To be able to manage the finances of a business, managers must have a clear understanding of the importance of cash flow and working capital. These are two fundamental aspects of finance that must be controlled in order to provide the resources necessary to allow activities to operate smoothly and without interruption. Knowledge of the interpretation of balance sheets and profit and loss accounts is essential for effective decision making, as well as the statutory requirements for reporting, and are discussed in this module

We will consider basic financial ratio analysis as a means for analysing financial performance and position, and we will also examine the potential effects of poor control when problems arise

An important consideration for business growth is the availability of funds. Therefore, we will discuss the variety of options open to businesses when selecting appropriate sources of funds. This is a particular important area as no business wants to find itself in a position where it is unable to support the costs of finance or is tied into long-term commitments which it no longer needs. However, this must be carefully balanced with the risks associated with running out of cash should unexpected events occur. This is particularly relevant when decisions are taken regarding the level of stock to hold