Book Cover Here
Business
Management
A contemporary approach
3rd Edition
Editors: Jessica Nell & Andreas de Beer
ISBN 978-1-48512-513-6
© Juta & Company 2018 Business Management 3e 1
Chapter 3: Financial Management
•Introduction
–Financial management involves the planning and
budgeting of short–and long-term funds for current
and future needs
–Tracking past financial transactions, controlling
current revenues and expenses, and planning for the
future financial needs of the organisation are the key
activities of financial management
2© Juta & Company 2018 Business Management 3e
The core principles of financial
management
1. Cost–benefit principle –benefits should be
greater than the costs
2. Risk–return principle –trade–off between risk
and return
3. Time value of money principle –money has
value over time
3© Juta & Company 2018 Business Management 3e
Value–chain analysis for growth and
profitability
•What role does management play?
•Analysis of the organisation to determine
value adding
•Financial planning (long–and short–term
financing)
•Budgets
4© Juta & Company 2018 Business Management 3e
What role does financial management
play?
•Determining long–term investments
•Obtaining long–term financing (equity or
