Describe about the Corporate Financial Management for Uranium Producers.
1. Preface
“ENERGY RESOURCES OF AUSTRALIA LIMITED” is selected as a research association. Energy Resources of Australia Limited is scheduled as ‘ERA’ on the (Australian Stock Exchange). ERA is one of the biggest uranium producers firm in the world. The firm produces uranium all the way through the ‘Ranger Uranium Mine that is located in the Northern Territory. The organization sells its product mainly in Asia, Europe and North America. Along with this, it should also be noted down that, ERA is a subsidiary of the Rio Tinto Group that has possession of approximately 70% of the corporation (ERA. 2016). Moreover, Peter McMahon is the chairman and Andrea Sutton is the chief executive officer (CEO) of the organization. On the other hand, this research term paper will be helpful to give a picture of the responsibility for the CFO (Chief Financial Officer) of the association. What’s more, the document will also be beneficial to explain how the tasks of the Chief Financial Officer of business may affect definitive goal of the business.
Three General Areas of Responsibility for Chief Financial Officer (CFO)
According to Kasunic and Kasunic (2009), the financial officer (CFO) is a very important person of an organization. The CFO who is also known as CFOO (Chief Financial & Operating Officer) is responsible to manage the fiscal threats of a company organization in an effectual and an inclusive way. Along with this, the financial officer of the firm is also responsible for proper fiscal scheduling and financial reporting for the success and growth of the business. In other words, the CFO of a firm performs loads of important roles and responsibilities to achieve the financial goals and objectives of the business in a specified time period (Sebastian, 2011). In the same manner, the CFO of ‘Energy Resources Of Australia Limited’ is also responsible to perform numerous roles & responsibilities to bring about the planned, financial, and spirited targets of the group in an efficient and an appropriate mode. Alongside this, the common regions of conscientiousness of the financial office of Energy Resources of Australia Limited are exemplified as below:
Moran and Kral (2013) state that; fiscal scheduling is the most important region of task for the financial officer of an organization. According to this area of responsibility, the CFO of ERA is in charge to compose fiscal tactics to make use of funds and wherewithal in a proper manner. The financial officer of the firm is liable to manage all the financial activities effectively. Along with this, under this area of responsibility, the CFO of ERA manages and controls cash inflow and outflow in an appropriate mode. The financial officer is also dependable to uphold transparency in all financial transactions of organization (Nolop, 2012). Moreover, the financial officer of Energy Resources also plays a significant role to forfeit taxes, as well as duties to improve financial performance of organization. The financial officer is also responsible to establish effective financial/accounting policies and procedures; so that all the people related to the organization may perform their financial obligations in an effectual manner.
In addition to this, Hommel, Fabich, Schellenberg and Firnkorn (2011) affirm that, in this area of responsibility, the CFO of the firm is also responsible to establish effective provisions in order to increase the assets and funds of the organization. Moreover, in order to move up the wealth of the business, the chief financial officer makes allowance on procurement of debt & equity capital and maintains the financial arrangements of the business effectively. The CFO of ERA also prepares long tern financial plans to motivate the people to accomplish financial objectives that are intrinsic in these financial plans (Hope, 2013).
Fiscal Functions:
Accoding to Fabozzi, Drake and Polimeni (2008), the enlargement of fiscal functions is also the other foremost region of duty for the chief financial officer of the organization. The financial officer of ‘Energy Resources of Australia Limited’ also develops financial functions to improve the overall financial as well as organizational effectiveness and performance effectively. Moreover, the chief financial officer of ERA also develops a constant organism of improvements within the finance functions of the firm; so that all the people can perform all financial functions in an accurate way (Finn, 2016). Apart from this, the CFO of ERA uses valuable financial methods for instance balanced scorecard, ratio analysis, dashboards, etc. in order to improve the projected and actual financial performance of the business. Also, the CFO makes effective communication with its shareholders, financial analysts, bankers, and investors to develop a strong reputation of the firm in their eyes. The chief financial officer comprehends the business model of corporation to create customer value and to execute all the financial functions in an effective and an accurate manner (Fabozzi, Drake and Polimeni, 2008).
