WGU C201 Business Acumen Chapter 17:
Financial Management
Financial Structure - ANS Chief Financial Officer, Vice President of Finance, Treasurer, and
Controller
Chief Financial Officer - ANS Leader of the financial team.
Reports to Chief Executive Officer.
May be on board of directors.
This person and CEO must certify accuracy of financial statements.
Vice President of Finance - ANS Makes recommendations to CFO for where to invest capital.
Prepares financial forecasts, analyzes investment decisions, and specifies funds needed for a
time period: inflows and outflows.
Treasurer - ANS Responsible for financial activities, cash management, tax planning.
Risk-Return Trade-Off - ANS The goal is to maximize the wealth of the firm's shareholders by
striking the optimal balance.
Often decisions involving the highest potential returns expose the firm to the greatest risk.
What is the purpose of a financial plan? - ANS To forecast and determine the specific amounts
and timing of expenditure and receipts.
The inflows and outflows and sources of funds.
What are the steps of preparing a financial plan? - ANS 1. Forecast of Sales or Revenue over a
time period
2. Profit forecast: Use the sales forecast to determine expected levels of profit for future periods.
Includes expenses, and payments to shareholders
3. Estimate how many additional assets the firm will need to support projected sales.
This information comes from the Sales Forecast (product you are going to sell).
Non-Sales Forecast (other ways the organization will generate income).
Asset Intensity (the increase in assets you'll need to meet the forecast).
Current Assets (also short term assets) - ANS Cash and cash assets that are expected to be
converted to cash within one year.
Examples: cash, marketable securities, inventory, accounting receivables.
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