Principles of Managerial Finance Gitman - equitybizz.com

Principles of Managerial Finance Gitman


principles of managerial finance gitman

The Principles of Managerial Accounting is a text book that has been used successfully by many business managers. For those who are looking to begin a career in accounting, The Principles of Managerial Accounting is a great place to start. The main idea behind this text book is to give students a solid grounding in the key concepts and tools of accounting. This textbook contains over 500 pages that cover the most important areas of accounting including: cash flow analysis, financial statement analysis, and accountancy techniques.

An Overview

A piece of paper on a table

For those who already have a background in business management, the principles of managerial finance is an excellent refresher course. The book provides a simple yet powerful model of how to think about, plan, and execute business projects. This textbook contains clear explanations of why certain decisions are made and what effect they will have on the organization. The authors provide an effective framework that is easy to understand and implement.

Many people believe that principles of managerial finance are simple and easy to follow. However, there are several concepts that are covered in this text book that are complex. Students need to be prepared to read and learn new information in a way that is easy to understand. This is because the principles of managerial finance is written in a very different style than most books on business management.

Principles Of Managerial Finance

A city at night

One of the principles of managerial finance is called the accumulation and flow model of accounts. This model is based on the accumulation and repayment of a company’s debt and the use of accounts receivable and accounts payable. The accountancy world is based around this concept. The book describes in great detail the process of building these models which are then used for analyzing the financial statements of the company. This book provides a simple explanation of the concepts involved.

Another principle of Gitman’s book is that a firm’s balance sheet is not the whole story. An accountant can only give an account of what is owed to a bank and what has been done with that money. There is another side of the picture that must be considered as well. The balance sheet cannot represent all financial aspects of a business. Business management is really a process of making decisions about what to buy or sell and how to manage those purchases and sales. Therefore, the accountancy practices of a firm need to take into account not just the financial statements but also the day-to-day activities that managers are undertaking on behalf of the business.

A third principle of principles of managerial finance that is covered in great detail by Gitman is that risk should not be the driving force behind managerial decisions. The principles of managerial finance say that managers should not be emotionally attached to any particular investment because that decision will reflect on the company’s balance sheet. Instead, managers should base their decisions on sound financial principles. The decisions that they make will then have an effect on the company’s net worth. In other words managers cannot be too careful in making investment decisions. They should only buy low and sell high.

Bottom Line

The principles of managerial finance are not easy to understand. In order for one to learn and understand the principles of managerial finance it takes a lot of study and research. In addition, the principles of managerial finance are applicable at all times because they are part of any firm’s conduct of business. These principles will always be in effect irrespective of the nature of the business. For instance, when a firm is trying to raise funds it will have to abide by the principles of finance. Similarly, when it comes to purchasing raw materials and selling its products it will have to comply with principles of managerial finance.

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