Financial Administration and Management in Companies
Administration
It is the science and technique designed for the management of resources through the administrative process, aiming to improve a company’s functional efficiency.
Financial Management
It is a technique aimed at securing the financial resources required by a company. It includes control and proper use of resources, protecting assets to plan and control capital management, thus enabling effective decision-making.
Administrator Functions
The financial manager interacts with other areas of the company for resource management and ensures proper operation, establishing purchase or acquisition schemes.
Support for Production
When there is excess capital resulting from financial documents, the analyst must perform the following:
- Invest in the capital market.
- Purchase assets on sale (to avoid value loss).
- Acquire land and other property (to generate better earnings).
- Responsibly obtain quality resources, considering quantity and comparative costs.
- Obtain and use funds to maximize the organization’s value.
Financial Statements
Financial statements, also called financial reports or annual accounts, are reports used by institutions to disclose their economic and financial situation, and the changes they undergo, at a specific date or time period.
Main Components of Financial Statements
- Balance Sheet (also called Statement of Financial Position)
- Income Statement (also known as Profit and Loss Account)
- Statement of Changes in Equity
- Cash Flow Statement
- Notes to Financial Statements
Balance Sheet
This document presents the financial accounting and costs of a business. It can be presented at an account level or as a report, outlining the active and passive movements to determine equity.
Income Statement
It is a supplementary accounting document that displays the profit or loss of a fiscal year over a certain period.
Treasury
The treasury department is responsible for setting objectives, practices, and financial plans. It maintains relations with investors, negotiates for resources, promotes efficient working capital management, and ensures compliance with fiscal policies.
Comptroller
This area is responsible for planning and controlling financial value, deliberations, and taxes, considering both government and private asset protection. Its main functions are:
- Report on the financial situation.
- Coordinate and integrate budgets.
- Monitor budgets.
- Conduct internal and external audits.
- Fulfill tax liabilities.
Budget
A budget is a distribution of income and expenses in an institution. It allows for the allocation and distribution of resources over a period, usually one year.
Financial Analysis
Financial analysis is the study of accounting information through the use of indicators and financial ratios. Accounting represents and reflects the economic and financial aspects of the company, so it is necessary to interpret and analyze this information to understand the origin and behavior of company resources. Each component of a financial statement has a meaning and purpose within the accounting and financial structure of the company; its effect must be identified and, if possible, quantified.