Financial Management System

Assignment Procedure
- Submitted To : Myanmar Entrepreneur SMEs Institute (MESI)

- Academic Partner : Association of Business Executive (ABE UK)
- Diploma Program : Executive Diploma in Business Administration
Management
- Duration : 2 Weeks
- Submitted Date :
- Submission Deadline :
- Submitted By : Mr Aung Moe Swe
- Batch Name : EDBAM Batch-22
- Assignment : Financial Management System
Contents
1. Introduction.........................................................................................................................3
2. Financial Management System...........................................................................................4
2.1 Benefits of good financial management system..........................................................4
1.3. Functions of Financial Management System.............................................................4
3. Accounting Vs Finance.......................................................................................................6
3.1 Accounting..................................................................................................................6
3.2 Finance........................................................................................................................6
4. Spring Flower Co. Ltd........................................................................................................7
5. Conclusion..........................................................................................................................8
6. Reference............................................................................................................................9
1. Introduction
Financial management system is one of the important functions of the business organizations,
companies and enterprises. Finance concerns with the matters of money, funds, cash, budget,
tax and investments. Financial management system thus implies the management of the
activities and accounts regarding these matters. It’s roles and functions are the major
indicators of the survival and growth of any business organization or company. Financial
accounting is responsible for the preparation of organization’s financial statements including
the income statements, the balance sheet, the statement of owner’s equity and the statement
of cash flow.
2. Financial Management System
The financial management system is the strategic planning, organizing, directing and
controlling the financial activities of the business organization or enterprise. The primary
goal of the financial management is to maximize shareholder’s wealth. It is very important to
have a good financial management system in any business organization, company or
enterprise. The necessary information to invest and make business decisions are provided by
the financial statements. A good financial management system is required to ensure adequate
returns to the shareholders, optimum funds utilization, safety on investment and to plan a
sound capital structure. The major functions of the financial management include financial
controls, cash management, surplus allocation, investment of funds, estimation of capital
requirement, choice of source of funds and determination of the capital condition. These
provide essential data to make important decisions for the survival and growth of the
organizations and its success.
A lot of people both inside and outside of the business organization, stakeholders, use the
financial records and statements prepared by the financial management. There are two types
of accounts, that are used by different stakeholders, namely managerial accounts and
financial accounts. Managers and business owners look at the managerial accounts to make
proper decisions and run the business operations effectively. Owners can consider whether
the assets should be sold or retained for further investments according to these accounts.
Managers make decisions to enhance the organization’s capacity and optimize profits
depending upon the information supported by the managerial accounting. Financial
accountings are used by both inside and outside of the organization including the employees,
managers, business owners, government agencies and shareholders. (Skripak, 2016) They
look at the financial statements which indicate the current situation of the company or
enterprise and future expectations as well. They analyze the financial data and reports to
know whether the company is making satisfactory profit, paying dividends and using correct
funding for the investments.
2.1 Benefits of good financial management system
Good financial management system gives rise a lot of benefits for the business organizations,
companies and enterprises. Companies are trying hard and struggling to survive at this time
of challenging and higher competition. Financial management system plays a vital role to
avoid financial distress and bankruptcy and for the survival in the long-run. It also helps
minimize the costs, maximize the profits and thereby maximize the market shares and beat
the competitors.
1.3. Functions of Financial Management System

The financial management system supports important business functions deals with financial
decisions, investment decisions and dividend decisions. Financial decisions relate to the
raising of finance from various resources and consider how can finance be obtained to pay for
the required investment. Investment decisions include long-term investments in fixed assets,
i.e. capital budgeting and short-term investments of current assets, i.e. working capital
management. Dividend decisions imply the net profit distribution for the shareholders and
retained profit.
3. Accounting Vs Finance
Accounting and finance are confusing terms as most people accept that they are the same in
their roles and functions within the organizations. Actually, they represent different meaning
and functions in a number of ways.
3.1 Accounting
Accounting is the process of measuring and summarizing business activities, interpreting

financial information, and communicating the results to management and other decision
makers. (Skripak, 2016) Accounting is concerned with the preparation, evaluation and
management of financial records. It makes records concerning with the taxes, audits and
business financial operations. It deals with concrete numbers expressing real sums in present
time and manage today’s revenues. Accounting is often called “the language of business”.
3.2 Finance
On the other hand, finance is the study and management of money and investments. It is
especially concerned with the storks, bonds and various other business products. Finance
looks at the future and anticipate tomorrow’s profits. In contrast with accounting, it deals
with the uncertain figures.
Accounting provides information and records what happened in the past, but finance looks
forwards what will happen in the future.
Accounting functions include bookkeeping and accounting, tracking of revenues and
expenses, internal and financial reporting, auditing and risk management.
Finance functions imply funding the business, raising the capital, risk adjusted returns. It is
also important in budgeting and forecasting of the business operations and implementing
corporate strategies.
4. Spring Flower Co. Ltd
Spring Flower Co. Ltd is a tissue paper distribution company that sells high quality tissues
for the valuable customers. Spring Flower Co. develops a good financial management system
to generate satisfactory profits, to allocate budgets properly and financial controls. Spring
Flower Co.’s visions are to become a leading tissue paper retailor in the Region, to maximize
shareholder’s wealth by increasing product sales and to make customer satisfaction.
Reviewing and analysing the financial statements of the company shall indicate whether these
visions are fulfilled.
The accountants of Spring Flower Co. prepare the financial statements according to the
proper accounting procedures. Managers regularly analyse and review these financial
statements to make financial decisions, budget utilization and maximize profits. Below is the
profit and loss statement of Spring Flower Co. as at 31 Dec 2023.
Spring Flower Co. Ltd

Profit and loss statement as at 31 December 2023
Column1 Column2 Column3

K' 000s
Revenues
Cash Sales 235
Credit Sales 385 620
Sale Returns -55
Net Revenues 565
Cost of Goods Sold -245
Gross Profit 320
Incomes
Received Insurance 75
Discount Received 30 105
Operating Expenses
Salary -120
Travel Cost -20
Insurance -45
Rent -45
Interest Expenses -25
Telephone Bills -20 -275
Profit Before Tax (Net Profit) 150
Tax (20% of Profit) -30
Profit After Tax 120
5. Conclusion
Good financial management system plays a vital role for any business organization to run
effectively and efficiently in this era of ever changing and rising competitions. Business
owners, investors and other stakeholders watch the financial statements of companies and
enterprises to make business decisions, investments and loans. Day to day cash flow
management of accounting function is important for the current operation of the company
while the financial activities are crucial for the fund utilization, budget decisions and future
investments.
6. References
1. Skripak, S. J. (2016). Fundamentals of Business. In S. J. Skripak. Pamplin College of

Business and Virginia Tech Libraries.
2. MESI EDBAM Course
3. Own Creation

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Assignment Procedure

- Submitted To : Myanmar Entrepreneur SMEs Institute (MESI)

2.1 Benefits of good financial management system

1.3. Functions of Financial Management System

Accounting is the process of measuring and summarizing business activities, interpreting

Spring Flower Co. Ltd

Column1 Column2 Column3

1. Skripak, S. J. (2016). Fundamentals of Business. In S. J. Skripak. Pamplin College of

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