Thursday, May 12, 2016

10 Principles of Financial Management

In a management there must be principles that we should note. As well as with its own financial management, we have also discussed about the basic knowledge of financial management when forgotten please click here .

According arekpinter.wordpress.com, there are 10 principles in financial management. Well here is the principle:

1.The Risk-Return Trade Off
We certainly think the same that we did not want to take the additional risk, but if we get additional results we may think twice about it.

Basically, every investor will demand a return to a minimum so he wanted to postpone their consumption now in order to be able to use the money for investment sbuah. Due to the minimal return is greater than the inflation rate had been anticipated.

The relationship of risk and return is

High risk and high expected return
Low risk and low expected return
Now the relationship of risk-return in this case merupukan a key concept in the calculation of stocks, bonds, and other things.

2.Time Value of Money
Value of 1 million that we received is higher than the value of 1 million to come. Why is that? Because 1 million today can we invest so will have interst (interest) that was worth more than 1 million to come.

When we receive a benefit that is greater than the cost of the investment project can be said to create value.

3.Cash-Profit-Is Not King
To measure the value we have to make use of cash flows rather than accounting profit. Accounting profit is usually recorded when the profit was generated, not when the cash is in hand.strategi pemasaran


As for the cash inflows and cash outflows are a record of the entry and exit of money from a company.

financial management principles
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4.Incremental Cash Flows

Represents the difference between the cash flows that exist at the time of the investment project is run versus the cash flow at the time of the investment projects are not executed.

5.The Curse of Competitive Market
Why is it difficult investment projects generate huge profits? The answer is when the investment sbuah mendaoat huge profits it will make other investors participating dlam tersbut field resulting in lower profit towards the required rate of return.

6.Efficient Capital Market
Capital market is all the institutions that provide complete facilities to financial instrume transaction in the long term. As for the implications of an efficient capital market, namely:

Price is right. The share price reflects no public information about the value of the company concerned.
Manipulation of earnings, with the way we changed the accounting method possible will not change the company's stock price.
7.The Agency Problem
The agency problems arising from the separation adana aatara management company with ownership of the company. Since it is usually held by a professional management company.

So that the decisions taken by the manager is not the same as keinginkan of the owner of the company. This is because the manager to make decisions according to their own interests.

Here are two factors that can prevent the agency problem.

Market forces, one kekutan market are major shareholders. Investors in large companies can press managers in order to memprhatikan the interests of shareholders, threatening to use the voting rights they have.
Threat of takeover threats remedy takeover of the company by other companies.
8.Pajak make business decisions bias
9.All Risk Is Not Equal
The risk was not as great, there is also some risk that can be diversified, some are not. Now we need to know about the risks, namely:

This diversification process can curate the magnitude of risks.
The risk of investment projects can be changed, it relates to the calculation of investment risk a stand alone or calculate investment risk along with other projects which have been taken by a relatively firm.kerja sampingan

10.Perilaku ethical is doing the right thing and the ethical dilemmas in financial management there everywhere
Dikatan ethical behavior is when we do the right thing. But what is to be the benchmark in "melaukaukn the right thing" it?

The concept of right or wrong is a normative concept, a community must have a 'set of value' (values) which they believe to be 'doing the right thing'.

Ethical error (errors ethics) will turn off seseorangserta career opportunities in the future. Why is that? The answer was twofold:

Akna unethical behavior that resulted in the loss of trust of the other party. Without this it will menagkibatkan business will not run smoothly.
The worst thing is the loss of public confidence is no standard setika the business.manajemen keuangan

Well also important social responsibilities. Tanggugjawab social enterprise is an enterprise has a responsibility to the community further maximizing shareholders' wealth.

Thus the explanation of financial management, may be useful for us all. See you on the other articles.