Financial Management and the
Planning Cycle
Program Support Notes by:
Belinda Taylor BBus, Grad Dip Ed
(Sec)
Produced by:
VEA Pty Ltd
Commissioning Editor:
Sandra Frerichs B.Ed, M.Ed.
© Video Education America Pty Ltd 2010
Reproducing these support notes
You may download and print one copy of these
support notes from our website for your reference.
Further copying or printing must be reported to
CAL as per the Copyright Act 1968.
Executive Producer:
Simon Garner B.Ed, Dip
Management
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Financial Management and the Planning Cycle
For Teachers
Introduction
This program provides an informative glimpse into real life financial planning and management that
takes place within large organizations today. An overview of the key roles and responsibilities of
people in the finance department is provided, and the financial planning cycle is explained clearly,
using supporting examples from KPMG staff who work in this area.
Timeline
00:00:00
00:00:32
00:03:00
00:06:51
00:09:15
00:11:27
00:14:59
00:15:29
Introduction
The role of financial management
The objective of financial management
Planning cycle – part 1 getting stared
Planning cycle – part 2 on the move
Planning cycle – part 3 keeping check
Credits
End program
Related Titles
Management Styles Explained
The PR Function
Small Business Management Series – Starting Up
Effective Communication in Business
Environmental Sustainability in Business – A Case Study
Recommended Resources
http://www.asx.com.au/
Australian Stock Exchange website. This is good to look at the annual reports and websites of publicly
listed companies, all of which should have CFO’s and be large organizations.
http://www.business.vic.gov.au/BUSVIC/HOMEPAGE/pc=HOME
Starting and Managing a small business. Whilst it’s a small business website, it’s good on the
importance of managing finance in easy to understand language.
http://www.cpaaustralia.com.au/cps/rde/xchg
Certified Practicing Accountants
2
© Video Education America Pty Ltd 2010
Reproducing these support notes
You may download and print one copy of these support notes from our website for your reference.
Further copying or printing must be reported to CAL as per the Copyright Act 1968.
Financial Management and the Planning Cycle
Student Worksheet
Initiate Prior Learning
1. Define the following terms:
a) Budget
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
b) Business Plan
_________________________________________________________________________________
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c) Liquidity
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
d) Cash Flow
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
e) Working Capital
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
3
© Video Education America Pty Ltd 2010
Reproducing these support notes
You may download and print one copy of these support notes from our website for your reference.
Further copying or printing must be reported to CAL as per the Copyright Act 1968.
Financial Management and the Planning Cycle
f) Financial controls
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
2. Research Task: The people behind financial planning and management
Using accounting based websites such as http://www.cpaaustralia.com.au Certified Practicing
Accountants or employment based websites such as www.seek.com.au complete the following
table:
Position
What does their role involve?
Salary?
Chief Financial Officer (CFO)
Management Accountant
Tax Accountant
Financial controller
Internal auditor
Finance/business analyst
3. In your opinion, what is involved in good financial planning? How does good financial planning
contribute to business success?
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
4
© Video Education America Pty Ltd 2010
Reproducing these support notes
You may download and print one copy of these support notes from our website for your reference.
Further copying or printing must be reported to CAL as per the Copyright Act 1968.
Financial Management and the Planning Cycle
Active Viewing Guide
1. Financial management is multi faceted. It involves:
•
P______________________
•
F______________________
•
A______________________ and E______________________
•
Legal, regulatory issues
2. Who is responsible for the overall financial management of a business?
_________________________________________________________________________________
3. What duties do accountants and analysts focus on?
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
4. What does good financial management look like? Identify five key objectives.
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
5. Why does a business need excellent financial management as far as cash flows?
_________________________________________________________________________________
_________________________________________________________________________________
5
© Video Education America Pty Ltd 2010
Reproducing these support notes
You may download and print one copy of these support notes from our website for your reference.
Further copying or printing must be reported to CAL as per the Copyright Act 1968.
Financial Management and the Planning Cycle
6. Plans for financial growth should be reasonable and s______________________.
7. What is liquidity?
_________________________________________________________________________________
_________________________________________________________________________________
8. What is Return on Capital?
_________________________________________________________________________________
_________________________________________________________________________________
9. What must happen before a business can plan for the financial management cycle?
_________________________________________________________________________________
_________________________________________________________________________________
10. Once the financial position and business plan has been finalized and developed then a
______________________ can be prepared.
11. According to Ben Skarrasbrek from KPMG, it can be a problem if you pay your accounts payable
too…?
_________________________________________________________________________________
12. Who uses the financial reports?
_________________________________________________________________________________
_________________________________________________________________________________
13. What role does IT play in keeping accurate records?
_________________________________________________________________________________
_________________________________________________________________________________
14. Provide an example of a financial control.
_________________________________________________________________________________
_________________________________________________________________________________
6
© Video Education America Pty Ltd 2010
Reproducing these support notes
You may download and print one copy of these support notes from our website for your reference.
