Role And Environment Of Managerial Finance Finance Essay

The word managerial finance and managerial accounting are used interchangeably. Managerial finance harmonizing to, “ Managerial finance covers two countries: corporate finance and direction accounting ” ( 5/11/2010 ) . Therefore, we shall specify managerial finance or accounting as “ the procedure of identifying, mensurating, analysing, interpretation, and pass oning information in the chase of a company ‘s concern ends. Besides known as cost accounting ” ( hypertext transfer protocol: //, 6/11/201 )

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Finance is the art and scientific discipline of pull offing money because it affect every individual individual in the organisation as a whole. One of the major functions of managerial finance is the interaction with finance forces and processs. All fiscal directors must be able to adequately understand economic environment they are runing in and see the fringy cost benefit before doing determination that may impact the company positively or negatively. Harmonizing to, “ Financial directors use accounting a dressed ore on hard currency flows and decision-making ” ( 8/112010 )

Further to this, Scott & A ; Eugene ( 2008, p17 ) summarizes that due to the non twenty-four hours to twenty-four hours engagement of stockholders in the concern, directors are expected to take determination for the organisation. This has led to the rise of bureau relationship. The direction of finance is for the exclusive intent of determination hereafter determination that can assist the organisation better on the overall.

In another reappraisal, Thea Mann ( 2006 ) high spots that The finance director must measure the manner and form of growing that will suite the corporation in term of stockholder ‘s maximization of wealth ( hypertext transfer protocol: // ) . Managerial finance is so relevant to the finance director who must invariably reexamine the company public presentation and see how they maximize the wealth. Gitman ( 1987 ) added that there is a demand to protect resource as portion of determination devising.

Managerial finance operates in an environment that is closely related to all other facet of direction. The function of fiscal establishment and markets are of all time present. The fiscal market serves as a beginning of loan and provider of it every bit good. In the capital market, minutess associating to long term ends are planned and undertaken. Security exchange creates some signifier of uninterrupted liquid markets so as to apportion their most productive utilizations.

Further to this, corporate incomes are cardinal to revenue enhancement rates. Companies pay approximately 15 to thirty per centum of all their earning and therefore are really important to the map and responsibilities of finance directors. These are the kind of environment that managerial finance is found, so as to integrate all these bing construction together. Finance directors must ever do determination and this is the exclusive purpose of managerial finance.


As portion of determination devising, the demand to understand value of money is really of import and indispensable. The construct Time Value of Money ( TVM ) is an of import construct in fiscal and managerial direction, “ It can be used to compare investing options and to work out jobs affecting loans, mortgages, rentals, nest eggs, and rentes ”

( hypertext transfer protocol: //, 6/11/2010 )

The construct clip is conceived so as to be able to offer chance and investing whereby financess is readily provided today. Harmonizing to Ridha ( 1994 ) , “ clip exercises a strong influence on economic activity and on economic determinations of both persons and communities ” . Many reappraisals [ Mahbub ( n.d ) , Trippi & A ; LewinA ( 1974 ) and Datta & A ; Pal ( 1991 ) ] have suggested that the value of money today and in the hereafter alongside the survey of rising prices. For determination devising, directors are faced with the option of holding to purchase something or put today than making so tomorrow due to the bing tendency in the concern universe. The construct clip value of money takes into consideration of compound involvement, future value of money, net present value of money ( NPV ) and rentes every bit good. ( N.D ) what is managerial accounting

hypertext transfer protocol: // Accessed on 5th November 2010

Financial-dictionary ( N.D ) , what does managerial accounting mean?

hypertext transfer protocol: // Accessed on 6TH November 2010

Destinydawnmarie ( 2010 ) the function and environment of managerial accounting

hypertext transfer protocol: // Accessed on 7th November 2010

Scott B & A ; Eugene FB ( 2008 ) , Essential of managerial finance. 2nd edn, Thompson South-Western, USA

Thea Mann ( 2006 ) , The Role of the Finance Manager. Published on 26th August 2006

hypertext transfer protocol: // cat=3. Accessed on 8th November 2010

Gitman, L.J. ( 1992 ) Foundations of Managerial Finance, 3rd Edition Harper Collins, New York, New York. ( n.d ) , “ Time value of money ”

hypertext transfer protocol: // Accessed on 6th November 2010

Ridha Saadallah ( 1994 ) Concept of Time in Islamic Economics Islamic Economic Studies Vol.2 No.1

Mahbub Parvez Time value of money: application and rationality- an attack utilizing differential equations and definite integrals.

Trippi, R.R. and D.E. Lewin, “ A Present Value Formulation of the Classical EOQ Problem, ” Decision Sciences, Vol. 5, No. 1 ( 1974 ) , pp. 30-35.

Datta, T.K. and A.K. Pal, “ Effectss of Inflation and Time-Value of Money on an Inventory Model with Linear Time- Dependent Demand Rate and Shortages, ” European Journal of Operational Research, Vol. 52, No. 3 ( 1991 ) , pp. 326-333


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