About This Chapter
Goals of Financial Management - Chapter Summary
This chapter's video lesson examine the goals of financial management. As your employees begin these lessons, they'll watch short videos on the income statement and balance sheet, financial statement analysis and the definitions of net profit and net loss. Utilize this resource for a variety of training purposes with new hires or veteran workers.
How It Helps
- Offers clarity: The definitions and elements of important financial statements, including the income statement, balance sheet and statement of cash flows, can ensure your team members understand the basics.
- Simplifies training: Because these lessons are accessible around the clock, this chapter offers a training resource you can use regardless of your employees' work schedules or locations.
- Covers trends: In addition to helping your team members understand the basics of financial management, financial trends in business and ways in which they can be identified and assessed for implementation is also addressed.
Once your employees complete this chapter, they should be able to:
- Discuss the goals of financial management
- Outline the components and format of the income statement and balance sheet
- Give the purpose and examples of the statement of cash flows
- Detail the formula used in the statement of retained earnings
- Describe the purpose and elements of financial statement analysis
- Define net profit and net loss, and understand how they are calculated
- Provide the formula used to calculate economic profit
- Give the definition of and formula for EBITDA
- Assess and identify financial trends in business
1. What Are the Goals of Financial Management?
This lesson introduces the concept of financial management and defines the scope that companies use to manage their finances. It will also discuss the primary goal of financial management and the advantages and disadvantages of this goal.
2. What Is an Income Statement? - Purpose, Components & Format
There are four financial reports that are created during the accounting cycle. These four reports make up what is commonly known as the financial statements. In this lesson, we will focus our attention on the income statement. We will learn what the income statement is, what its role in the financial statements is, and why it is important in accounting.
3. The Balance Sheet: Purpose, Components & Format
There are four financial reports that make up a group known as the financial statements. We will take a walk with one of those reports - the balance sheet - and learn what it is, what items are included on it and what its role in the group is.
4. The Statement of Cash Flows: Purpose, Format & Examples
There are four financial reports that are required in financial statements. In this lesson, you will learn about the fourth and final report - the statement of cash flows. You'll learn what the makeup of the statement is, its purpose, and why it is important to users of the financial statements.
5. Statement of Retained Earnings: Definition, Formula & Example
Retained earnings are a critical part of the business life cycle. The statement of retained earnings calculates not only the cumulative amount of earnings but also the changes that have affected that amount during the past year.
6. Financial Statement Analysis: Definition, Purpose, Elements & Examples
In this lesson, we'll define financial statement analysis and discuss the main categories. You'll also learn how to calculate a financial ratio in each category and analyze the results.
7. Net Profit: Definition & Calculation
In this lesson, you will learn about net profit. You will learn the definition of net profit, how it is calculated, and see an example of how it relates to everyday life.
8. Net Loss: Definition & Formula
Business owners hope that each period, the money brought in is more than the money paid out. But that's not always the case. In this lesson, you'll learn the definition and formula for net loss, and why it can be bad news for business owners.
9. How to Calculate Economic Profit: Definition & Formula
Learn what economic profit is and how it's different from standard accounting profit in this lesson. Find out the formula for calculating economic profit and why it's possible to have a positive accounting profit and a negative economic profit.
10. What is EBITDA? - Definition & Formula
In business, managers are interested in analyzing the company's performance. To do this, they would look at the company's earnings before interest, taxes, depreciation, and amortization (EBITDA). Let's take a look at EBITDA and how it's calculated.
11. Identifying & Assessing Financial Trends in Business
Business, economic influences, and politics are dynamic and sometimes unpredictable. This lesson lists some of the financial trends that must be monitored by businesses on an ongoing basis in order to keep pace.
12. Practical Application: Analyzing Financial Statements
Analyzing financial statements is a basic business skill that is fundamental to understanding an organization's position in the market. Despite an intimidating name, analyzing a financial statement is relatively straightforward.
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