Further copying or printing must be reported to CAL as per the Copyright Act 1968.
Financial Management and the Planning Cycle
15. How can risks and losses be minimized?
_________________________________________________________________________________
_________________________________________________________________________________
16. At the beginning of the planning cycle, a business needs to:
• Understand the ______________________ financial position
• Deliver the b______________________ p______________________
• Create the ______________________
17. Fill in the missing words:
During the planning cycle, it is important for a business to ______________________ on
financial performance and ______________________ financial performance.
18. The Planning Cycle is all about preserving the ______________________ of the business.
7
© Video Education America Pty Ltd 2010
Reproducing these support notes
You may download and print one copy of these support notes from our website for your reference.
Further copying or printing must be reported to CAL as per the Copyright Act 1968.
Financial Management and the Planning Cycle
Extension Activities
1. Working individually or in pairs, rank the following from 1-10, in the order they should occur for
successful financial planning:
Interpret financial performance
Deliver the business plan
Identify risk and loss
Report on financial performance
Understand current financial position
Create the budget
Accurate record keeping
Utilize Cash Flow
Change focuses and greater efficiency
Strong financial controls
2. Identifying finance problems in the business
Divide into small teams and work to solve the problem that has been identified as an area of
concern regarding financial planning.
Information:
You have been selected to be a consultant on financial planning. You have found the following
problems and assembled the staff to a meeting to provide possible solutions to these problems.
For each of the problems, state why it is a problem and explain how it could be solved:
•
Accounts Receivable is paying on average 65 days with Accounts Payable at an average of
15 days.
•
The Budget has been prepared for the next 2 months only.
•
One signature is required on checks. It can be anyone in the finance department.
•
Computer back ups are made once a month.
•
The working capital ratio is currently 12:1.
8
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You may download and print one copy of these support notes from our website for your reference.
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Financial Management and the Planning Cycle
3. Article Analysis
a)
Search for an article on financial management.
Sources can be government based websites designed to help get business owners started or
provide advice, mainstream newspapers / media or journals.
b)
Summarize the content of the article providing either 100 words or 5 key points.
c)
Write / create your own article on successful financial management. It should incorporate the
material provided in the program, as well as information found in the extension activities after
the program.
9
© Video Education America Pty Ltd 2010
Reproducing these support notes
You may download and print one copy of these support notes from our website for your reference.
Further copying or printing must be reported to CAL as per the Copyright Act 1968.
Financial Management and the Planning Cycle
Suggested Student Responses
Active Viewing Guide
1. Financial management is multi faceted. It involves:
•
•
Planning
Forecasting
•
Analysis and Evaluation
•
Legal, regulatory issues
2. Who is responsible for the overall financial management of a business?
CFO – Chief Finance Officer
3. What duties do accountants and analysts focus on?
Day to day operations: Accounts receivable and payable, payroll, tax and regulatory
compliance, risk management, shareholder and investor information, accurate record
keeping
4. What does good financial management look like? Identify five key objectives.
Meeting objectives of profitability
Growth
Efficiency
Liquidity
Return on capital
5. Why does a business need excellent financial management as far as cash flows?
To be able to pay suppliers and your liabilities and debts.
6. Plans for financial growth should be reasonable and sustainability
7. What is liquidity?
How quickly or effectively cash is moving to and from the business
8. What is Return on Capital?
How much profit the business makes from the money its investors have put in
9. What must happen before a business can plan for the financial management cycle?
A company must understand its immediate financial position.
10. Once the financial position and business plan has been finalized and developed then a budget
can be prepared.
11. According to Ben Skarrasbrek from KPMG, it can be a problem if you pay your accounts payable
too…?
Early
10
© Video Education America Pty Ltd 2010
Reproducing these support notes
You may download and print one copy of these support notes from our website for your reference.
Further copying or printing must be reported to CAL as per the Copyright Act 1968.
Financial Management and the Planning Cycle
12. Who uses the financial reports?
Finance controller
The board
Auditors
External stakeholders
13. What role does IT play in keeping accurate records?
Backs up spreadsheets, records
14. Provide an example of a financial control.
No check is written out without the signature of the financial controller.
15. How can risks and losses be minimized?
Put risk management policy in place
16. At the beginning of the planning cycle, a business needs to:
• Understand the current financial position
• Deliver the business plan
• Create the budget
17. Fill in the missing words:
During the planning cycle, it is important for a business to report on financial performance and
interpret financial performance.
18. The Planning Cycle is all about preserving the future of the business.
11
© Video Education America Pty Ltd 2010
Reproducing these support notes
You may download and print one copy of these support notes from our website for your reference.
Further copying or printing must be reported to CAL as per the Copyright Act 1968.