Financial Management & Improving Automotive Industry Essay

Financial Management & Improving Automotive Industry - Essay Example For example, by using balance sheet they can tell the company’s financial position at a specific point in time as it shows the assets and liabilities of the company. Solidity, liquidity and rentability or reliability of the company can also be reflected from the balance sheet. Profitability or the return on assets is another aspect of the company that is measured by the financial statement like the balance sheet. Profitability ratios show the combined effects of liquidity and asset management. If the solidity, liquidity, rentability or reliability and profitability ratios all look good, then the market value of the company is high. Cash is important for the operation of the company but at the same time variable due to several factors like the cash flow. Thus, there should be cash planning, cash management, and cash reserve involved in a company’s financial management. Cash flows can be from operative, investment or financing activities. Cash flow analysis is important for the company as this will provide clues about its financial position. Evaluation of investment projects will help the company to evaluate performances of each investment project and tell whether it will improve or not the financial position of the company. This will help financial managers to analyse ways of improving their financial performance. Capital budgeting is also about planning expenditures on assets whose cash flows are expected beyond one year. Just like in cash management, there is a need for strategic management and planning for the capital. The growth of the company and its ability to remain competitive and to survive will depend on how its finances are budgeted and managed. In any industry the need to develop the efficiency of production and of the working environment of the company is necessary to ensure that the organization is able to meet its needs. The automotive industry, the