Finance: each one of us deals with finance in some way or the other on a daily basis, whether we are a professional accountant, a number-crunching wizard, an artist, a medical practitioner, a lawyer, an entrepreneur or a home-maker. There is no escape from finance even if you do find it difficult to comprehend the financial concepts or resent dealing with numbers (that goes for myself, huh numbers!). Being pervasive might make it one of two things (or maybe both): boring to death, or critically important.
At Robert Kennedy College (RKC), we know a master’s degree in management is a prime management qualification for managers. Our Online Master’s degrees give you a great overview of the business world and enhance your knowledge and skills further. And since Financial Management is an integral part of any business, we offer it as a core or as an elective module depending on which degree you choose to pursue.
Now, before I share with you an insider’s view of the online module let’s get started with the basics – learning what financial management is and why it is important in business.
What “Finance” really is – academically speaking
Khan and Jain (as cited in Classification of Finance by Paramasivan and Subramanian, 2009) define Finance as the art and science of managing money. Any kind of business entity, big or small, depends on finance to meet its requirements in the economic world and so if you accept that money is the lifeblood of the organization, then finance is its heart.
Types of Finance
As described above, Finance is one of the most important functions of a business. It plays a paramount role in the smooth functioning of the business activities.
Finance can be classified into mainly two categories:
Private Finance includes the Individual, Partnership, and Business or Corporate Finance, while Public Finance, on the other hand, covers Central, State and Semi-Government Financial matters. (Source: Financial Management by Paramasivan and Subramanian (2009)).
According to Joseph and Massie (as cited in Classification of Finance by Paramasivan and Subramanian, 2009): Financial Management “is the operational activity of a business that is responsible for obtaining and effectively utilizing the funds necessary for efficient operations.” The job of a finance manager includes procurement and efficient utilization of funds. Financial management has two main objectives: wealth maximization and profit maximization.
So ultimately, why IS Financial Management important?
It is imperative for any business to maintain adequate amounts of funds for its smooth operations. Financial Management thus plays an important role in the following:
- Financial Planning: Financial Management begins with the determination of the financial requirements of the business.
- Acquisition of the funds: A financial manager employs the most effective means of acquiring adequate funds at minimum cost.
- Utilization of funds: It is not just acquisition, financial management also involves the efficient and effective use of the sourced funds to improve the operational efficiency of the business.
- Profitability: Employing financial management tools like accounting, budgetary control, ratio analysis and cost volume profit analysis, businesses look to improve their profitability.
- Enhance the value of the firm: As stated earlier, one of the objectives of financial management is wealth maximization and improving returns for investors.
What would you learn from the Financial Management module in the Online MBA?
Business is about profit, and there can be sustainability only with proper knowledge of effective financial management. Oxford and Harvard Business School graduate Professor David Duffill will expand and reinforce your knowledge of financial accounting, management accounts, budgeting and financing. This module aims to provide an introduction to financial accountancy and managerial economics. The module will engage you in reflective and discursive argument on the materiality of different social, environmental and ethical issues, introducing you to accounting and principles of finance and letting you use your new knowledge in practical ways by using case studies.
What our own students say about the module?
There is nothing better than to hear from the horse’s mouth (past and current students) though, so here’s what they have to say about the Financial Management module. Each cohort is surveyed at the end of the module.
For most students, the module was “an amazing learning experience”. The course developed their skills, enabling them to quickly adapt and find a new direction. The learning also allowed them to better understand changes in the economy, and identify new business opportunities.
It “strengthened my business and financial skills”. Students benefit from a clear understanding of the foundations of finance as well as the various financial instruments used for valuations like futures and options and also from an understanding of financial statements to make an investment decision. Videos from Professor David Duffill and illustrated instructions on exercises or examples are seen as very helpful by an overwhelming majority.
It is not all roses though. There is also agreement on the fact that assessments are very challenging (just like real business challenges are very … well … difficult!), yet they are also a very enjoyable experience allowing students to use different financial techniques to improve a business (for those who get it right anyway!).
I hope you enjoyed reading about business finance management today. Stay tuned for next week’s blog that takes financial management to a more personal level – managing your personal (or family) budget! Watch this space!