Functions of the financial manager are as below:

1. Analyze - The financial manager has to analyze the current financial position of the
company which involves interpreting financial statements, cash flow statement, current
market trends, strategic and long term goals etc. This is a key function which gives an
overall picture of the current scenario based on which the financial manager can make
decisions that contribute towards achieving the companys goals.
2. Anticipate Anticipating financial needs. For the project chosen, the financial
manager has to anticipate the total expenditure that could be incurred by having the
budgets prepared. Future cash flow prediction and the expenditure anticipation helps to
plan ahead for cash shortages etc.
3. Acquire Acquiring Financial resources. Timing of acquisition is also important. It is
the duty of the financial manager to determine different sources through which the
money can be raised. For example, raising money by issuing stock, bonds, bank loan
etc. There is a cost to investing money. Cost of capital, time value of money are few
tools that help in determining the cost of financing. It is also very important to strike a
proper balance between the long term and short term financing. Various factors that
contribute to a favorable ratio between equity and debt needs to be considered.
4. Allocate Allocating funds in business. Management of the companys asset
structure is of prime importance. Investment in fixed assets, current assets such as
inventory at year end, cash on hand, working capital requirements etc needs to be
analyzed. Ratios such as inventory turnover ratio, liquidity measurement ratio etc also
helps in proper allocation of assets. The finance manager must collaborate across
business functions in order to determine how to best allocate and manage assets.
Example XYZ Inc, a pharmaceutical company plans on having a new plant built as it
wants to expand its production capacity.
Sam being the financial manager has to analyze the current financial statements,
anticipate the various expenditure that needs to be incurred such as the costs of
machinery, building costs, labor costs, production cost etc. Cost-benefit analysis has to
be made. Feasibility of the project needs to be analysed.
Cash flow needs to be analyzed to determine the cash available and the amount that
needs to be borrowed for the new plant. An anticipatory cash flow is also required to
determine what amount is required at what stage.
Before making the finance decisions, Sam has to analyze the current structure of the
equity and debt and determine how the new requirement needs to be raised. Various
advantages and disadvantages of stock issue, debt issue and bank loans have to be
compared.
Working capital requirements involving current assets and current liabilities have to be
dealt with along with investment in fixed assets such as building, machinery. Investing
all the money in fixed assets would not help the company to run its day to day activities.
Hence a proper balance between fixed assets and current assets is required.