Financial Management includes, but is not limited to, the following:
1 – Ratio Analysis: Overall Financial Health
- Liquidity – shows the firm’s ability to pay off debts as they become due
- Asset Management – also known as efficiency or activity ratios that evaluate how efficiently management uses resources and how much activity is generated from assets
- Debt Management – shows the extent to which a company finances its assets with debt
- Profitability – shows the combined effects of liquidity, asset management, and debt on operating results
- Market Value – The stock market’s assessment of the company as an investment
2 – Common Size Analysis: Cutting Costs
- Uses historical data to point out financial trends
- Helpful with finding ways to cut costs
- Keeps track of increases and decreases in gross profit
3 – Budgeting: Planning for the Future
- Budget creation for new projects (new product line, opening a new location, etc.)
- Tracking budgets to ensure profitability
MDW Financial 