The author Dergel (2014) says that the CFO of ERA plays a significant role to align the staff into a group; so they can perform all the financial functions and make efforts to improve the overall organizational performance effectively. Moreover, the CFO also manages the staff and also develops effective methods, policies, guidelines & procedures to perform all the financial functions of the business. Along with this, the CFO is also responsible to manage accuracy and honesty in the execution of the accounting & financial functions of the firm (Dergel, 2014). In this way, it can be said that, in this area of responsibility, the CFO is responsible to develop, manage and performs all the accounting/financial functions of the firm in an effective and an accurate manner.
In the views of Bragg (2012), the mitigation of financial risk is another important area of responsibility for the CFO of an organization. The chief financial officer of ‘Energy Resources of Australia Limited’ is fully responsible to appreciate and condense financial risks to improve the financial performance of the organization. Moreover, the CFO of ERA is responsible to have complete knowledge of all the accounting &financial systems that are used by the firm. The main reason behind it is that, with the help of in-depth knowledge, the CFO would be able to find any peril that might perhaps take place in the fiscal regions of the commerce (Brag, 2012). The financial officer is conscientious to develop threat mitigation strategies to improve financial proficiency of the business.
The author Clark (2012) states that, the financial officer of ERA is conscientious to alleviate abundant kinds of financial threats that might dangerous for the general concert of the group. For example, the financial officer plays a momentous part to diminish foreign exchange risk in an effective way. The CFO decides the level of overseas deal, recognizes prospective defeats and executes hedging strategies in order to reduce foreign exchange risk in an appropriate way. Along with this, the financial officer plays an essential part to diminish the risk related to the changes of commodity prices. Moreover, in order to manage the commodity prices’ changes, the chief financial officer makes long-term fixed price agreements with its counterparties. The CFO also makes use of cost cutting methods to mitigate the risk in an effective way (Clark, 2012).
Impact of the Financial Office’s Tasks on Definitive Object of the Business
The authors Lapovsky and McKeown-Moak (2010) expressed that, the major responsibilities of the CFO of the firm influence the eventual goal of the company. The tasks of the CFO change the definitive point of the firm in both optimistic as well as pessimistic manner. For example, the financial officer plays an important role to manage and control all the funds and means of the business in an effective manner. Moreover, the officer is also liable to keep up lucidity and simplicity in the monetary dealings of the business. Along with this, the officer makes an effective financial planning to manage the funds and to maintain transparency in an appropriate way. Also, the CFO develops risk mitigate strategies to improve the overall financial performance of the business. These all the things have an effect on the goals and objective of the firm (Lapovsky and McKeown-Moak, 2010). Apart from this, if the CFO is incapable to perform effective financial planning, develop accounting & financial functions, and also develop risk mitigation strategies then it will influence the ultimate objective of the firm in a negative way. It is because of, in this situation, the firm would not be able to make effective utilizations of available funds, manage & control cash flows, mitigate financial risks, and perform financial functions in an effective and an appropriate manner This will be dangerous for the growth and success of the organization (Sebastian, 2011).
Finale
On the premise of over discussion, it could be assumed that chief financial officer of a group plays numerous imperative functions as well as tasks to develop the general managerial performance in a valuable way. Along with this, it is also observed that, the tasks of the financial officer may concern the critical ambitions and objectives of business.
2. In the views of Brealey, Myers, Allen and Mohanty (2012), nowadays all the financial organizations focus on the efficient markets hypothesis in order to put together financial choices in an effective and an accurate manner. In other words, it also can be said that, the markets theory has become the most important source that provide all the accurate financial information of trade organizations to the investors. In the same manner, it is supposed to be that, the markets theory portrays so as to the costs of securities play a major role in order to expose every part of the existing fiscal information of business firms. Moreover, the market theory is valuable to confirm so as to the financial markets for example the U.S. bond, stock market, etc. are competent or not (Brealey, Myers, Allen and Mohanty, 2012).
