Managerial or corporate finance is the task of providing the funds for a business's activities. It generally involves balancing risk and profitability, while attempting to maximize an entity's wealth and the value of its stock.
Long term funds are provided by ownership equity and long-term credit. The balance between these forms the company's capital structure. Short-term funding or working capital is mostly provided by banks extending a line of credit.
Another business decision concerning finance is investment, or fund management. An investment is an acquisition of an asset in the hope that it will maintain or increase its value. In investment management – in choosing a portfolio – one has to decide what, how much and when to invest.
To do this, a company must:
- Identify relevant objectives and constraints: institution or individual goals, time horizon, risk aversion and tax considerations;
- Identify the appropriate strategy: active v. passive – hedging strategy
- Measure the portfolio performance
Financial management goes together with the financial function of the Accounting Profession.
Accounting Management (Business) is the practical application of management techniques to control and report on the financial health of the business.
This involves the analysis, planning, implementation, and control of programs designed to provide financial data reporting for managerial decision making.
This includes the maintenance of bank accounts, developing financial statements, cash flow and financial performance analysis.
Management Accounting is the process of identification, measurement, accumulation, analysis, preparation, interpretation and communication of information used by management to plan, evaluate and control within an entity and to assure appropriate use of and accountability for its Resource (economics) resources”.