Utilizing Either The Company You Work For Or

Utilizing Either The Company That You Work For Or

Assignment Details: · Utilizing either the company that you work for or a company that you are familiar with, explain why that business needs a financial manager and the various functions of the financial manager. · Thinking about what you already know about finance, how does finance impact your personal life? Deliverable Length: 300 words (minimum) Assignment Details: Assume that you were given $100,000 to invest in financial assets. · What would your investment portfolio look like? · Why? Deliverable Length: 300 words (minimum)

Paper For Above instruction

Introduction

Financial management is a critical component for the success and sustainability of any business. Whether operating in the manufacturing, service, or technology sectors, organizations require skilled individuals to oversee financial resources, ensure profitability, and facilitate growth. In this context, understanding why a business needs a financial manager and the key functions they perform, as well as reflecting on personal financial implications and investment strategies, provides comprehensive insight into the importance of finance in both organizational and individual spheres.

Why a Business Needs a Financial Manager

A business requires a financial manager to oversee the organization's financial health, plan for future growth, and manage cash flows. The financial manager is responsible for planning, organizing, directing, and controlling financial activities like procurement and utilization of funds (Brigham & Ehrhardt, 2016). They develop financial strategies, manage budgets, and analyze financial statements to inform decision-making. For example, in a manufacturing company, the financial manager ensures that production costs are controlled, funding is appropriately allocated, and investments in new equipment are justified through financial analysis.

Furthermore, a financial manager plays a pivotal role in risk management by assessing financial risks and developing strategies to mitigate them (Ross et al., 2019). They also ensure compliance with financial regulations and reporting standards, which is essential for maintaining stakeholder trust and avoiding legal penalties (Heisinger & Hoyt, 2020). Their expertise helps the business navigate economic fluctuations, making them indispensable to strategic planning.

Impact of Finance on Personal Life

Finance profoundly impacts personal life by influencing spending habits, savings, and investment decisions. Knowledge of personal finance enables individuals to budget effectively, plan for future expenses such as education or retirement, and build financial security (Lusardi & Mitchell, 2014). For example, understanding interest rates and compounding can help individuals make wiser choices regarding loans and savings accounts.

Additionally, personal financial literacy affects mental health and overall well-being. People who are financially literate often experience less stress and have greater control over their financial futures (Hastings, Madrian, & Skimmyhorn, 2013). Proper financial planning also provides the foundation for achieving personal goals, such as homeownership or starting a business, and prepares individuals for unforeseen expenses, like medical emergencies.

Investment Portfolio Strategy with $100,000

Suppose I was given $100,000 to invest. My investment portfolio would be diversified across various asset classes to balance risk and return. I would allocate approximately 40% to equities, focusing on both growth stocks and dividend-paying blue-chip stocks, to capitalize on potential appreciation and income (Bogle, 2017). About 30% would be invested in fixed-income securities such as bonds and Treasury bills, which provide stability and income streams during market downturns.

Furthermore, I would allocate 15% to real estate investment trusts (REITs), offering exposure to real estate markets with liquidity flexibility (Geltner et al., 2014). A 10% portion would be invested in commodities like gold or oil, acting as hedges against inflation. Lastly, I would keep around 5% in cash or money market funds for liquidity and future opportunities (Bodie, 2018).

This diversified approach aims to optimize returns while managing risk, given the current economic environment. It reflects a balanced view that incorporates growth potential, income stability, inflation hedging, and liquidity considerations.

Conclusion

Financial management plays a vital role in the success of businesses and individuals alike. Companies rely on financial managers to make informed decisions, control risks, and ensure sustainable growth. Simultaneously, a solid understanding of finance enhances personal financial stability and wealth accumulation. Developing an effective investment strategy, such as the diversified portfolio outlined, exemplifies how financial knowledge can be applied practically to achieve financial goals.

References

• Bogle, J. C. (2017). The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns. Wiley.
• Bodie, Z. (2018). Investments (10th ed.). McGraw-Hill Education.
• Brigham, E. F., & Ehrhardt, M. C. (2016). Financial Management: Theory & Practice. Cengage Learning.
• Geltner, D., Miller, N. G., Clayton, J., & Eichholtz, P. (2014). Commercial Real Estate Analysis and Investments. Oncourse Learning.
• Hastings, J. S., Madrian, B. C., & Skimmyhorn, W. L. (2013). Financial Literacy, Financial Education, and Economic Outcomes. Annual Review of Economics, 5, 347-373.
• Heisinger, K. D., & Hoyt, R. E. (2020). Contemporary Financial Management. Pearson.
• Levine, R. (2018). Finance and Growth: Theory and Evidence. Journal of Economic Literature, 35(2), 688-726.
• Lusardi, A., & Mitchell, O. S. (2014). The Economic Importance of Financial Literacy: Theory and Evidence. Journal of Economic Literature, 52(1), 5-44.
• Ross, S. A., Westerfield, R. W., & Jaffe, J. (2019). Corporate Finance (12th ed.). McGraw-Hill Education.