Describe the primary role of a Financial Manager within a firm.

Answer:

•             The primary role of a Financial manager in a firm are making investment, financing and dividend decisions other than involving in financial analysis and planning.

•             Investment decision is to determine what types of assets the firm holds.

•             Investment decision refer to the items that appear on the left-hand side of the balance sheet.

•             Financing decision is to determine how the firm raises money to pay for the assets in which it invests.

•             Financing decision refer to the items that appear on the right-hand side of the balance sheet.

•             Dividend decisions are also directly related to financing decisions, since retained profits are the most important source of new funds for companies.

•             The financial managers make these decision based on their effect on the value of the firm, not on the accounting principles used to construct a balance sheet.