enterprise How to set up financial institutions, positions and staffing, as an indispensable finance in the enterprise management process, should have the following seven functions and do seven things well, although these functions show different strengths in different enterprises.

Corporate finances are good

Accounting is the technical support of corporate financial management and one of the most fundamental and important functions of corporate finance. Whether the basic functions of accounting are the two-function theory (reflection and supervision), the three-function theory (reflection, supervision, and participation in decision-making) or the five-function theory (reflection, supervision, budget, control, and decision-making), the first function is to reflect It reflects what the function is achieved through, that is, accounting.

Accounting is a management science and a hard science. It has a strict set of procedures and methods for confirmation, measurement, recording, and reporting. Accounting is a method of recording the business process of a company, reflecting its gains and losses, and reporting its operations. Results, accounting audits and calculations can only be performed after the business has occurred, so accounting is reflected after the fact. It is based on the country s unified accounting system, and accounting policies and accounting estimates are well known as "accounting methods" and "accounting standards." "," Financial rules ", and so on. As a branch of management science, he has a complete set of internationally accepted methods and systems, including bookkeeping methods, accounting subjects, accounting assumptions, and accounting standards, systems, rules, and regulations formulated by the country. These things provide a comparative basis for the entire accounting process. The purpose is to obtain a "true account" with a lot of norms. The conclusions are legal, fair, and consistent. Relatively speaking, the conclusions are "dead." Different people perform accounting on the same accounting business. There should be no major discrepancies in major aspects. Among the seven things in finance, this function can be most recognized by everyone, and it is also one of the better used functions in corporate finance today. Of course, in addition to deliberately doing fake accounts.

Corporate Finance Manages Good Money

In addition to accounting, the most important function of accounting is supervision. Accounting supervision is comprehensive and includes all aspects of the enterprise. Among them, the supervision of corporate funds is something that every company attaches great importance to. For any enterprise, the use and management of funds is a very important thing. For an enterprise, funds are as good as people's blood. There is no, more, less, fast flow, slow flow, no movement, If you are ill, you may end your business. As the financial department of the company's value management, its important functions include fund raising, scheduling and supervision. Simply put, it is to manage the company's "money".

The use and management of funds is different from accounting. There is no set of strict management methods. There are large differences among enterprises. Fund planning, financing, various settlements and controls belong to the scope of capital use and management. The nature of the enterprise and the amount of funds , Accounting policies, credit policies, industry characteristics, preferences of major decision makers, and even the experience of fund dispatchers may cause deviations in the use and management of corporate funds. The establishment of an enterprise fund management system can prevent the improper use of funds to a certain extent. However, to improve the effectiveness of corporate funds, it is difficult to achieve the system alone. In addition to establishing a fund approval and monitoring system suitable for enterprises, it is also necessary to select personnel with certain experience to perform this work.

Corporate financial relationship

There are many financial relationships involved in the operation of an enterprise, both between internal departments and between the company and external suppliers, customers, banks, taxation, industry and commerce, government departments, etc. The financial department should adjust this relationship. . Companies say that they value financial management, but there are not many companies that can really understand what financial management is, and they understand accounting more as finance. Finance is inseparable from accounting. Many financial decisions depend on accounting. Many methods of accounting are also directly used by finance. However, this is two disciplines after all and cannot be confused. Financial management is a soft science and more needs to be experienced. Management of personnel, financial management management effectiveness is often higher than accounting.

Corporate financial monitoring assets

The first function of the Finance Department is accounting. Of course, the purpose of accounting is not for a few Arabic numbers. Accounting is a comprehensive reflection of the process of physical movement of the enterprise by means of value. The physical object goes from this workshop to that workshop, from this process to that. Procedures are not reflected in the accounting calculations. Therefore, in addition to the requirements for matching the accounts and certificates, whether the accounts are consistent is also one of the functions of the Finance Department and an important aspect of the financial performance of its supervision function. The financial department can regularly and irregularly conduct asset spot checks and inventory to compare whether the physical assets of the enterprise are consistent with the financial record data, and participate in enterprise asset management from the perspective of asset supervision to ensure the authenticity of financial records and the Security and integrity.

Corporate financial management credit

As one of the contents of corporate financial management, credit management should not be classified as a financial function separately, but due to its importance and the complexity of credit management, it has prompted companies to separate it from financial management functions and form separate functions. In the era of excess economy, it is indispensable for the company to have some transactions with customers. Among them, credit sales are not widespread. With the increase of credit sales business, the possibility of corporate bad debts increases. Under the condition of low gross profit margin, a bad debt is a bad debt. It often exceeds the company's annual profit. To control the occurrence of bad and bad debts,

Relevant to the purpose of financial management-basic views of various objectives of financial management and evaluation of advantages and disadvantages

Maximize profit

Basic point of view: Profit represents the newly created wealth of a company. The more profit, the more wealth the company has, the closer it is to its goals

Disadvantages: The first is that the time value of profit is not considered, such as 1 million in 2013 and 1 million in 2014. Obviously, it is not difficult to make a correct judgment at a point in time. The second is not considering the profit obtained and the invested capital. In terms of relationship, compared with the one million yuan profit earned by investing 50 million yuan in capital and the one million yuan profit earned by investing 60 million yuan in capital, if you look at the profit alone, the two contributions are the same, but If you consider the investment, it is obviously not the same. The third is that the relationship between the profit obtained and the risk assumed is not considered. For example, the same investment of 1 million yuan and a profit of 100,000 yuan in 2013 are all converted into cash. , Another enterprise is all accounts receivable, and the situation of bad debt losses may not be recovered, the risks of the two are obviously different

2. Maximize earnings per share

Basic point of view: We should consider the profit of the company and the capital invested by shareholders, and use the earnings per share to summarize the financial management goals of the company, so as to avoid one of the shortcomings of the "profit maximization" goal

Disadvantages: This target still does not take into account the time value of earnings per share, and in addition, does not consider the risk

Pros: Resolve the shortcomings of profit and capital investment in the "profit maximization goal"

3. Maximize corporate wealth (value)

Basic point of view: increasing shareholder wealth is the goal of financial management

Pros: This goal addresses all three shortcomings in the "profit maximization" goal

Cons: Difficult to measure

4. Maximize related benefits

Basic point of view: Consider not only the interests of related parties such as creditors, shareholders, but also corporate employees, customers, and corporate social responsibility.