What is the role of financial manager in maintaining liquidity of concern? (2024)

What is the role of financial manager in maintaining liquidity of concern?

Managing cash flow is also key. The financial manager must make sure there's enough cash on hand for day-to-day operations, like paying workers and purchasing raw materials for production. This involves overseeing cash as it flows both in and out of the business, a practice called cash management.

As Finance Manager, your responsibilities will include overseeing end-to-end finance operations, financial planning and analysis, balance sheet reconciliations, looking to make improvements to procedures and controls, as well as ad-hoc projects and requests as and when they come up.

Maintenance of Liquidity

Liquidity refers to the ability of a company to meet its short-term obligations without suffering any loss in value. The liquidity position should be monitored regularly, as it is an important factor in assessing the financial health of an organization.

Financial managers are involved in raising funds for a firm and in investing those funds in an efficient way. The activities of a financial manager include; working capital management, capital budgeting, and capital structure financing decisions. To increase the wealth of the organization's owners or shareholders.

Importance of liquidity in financial markets

Liquidity is a multi-dimensional concept, generally referring to the ability to execute large transactions with limited price impact, and tends to be associated with low transaction costs and immediacy in execution.

Liquidity is the degree to which a security can be quickly purchased or sold in the market at a price reflecting its current value. Liquidity in finance refers to the ease with which a security or an asset can be converted into cashat market price.

Financial managers are responsible for the financial health of an organization. They create financial reports, direct investment activities, and develop plans for the long-term financial goals of their organization.

Most financial management plans will break them down into four elements commonly recognised in financial management. These four elements are planning, controlling, organising & directing, and decision making.

Typically, the primary goal of financial management is profit maximization. Profit maximization is the process of assessing and utilizing available resources to their fullest potential to maximize profits. This has the greatest benefit for company shareholders hoping for the highest possible return on their investment.

the ability to buy or sell easily on a market, for example a market in shares or bonds: They were forced to intervene, in order to maintain the liquidity of the market.

How do you manage liquidity management?

Continuous monitoring of cash flow is the basic prerequisite for reliable liquidity management. The more closely you can monitor the cash flow, the better. Optimally, you can see the current cash flow in real time, i.e. you can see at any time what income and expenditure is taking place in the company's accounts.

Expert-Verified Answer. Among the options provided, keeping an up-to-date record of past operations (option A) is generally considered the least important of the financial manager's responsibilities.

Explanation: a. A financial manager makes decisions after analyzing the economy and environment and the financial manager also executes those plans or decisions to increase the wealth of a firm. A financial manager also has the responsibility to raise funds by maintaining a balance between debt and equity.

It's the financial manager's job to ensure that departments get the funds they need when they need them. It's also important to make sure that the department is requesting only funds they need for operations. That's where purchase requisitions, purchase orders, and automated approval workflows come into play.

Liquidity decision refers to managing a company's current assets and liabilities. It is done to ensure sufficient cash or liquid assets to meet its short-term financial obligations. This decision involves determining the optimal level of liquidity that a company needs to maintain.

Answer and Explanation: Assets and liabilities are the two important factors considered while managing liquidity. For banks, it has been observed that asset-based liquidity is more significant than liability-based liquidity.

What is business liquidity? Business liquidity is your ability to cover any short-term liabilities such as loans, staff wages, bills and taxes. Strong liquidity means there's enough cash to pay off any debts that may arise.

Liquidity risk professionals monitor cash flows, analyse funding sources, and develop strategies to maintain sufficient liquidity. They assess potential liquidity stress scenarios, implement liquidity risk management frameworks, and establish contingency plans to mitigate liquidity risks.

You Can Shape the Future of an Organization

As the manager of an organization's finances, you have considerable power to determine the organization's future. With smart management of cash and investments, you can set up a company for long-term success (and help its employees enjoy long-term success as well).

What are the three major functions of a financial manager?

The three major functions of a finance manager are; investment, financial, and dividend decisions. Firstly, the investment decision entails determining assets that the firm needs or projects it needs.

The first four decisions pertain to long-term financing decisions and are called financing, investment and dividend decisions while the fifth decision is short term decision called working capital decisions. Corporate finance refers to the study of these decisions.

The objectives of financial management are as follows: Profit maximisation. Mobilisation of finance in a proper way. Ensuring the company's survival.

The ultimate purpose of Financial management is: to get a maximum return. to increase the wealth of owners.