FINANCIAL ADMINISTRATION

Financial administration somehow affects all individual and companies, aiming to learn to
administer the money through the main sources of participation and market exchange,
investments, acquisition and sales of products or services.

Taking as starting point the appearance of money and work division, we found how the
economic evolution of nations is linked to the complex expansion of the different roles that
individuals play on the acquisition of goods, the capability to acquire them and their
possibility to treasure richness. It is then detached that the evolution of money in its
different manifestations and functions is linked to socio-economical improvements of
humanity.

Money has some features: Means of change make commercial interchange possible, which
is known as prize; allows the division of work and determines the specialization of
production. Unit of measurement of value of the different human activities performed by
society, quantifies the incorporated work in each act of society. Liquidity synonym, is
derived from the capacity of purchasing power what money has against other goods and
productive services, commonly accepted. Deposit of value, is effectuated through the
storing of paper money or throughout securities, tradable freely and correctly at any
moment in any place.

Offer and demand of money has an essential role in todays business world. On one hand
there are different financial entities that put into consideration of a market, money to be
used by a big mass of people with certain needs of resources. On the other hand, there are
people who demand money to be invested on projects or in the acquisition of goods and
services.
The financial basic objective is then concentrated on making enterprises be able to stay in
the market and besides, be able to grow; taking opportunely Decisions of inversion which
affects the level of actives of the enterprise, reflecting it on the profitability of the
patrimony. Decisions of financing which affects the level of passives of patrimony, reflecting
it on the capital cost. And Profit sharing which manages the indicator of internal generation
of funds (GIF), taking as starting point the liquidity, analysis of profit and indebtedness.

Nowadays the individuals and companies wish to have an excellent economic life, to invest,
to buy and to increase their financial capacity, and it is here where the financial
administration has an important and essential role, due to it is thanks to this that gains
obtained, losses, behavior of sales, the purchases can be determined (Lpez & Hernndez,
2011), among others, that allow to make decisions in an effective and opportune way, to
identify main risks and diminish them, to reduce costs, to improve the value for money and
to know the social, environmental, and economic variables.

The financial analysis starts mainly from the historical facts, based on:

- The state of results: allows to comprehend the operating flows, investment and
financing of the enterprise, these states permit to have direct and real access to the
countable information, with the purpose of analyzing the utilities, profitability in the
growth.
- The effective flow: is the main focus for the administration, planning and decision
making, to determine the long or short term process of projection.
- The process of cash planning: allows to make the sales forecast, with which the
enterprise can define the investment of time and money according to the assessed
period, looking for the fixing of goals of the organizations and the way to achieve
the proposed objectives.
- The cycle of cash: allows to determine the strategies of rotation of inventories, to
collect accounts effectively and to pay debts with the aim of increasing the liquidity.
As a conclusion, the financial administration is in its essence a science that allows to
establish budgets where objectives for sales and savings are pinned up, incomes, discharges
and activities to control the countable registers are estimated. It enables to make the
analysis of financial opportunities, knowing the tools that will make saving become an
efficient investment, looking for the lowest risk with the highest profit. It provides an
adequate management of money through the adequate accounting of incomes and
expenses, as well as the appropriate analysis of the way to keep track of the money taking
into account the economical capacity and planned financial objectives, aiming to maximize
interests. It also allows to make the analysis of investments and actives, due to each
purchase or investment should mean growth for the financing, analyzing them from the
financial productivity achieving purchases of residual investment in time. The payment of
taxes is essential to accomplish in an organized way the contribution that should be made,
taking advantage of deductibility of expenses that are effected in the productive activities.
Finally, the financial administration empowers the maximization of utilities which leads to
the acquisition of financial objectives set in the least time possible.

The financial administration is undoubtedly transversal in each field of daily life, giving huge
importance to decisions making that minimize risks and potentiate earnings throughout
good practices. In the end the difference lies upon the assertiveness as well as learning
constantly the management of money in time.