What do financial managers do for a living? That simple question can be answered in several ways. We can start with financial managers’ job titles.
Most large corporations have a chief financial officer (CFO), who oversees the work of all financial staff. The CFO is deeply involved in financial policy and financial planning and is in constant contact with the Chief Executive Officer (CEO) and other top management.
The CFO is the most important financial voice of the corporation, and explains earnings results and forecasts to investors and the media. Below the CFO are usually a treasurer and a controller.
The treasurer is responsible for short-term cash management, currency trading, financing transactions, and bank relationships. The controller manages the company’s internal accounting systems and oversees preparation of its financial statements and tax returns.
The largest corporations have dozens of more specialized financial managers, including tax lawyers and accountants, experts in planning and forecasting, and managers responsible for investing the money set aside for employee retirement plans.
Financial decisions are not restricted to financial specialists. Top management must sign off on major investment projects, for example. But the engineer who designs a new production line is also involved, because the design determines the real assets that the corporation holds.
The engineer also rejects many designs before proposing what he or she thinks is the best one. Those rejections are also investment decisions, because they amount to decisions not to invest in other types of real assets.
#The investment decision
