What I Learnt From This Course and My Reaction of the Topic
Financial management course has been very exciting as it touched onthe current day-to-day management of the organizations’ financials.Organizations employ different techniques in stabilizing theirbusiness operations and ensuring that they invest wisely.Contemporary business environment is very volatile with increasinguncertainty about future. Future uncertainty creates the concept ofrisk, where organizations and investors have to equate risk andbenefit in their investment plans. Through the financial managementcourse, I have learned much in financial projections, external andshort-term financing, time value of money and long term planning andfinancial organization.
In the course, I have learned that financial projection is veryimportant to the financial managers. Financial projection isconducted by factoring in all the factors that affect the performanceof the company. Globalization has brought about integration of theworld economy therefore, it is very imperative for financial managerto monitor all the market factors on local and global scale. Accurateprojection trend helps the organization to plan its finances andinvest its fund wisely. Some of the factors that bring uncertainty inprojects, and which needs close monitoring include market factors andeconomic factors. Market factors include commodity prices,competition, regulations, demand, and supply of goods and services.On the other hand, economic factors include interest rate changes,inflation level and global economic performance.
Through the course I have learned that organizations are affecteddifferently by economic factors, for example, international companiesare more affected by international regulations and exchange rate morethan the local firms are. The companies should pay attention to theeconomic factors because they influence both current and futurefinancial performance of the company. Organizations operate withinthe environment that constitute of both human and economic factors.Economic factors affect the value and profitability of the company,for example, during the financial crisis people tend to spend lesson many commodities which cramp the revenue of the company.Uncertainty in the future and the need to make sound financialdecisions makes financial projection very important in anorganization.
In the financial management course, I have appreciated thatorganizations use different methods of financing. Organization canuse either internal or external financing. Internal financing is usedwhen an organization has enough retained earnings to funds itsinvestment or expansion plans. On the other hand, external financingis used when an organization does not have enough internal funds.Strategic plan of the company determines whether the company will usedebt or equity financing. Some company prefers to have more debtsthan equity and vice versa. Debt financing is expensive for thecompany but also has some advantages. Equity financing dilutes theshareholding of the company. On top of the organization’s strategy,external factors affect the mode and nature of financing that will beused.
Short-term financing is used to fund the organizations workingcapital. In the course, I have learned that working capital is thetotal current asset of the organization less the amount of currentliability. Working capital is used to generate daily cash flow to theorganization. While choosing the short term financing to use infunding the operating capital, organizations consider factors likeprofitability of the organization and availability of the capital inthe capital market. Using dent financing gives organization interestencumbrances and other obligations which are costly to theorganization. I have learned that organizations source of financingis affected by many factors and each source of financing has itsadvantages and disadvantages.
While handling the assignment on Genesis company case, I learnedthat money today is worth much more than the same money in thefuture. The difference in value between the present money and thefuture money is the interest rate. Interest rate is the gain that theamount of money would generate when invested. Present value of moneyconcept is used in investment planning. When one makes an investment,it generates future cash flows. The future cash flows, whendiscounted at the prevailing market interest rate, will help thefinancial manager to know the value of the investment. When thepresent value of future cash flow exceeds the present value of theinitial investment, the investment is a worthy undertaking. When thevalue of discounted cash flow from an investment is less than theinitial investment, an investment venture is not worthwhile. Thecourse has taught me that the present value of money is an essentialconcept while analysing the investment venture.
Financial management course emphasizes that the financialorganization and long term planning are at the centre of managingorganization’s finances. When entities are organizing theirfinances, they consider the debt-equity ratio. Organization capitalis made up of debt and equity. The source of each capital depends invarious factors, for example, equity capital will be expensive wheninvestors consider investing in the organization as a risky venture.When investors do not have confidence with the organizationmanagement, raising capital from the stock market becomes hard forthe company. Financial planning requires consideration of coat andbenefit of undertaking a venture. Cost versus benefits help themanagement to make vital financial decisions. I have learned toappreciate the planning techniques and methods used for financialorganization.
In the course, we have worked on various assignments which helped toexpand my financial analysis techniques. In the assignments, I havelearned to appreciate the time value of money concept. I discountedthe future cash flow of the Genesis company and learned how to makingsound investment analysis. The experience in the course has been veryuseful and interesting. The course stressed more on practicality ofthe content by having many assignments. The assignments included inthe course, helped me to understand the concepts further. Financialmanagement course is very relevant to the day today’s businessworld. It expanded my understanding of corporate business andinvestment methods. The experience gained in the course isinvaluable. Financial management concepts are not only necessary inthe organizational operations, but also in management individualfinances.
Financial management course has equipped me with ample knowledge ondifferent factors that affect organizations and investors investmentdecisions. An investment return is a product of many factors thatemanate externally or internally. Understanding these factors helpsto make financial projections which are used in making investmentdecisions. The course presents financial concepts in a simple waythat is easy to comprehend. The assignments help in bothunderstanding and appreciation of the course concepts. When operatingorganizations, managers are faced with different financial problemswhich can be solved using the financial management concepts. Inconclusion, financial management course provides invaluable financialknowledge in a simple way.