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3.4 FINANCIAL MANAGEMENT pg 145

3.4 FINANCIAL MANAGEMENT pg 145. 1. Appropriate assets. 2.Assets = land, machinery, buildings; Management skills; electricity; communication facilities etc 3. Business needs funds to buy assets . These funds are known as CAPITAL. Functions of financial management.

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3.4 FINANCIAL MANAGEMENT pg 145

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  1. 3.4 FINANCIAL MANAGEMENT pg 145 • 1. Appropriate assets. • 2.Assets = land, machinery, buildings; • Management skills; electricity; communication facilities etc • 3. Business needs funds to buy assets . These funds are known as CAPITAL

  2. Functions of financial management. • 1. Financing = obtaining funds. • 2. Investment=applying these funds in assets. • 3. Accounting= administering and reporting

  3. Financial managers must :- • 1. Be familiar with financial institutions. 2. Consider tax implications. • 3. Incentives • 4. Government subsidies • 5. Legislation regarding above[ laws ] • 6. Personal finances [ small bsinesses] • 7. Risk management.

  4. Financial concepts- JOE • Some examples: • Return on capital • Debtors control • Overdraft • Interest rate • Personal assets • Cash flow • Budgets • Balance sheet etc.

  5. 3.5 PRODUCTION OR OPERATIONS MANAGEMENT- pg 147 • FUNCTIONS • 1. Layout=setting out the factory • 2. Processing= actually making the products • 3.Scheduling= timetabling services and production

  6. PRODUCTION PROCESS

  7. Questions that a producton manager must ask. • 1. How many to produce? • How many worker? • What raw materilas/ • What is the due date? • Which machines? • What is the most economical way to produce? • What changes are needed etc?

  8. Materials Management • Ordering; receiving; storing ;despatching;; flowing of material till efinal product is ready and stored= FLOW OF MATERIALS • Stock control-very important function. • Control – quality, quantity, cost and safety. • QUALITY CIRCLES= teams discuss quality

  9. 4.2 pg 142 PURCHASING MANAGEMENT • Acquisition[ buying] of all products and services[servicing of machines] required by a business. • FUNCTIONS • 1.Know the suppliers. • 2. Know the prices. • 3.Quantities and qualities of goods available. • 4. Stock levels[ inventory levels]

  10. RISK • Purchasing converts liquid asset[money] to goods which have a higher risk. • Certainity for uncertainity. • Manufacturing +- 60% on purchases • Retailers e.g pik n Pay +-80%

  11. COST IMPLICATIONS • Purchasing affect profitability because of costs incurred. • Purchase • Storage • insuranceInterest • Losses • Shrinkage [theft]

  12. RELATIONS • 1.Good with suppliers. • 2. Godd in calculating inventory levels and orders. • 3. Quality assessment; price analysis • scheduling

  13. KEY QUESTIONS • 1. What to buy? • 2. Where? • 3.When? • 4.How Much? • 5.What price?

  14. Production acronyms • JIT = just in time • PERT= programme evaluation and review technique • CAD Computer aided drawing

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