Financial Management 1

During the very first day of our Financial Management class, we were asked to
define Financial Management and sure enough my answer was a little bit far from our
teachers answer. However, as Prelims and Midterms went by, I slowly got the true
meaning of Financial Management and it is the study of the proper and efficient use of
money. More than that, it is the efficient and effective management of money.
Furthermore, we learned methods and ways of how to efficiently and effectively
manage the money and funds mostly in the context of business. About halfway
through the semester though, the lessons got more and more challenging and I found
myself struggling especially with the topic Cash Flows Estimation. Fortunately, I still
managed to pass the Midterms, especially since I failed some of the quizzes. But then,
I learned to be patient and persistent in dealing with the difficult topic. In the end, I
was still able to do well and get a high grade.

For me personally, Financial Ratio Analysis was one of the topics that I have
enjoyed learning. It is probably one of the simplest topics in Financial Management. It
only involves simple methods of calculating and interpreting financial ratios to analyze
and monitor a firms performance. Even people who dont have a degree in business or
finance would easily understand this topic since it does not involve complex
computations and interpretations. The concept of ratio analysis is very much helpful
to a business, as it involves providing essential facts by establishing a measure of
relationship between two variables through which the interpretation is easier. Ratio
analysis also provides ways for business people to compare the financial state of their
business against other businesses within the industry. However, the concept of ratio
analysis is not only helpful for businesses, but with investors as well. Smart investors
can use financial ratios to analyze a companys financial performance before making
an investment. Aside from investors, ratio analysis is also of interest to shareholders
and creditors. Current and prospective shareholders are interested in the firms
current and future level of risk and return, which directly affect share price.
Meanwhile, the firms creditors are interested basically in the short-term liquidity of
the firm and its ability to make interest and principal payments. The importance of
ratio analysis emerges due to the fact that the process of ratio analysis summarizes
and simplifies the mass of accounting data derived from the Financial Statements. It
provides the information in such a simple and concise manner that not only the
comprehension of financial statements is made with a very little effort, but also it
enables to predict the events in the future so that necessary actions or precautionary
measures may be taken accordingly. When calculated correctly, ratio analysis is very
much helpful in evaluating the current position and performance of a business. As a
matter of fact, ratio analysis can also be used in locating the weakness of the
companys operations even though its overall performance may be quite good.
Management can then pay attention to the weakness and take remedial measures to
overcome them. Although ratio analysis is primarily used to analyze the companys
past financial performance, they can also be used to establish future trends of the
companys financial performance. As a result, they help formulate the companys
future plans. Ratio analysis is truly of great help in making comparative study with
other business or businesses. Ratios are helpful to disclose the whole story of changes
in the financial position and performance of a business entity.

My knowledge, insight and appreciation for Financial Management grew

increasingly throughout the semester, even during the times I have failed my quizzes
and struggled with the topics. Now that the semester is almost ending and our finals
are fast approaching, I have come to realize how far my classmates and I have already
gone through since our first day in this Financial Management class. All our struggles
and failures have not been wasted since we also have gained much greater lessons
that we can, for sure, use in the future. Moreover, Financial Management is an
essential tool especially in my undergraduate degree in Accounting Technology,
wherein we are taught to prepare the necessary documents and financial statements
of a firm.