Management Extra: Financial Management
With numerous examples used throughout, this book aims to provide learners with the necessary understanding to input into the financial management of their organization.
TABLE OF CONTENTS Management Extra: Financial Management
Long-Term Capital Investment
The sort of investments we are thinking of in this section may be in plant and equipment for a manufacturing concern, distribution facilities for a service company or new offices. The investment will appear in the balance sheet under the heading fixed assets'.
It is a feature of this type of investment that it is for the long term and very difficult to reverse. For this reason, good investment decisions will lay the foundation for continuing success, whilst organisations may have to live with the adverse effects of bad decisions for many years.
Preparing the Cash Flow Forecast
In the last section we introduced Squishies Ltd, a profitable company that makes ice cream. To recap, the company's financial position in Year 1 was as shown in Table 4.11
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Squishies Ltd currently operates only in the UK where the market is static but there is the exciting possibility of setting up a parallel operation in France. The company has been approached with the offer of an existing production facility by another company withdrawing from the market. The financial manager has been asked to produce a cash flow forecast for the first year of operation in France and has come up with the numbers shown in Table 4.12
| Cash flow forecast for Year 2 |
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|---|---|
| Cash in | |
| Sales | 500,000 |
| Cash out | |
| Raw materials | 250,000 |
| Selling expenses | 120,000 |
| Distribution... |
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