Financial Activities and Management

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Describe the cycle of money, the participants in the cycle, and the common objective of borrowing and lending

The cycle of money is the period of funds circulation. It starts from the moment of resources acquisition and goes until the sale of goods and receiving money for them. The main participants in the cycle are creditors and buyers. The purpose of borrowing is to obtain financial resources for a certain period. The objective of lending is the provision of capital taking into account the following interest payments.

Distinguish the four main areas of finance and briefly explain the financial activities that each encompasses

The primary financial areas include finances of commercial and non-commercial funds, as well as budgets of public authorities and extra-budgetary funds (Janicka, 2016). The first two relate to business entities and cannot be connected with the state property. The second two are linked to state and municipal finances and can be used to sponsor all the government projects and payments.

Explain the different ways of classifying financial markets

According to the types of services, four categories of financial markets are distinguished (Davari & Aminnayeri, 2014). They are the credit market, the securities market, the foreign exchange market, and the precious metals market. According to the way of the trade organization, there are exchange and non-exchange markets. These types of classification are used to identify the primary spheres of trading and finances distribution.

Discuss the three main categories of financial management

All financial activities are connected with the earning and distribution of resources. The main categories of financial management are considered to be capital, that is, available funds, the profit that comes in the process of work, as well as cash flow. If all three categories are correctly considered, the chances of successful trading will be very high.

Identify the main objective of the financial manager and how he or she might meet that objective

Priority tasks of any financial manager are the competent allocation of resources, the assessment of risks and opportunities for a particular company, as well as the planning and control of costs. This post implies searching for solutions to ensure that a certain enterprise is economically sustainable. Also, a rather significant task is to work with customers while focusing on sales.

Explain how the finance manager interacts with both internal and external players

As a rule, financial managers interact not only with internal players, controlling the flow of profits and expenses, but also with external ones, establishing trade relations with other market participants. The organization of mutually beneficial cooperation is one of the criteria for financial managers’ successful work. The partnership can be performed both on the terms of lending and on the equal conditions of dividing profits.

Delineate the three main legal categories of business organizations and their respective advantages and disadvantages

Business organizations are of three types: primary like ordinary enterprises, secondary, which are represented in the form of corporations, as well as departmental, governing the activities of controlled companies at the regional level (Karadag, 2015). The first category includes companies that are simple in their structure, but they, as a rule, cannot make a significant profit. Incorporate organizations, the process of sales and relationships is well established; however, for the sake of achieving a common goal, some essential points of activity can be missed. Finally, management companies monitor the activities of subordinates and are necessary to ensure regular work. Nevertheless, they cannot always objectively evaluate the work of an enterprise and take appropriate measures.

Illustrate agency theory and the principal-agent problem

The agency theory provides for the awareness of all the participants of a certain organization in specific financial operations. Nevertheless, all representatives of such a group have different information about some aspects of work, and the information is spread asymmetrically (Panda & Leepsa, 2017). The principal-agent problem is that an employee sometimes wants to take all the control responsibilities, thereby placing the risk on the work process and forgetting about corporate norms.

Review issues in corporate governance and business ethics

Business ethics is a set of measures that employees of most modern companies adhere to. They include respect for the rights and thoughts of colleagues, compliance with commercial secrets, etc. Corporate governance is based on encouraging the success of subordinates and controlling all the areas of work of a particular enterprise.

References

Davari, H., & Aminnayeri, M. (2014). On multiperiod portfolio selection with different borrowing and lending rates. Economic Computation & Economic Cybernetics Studies & Research, 48(4), 270-287.

Janicka, M. (2016). Financial markets and the challenges of sustainable growth. Comparative Economic Research, 19(2), 27-41.

Karadag, H. (2015). Financial management challenges in small and medium-sized enterprises: A strategic management approach. Emerging Markets Journal, 5(1), 26-40.

Panda, B., & Leepsa, N. M. (2017). Agency theory: Review of theory and evidence on problems and perspectives. Indian Journal of Corporate Governance, 10(1), 74-95.

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