Question

Reflecting on the focus and content of this course, what is an important challenge facing the financial management of organizations today, and how would you go about addressing it? Explain.

Answer 1

Answer:

Challenges facing the financial management of organizations- Are as following:

Record keeping- Proper record keeping of the financial transactions, on the basis of accounting standards and principles is very important challenge because a single mistake or error will lead to inaccuracy of the financial statements. Hence as soon as a financial transaction takes place, it must be recorded immediately.

Timely financial reporting- Financial reporting is very important for companies. It includes presentation of company's balance sheet. income statement and cash flow statement. These financial statements should be accurate and should have transparency. They should tell the fair picture of company's profitability, liquidity and financial position.

Fundraising- Capital structure decision is a challenge for companies, fund raising through equity and debt or what should be the ideal mix so that company may achieve optimal cost of capital. A wrong decision may lead to negative outcomes.

Fraudulent practices- Nowadays fraud is the biggest concern. it can be inside or outside the organization, companies' internal control should be very good that can prevent from fraudulent practices in the organizations. Fraud destroys the company's brand value in the market.

Timely repayment of debt- Companies have to take debt for operating business if they repay the debt on time, it is a win win situation for both but if company does not repay the debt timely, it increases interest burden and obligation for companies.