At the same time, the author Graham and Dodd (2008) state that, the annuity money manager might not opt for a assortment with a brooch at what time the efficient market theory is true. The main reason behind it is so as to an assortment with a join would be unable to put forward satisfaction to customers. In other words, it is supposed to be that, an assortment with a badge will not make effort in favor of customers or investors. Apart from this, the annuity finance manager must select a portfolio at what time the efficient-market hypothesis is accurate and securities are well priced. In this situation, the fund manager may choose a portfolio at the accurate risk level for the investors. On the other hand, the efficient market theory does not mean to choose an assortment with a brooch. The annuity finance manager ought to not just consider the efficient market theory in order to decide on a portfolio. The main reason behind it is so as to different stocks of analogous commerce are not diversified in an effective as well as appropriate way (Graham and Dodd, 2008). Moreover, a well branched out portfolio plays a significant role in order to mitigate peril and enlarge profits on investors’ funds.
According to Tyson (2016), the annuity finance manager should accept an assortment on the basis of the altitude of risk as well as homecoming. The assortment that is less risky and more cost-effective would be able to improve the satisfaction level of the investors. Along with this, the manager has to choose a portfolio on the basis of pre-determined guidelines as well as procedures. According to these guidelines, the manager must choose an assortment that is well diversified. The manager has to observe that the risk point of selected assortment is appropriate for clientele. Also, the annuity manager has to consider that a large quantity of reserves might inadequate to ensure diversification of an assortment (Tyson, 2016). For that reason, these guidelines and procedures would be helpful to make effective selection of the portfolio. In this way, the annuity manager has to choose an assortment simply on the basis of the point of peril as well as profit.
References
Bragg, S.M. (2012). Accounting Policies and Procedures Manual: A Blueprint for Running an Effective and Efficient Department. Australia: John Wiley & Sons.
Brealey, R.A., Myers, S.C., Allen, F. and Mohanty, P. (2012). Principles of Corporate Finance. NY: Tata McGraw-Hill Companies Inc.
Clark, R.M. (2012). Intelligence Analysis: A Target-Centric Approach. Australia: CQ Press.
Dergel, S. (2014). Guide to CFO Success: Leadership Strategies for Corporate Financial Professionals. USA: John Wiley & Sons.
ERA. (2016). About Us. Available At: https://www.energyres.com.au/ [Accessed on: 9th September 2016]
Fabozzi, F.J., Drake, P.P. and Polimeni, R.S. (2008). The Complete CFO Handbook: From Accounting to Accountability. UK: John Wiley & Sons.
Finn, A. (2016). MBA In A Week: All The Insights Of A Master Of Business Administration Degree In Seven Simple Steps. UK: Hachette UK.
Graham, B. and Dodd, D.L.F. (2008). Security Analysis (6th ed.). USA: Tata McGraw-Hill Companies Inc.
Hommel, U., Fabich, M., Schellenberg, E. and Firnkorn, L. (2011). The Strategic CFO: Creating Value in a Dynamic Market Environment. USA: Springer Science & Business Media.
Hope, J. (2013). Reinventing the CFO: How Financial Managers Can Transform Their Roles And Add Greater Value. Australia: Harvard Business Press.
Kasunic, T.K.F.T., and Kasunic, F.T. (2009). Supersize Your Small Business Profits!: How to Survive the Current Recession and Manage Your Small Business Profitably During Turbulent Economic Times. Australia: Trafford Publishing.
Lapovsky, L. and McKeown-Moak, M.P. (2010). Roles and Responsibilities of the Chief Financial Officer: New Directions for Higher Education, Number 107. Australia: John Wiley & Sons.
Moran, S. and Kral, R. (2013).The Board of Directors and Audit Committee Guide to Fiduciary Responsibilities: Ten Critical Steps to Protecting Yourself and Your Organization. US: AMACOM Div American Mgmt Assn.
Nolop, B.P. (2012). The Essential CFO: A Corporate Finance Playbook.UK: John Wiley & Sons.
Sebastian, S.J. (2011). Internal Revenue Service: Status of GAO Financial Audit and Related Financial Management Report Recommendations. USA: DIANE Publishing.
Tyson, E. (2016). Investing For Dummies. John Wiley & Sons.
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