Managerial Economics DQ

The Role of Financial Management in a Firm

Examine the role of management as it relates to finance in a corporation. In your post, discuss the role of management by addressing the following prompts:

• Explain the various aspects of finance that management must understand.

• Describe why a manager needs to understand the characteristics and importance of financial markets including their liquidity, competitiveness, and efficiency.

• Interpret the function of the Financial Balance Sheet in assisting in management's decision making process.

• Discuss what could happen if management does not fulfill responsibilities related to finance. Share a real world example from your own professional experience or from an external source.

Short Term View or Long Term View?

After reading the first two chapters of your textbook, evaluate the following statement: Managers should not focus on the current stock value because doing so will lead to overemphasis on short-term profits at the expense of long-term profits. In your post, explain what is meant by this statement. Describe how management might decide whether to focus on short term or long term goals and how that decision impacts the organization. Next, using the financial balance sheet as displayed in the text, compute an example of how focusing on short term profits can be detrimental to long term profits. Share your opinion regarding whether you feel it's a better option to focus on short term or long term goals. Use evidence from the text or external sources to support your position.