Role of Financial Manager - 1220 Words

Role of the Financial Manager The role of the financial manager has changed drastically during recent years. Previously, financial managers were seen as the stewards of the organization, since they were responsible to ensure the accountability of all organizational assets and to generate accurate financial reports. Today, their main goal is to maximize shareholder value. In order to achieve this goal, they have to be information managers, cost managers, controllers, consultants, and risk managers. However, there are critics that disagree with this shareholder value approach. Instead, in order to ensure long-term sustainability, financial managers should be focusing on the stakeholder value. Financial manager s role Traditional†¦show more content†¦Financial managers, therefore, must implement proper risk management by identifying all potential risks, determining of their financial impact, and making proper decisions regarding each risk. (Bozzo, 1998) According to Lowell Johnson (Anonymous, 2004), financial managers must also have the capabilities to Create through creating capital, managing daily cash flow, and maximizing return, thus increasing the organization s ability to borrow money when needed. Maximizing share value opinion Maximizing shareholder value has become a prominent objective for many financial managers. It seems that more and more corporations are only focusing in increasing shareholder value. According to George, CEO of Medtronic, this practice is both short-term and shortsighted. The shareholder value strategy forces financial managers to focus their effort and strategies in meeting quarterly earnings expectations. This strategy is financially driven, which does not make room for differentiating factors in business competition and employee motivations. In George s opinion, this strategy will soon lose its competitive advantage. Instead of shareholder value maximization, George believes that it would be more beneficial to the organization in the long run to focus in meeting the needs of all stakeholders: shareholders, customers, and employees. Organizations should putShow MoreRelatedRole of the Financial Manager1139 Words   |  5 PagesRole of the Financ ial Manager Paper Introduction Shareholders own companies and are therefore entitled to a return on their investments when the companies are performing well. It becomes the financial managers role to ensure that shareholders are receiving a maximum return on their investment. This project will concentrate on defining the different roles and objectives of financial managers in their attempt to maximize shareholder value. 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