FINANCIAL MANAGEMENT

PAPERS

CASE STUDY

Lecturer: Agatha Christy Situru, SE, MM

Name: Nuraini Jafar

NPM: 02042211066

Class: III Bilingual

MANAGEMENT STUDY PROGRAM

FACULTY OF ECONOMICS AND BUSINESS

KHAIRUN UNIVERSITY

TERNATE

2023
 Background

Financial Management is an important strategic approach for organizations

in managing their financial resources efficiently and effectively. The main
objective of financial management is to optimize the use of company funds,
maximize company value, and maintain a balance between risk and profit.

Financial Reports, on the other hand, are an important tool in the financial
management process. Financial reports are documents that reflect the financial
performance of a company during a certain period. This report includes
information such as a balance sheet, profit and loss statement, cash flow
statement, and notes to financial statements. Financial reports not only function to
provide a clear picture of the company's financial condition to internal and
external stakeholders, but also to comply with applicable regulations.

Good financial management involves a process of planning, organizing,

controlling and making wise financial decisions. In this context, financial reports
act as an important tool to help managers make appropriate decisions regarding
the allocation of financial resources, performance evaluation and future planning.

The combination of effective financial management and accurate financial

reports helps organizations to manage financial risks, identify growth
opportunities, and maintain transparency in relationships with stakeholders such
as shareholders, creditors, and the government. Therefore, financial management
and financial reports are important elements in the overall financial success
strategy of an organization.
 RESUME

Management is the process of planning, organizing, actuating and controlling

organizational resources to achieve predetermined goals. Management is an
integral part of every organization, and involves coordinating various
organizational functions to achieve efficiency and effectiveness.

Management Function

1. Planning (Planning): This is the initial stage in management where the

manager formulates the goals of the organization, identifies the required
resources, and plans the steps to achieve those goals.
2. Organizing: Managers design organizational structures, determine roles
and responsibilities, and allocate resources to achieve planned goals.
3. Implementation (Actuating): This stage involves implementing the plan
through HR management, production and marketing. It involves using
resources effectively to achieve goals.
4. Controlling: Managers monitor organizational performance to ensure that
goals are achieved. If there is a difference between actual and planned
performance, corrective action can be taken.

Human Resources Management (HR): HR management involves managing

human resources in an organization. This includes recruiting, training, developing,
rewarding, and managing employee performance. HR management aims to create
a productive work environment and motivate employees.

Financial Management Financial management involves managing the financial

aspects of an organization. Specific tasks in financial management include:

 Investment Decision Making:

Investment decision making involves assessing potential investment projects to

determine whether the investment should be pursued or not. This investment
project can be the purchase of new assets, business expansion, research and
development, or other investments that are expected to provide a return on
investment. Financial managers carry out investment project analysis that involves
calculations such as net present value (NPV), internal rate of return (IRR), and
investment payback period. The goal is to understand the risks and potential
returns of the investment and decide whether the project meets the company's
goals.

 Funding Decision Making:

Funding decision making is related to how a company obtains the funding sources
needed for operations and investment. This involves choosing between debt and
equity as well as determining the optimal capital structure. Financial managers
must consider the cost of capital and risks associated with different sources of
funds. They can take out loans (debt) from financial institutions or obtain funds
through the issuance of shares (equity). This decision will affect the company's
financial structure and ability to meet financial obligations.

 Working Capital Decision Making:

Working capital decisions focus on the management of a company's short-term

assets and liabilities, such as cash, inventory, accounts receivable, and accounts
payable. The aim is to ensure operational continuity and company liquidity. The
financial manager must decide how much working capital needs to be maintained.
Excess working capital can tie up too much company capital, while a lack of
working capital can disrupt operations. Managers must also monitor the
company's cash cycle to ensure enough cash is available to meet short-term
obligations and manage inventory efficiently.

Decisions in financial management are very important because they can affect the
financial health and survival of the company. A good understanding of these three
specific tasks helps financial managers manage financial resources more
effectively and efficiently to achieve company goals.

Production Management: Production management involves managing

production processes and operations within an organization. This includes
production planning, work flow organization, inventory management, quality
control, and efforts to increase efficiency and productivity.

Marketing Management: Marketing management involves managing marketing

activities, market research, promotion, distribution, and developing marketing
strategies. The main goal is to understand customer needs and create value for
customers.
Case study: Implementation of Financial Report Preparation for MSMEs
Based on SAK EMKM

By: Rizky Aminatul Mutiah

Silky Parijatah is a company operating in the trading sector that sells

various kinds of clothing and food needs with a fairly wide marketing scale and
has been run by Mr. Edy Yusuf for 10 years and was founded on Wednesday,
September 9 2009, located on Jl. Parijatah Wetan, Patirejo, Srono, Banyuwangi
Regency. Considering the need for clothing and food, there are many market
players with various amounts of turnover obtained from these sales. In particular,
information from the owner of Silky Parijatah for its annual turnover has
increased by IDR 425,000,000 which can be seen from 2017 amounting to IDR
3,171,201,000 and in 2018 amounting to IDR 3,596,201,000, but the owner finds
it difficult to make financial reports. Due to limited thinking regarding the
management of financial reports and limited human resources which are
inadequate in preparing financial reports, so that the company is not well
controlled, the researcher came up with the idea of implementing the preparation
of financial reports on Silky Parijatah in accordance with applicable standards,
namely SAK EMKM, because SAK EMKM came into effect effectively on
January 1 2018. The application of financial reports prepared by Silky Parijatah is
still very simple, namely only calculating money in and money out, even seen
from the payroll system at Silky Parijatah it still uses memory without writing it
down. So that the financial reports expected by the owner of Silky Parijatah can
be used as a business evaluation and used as a basis for decision making. Thus the
company is not well controlled, so the researcher got the idea to apply the
preparation of financial reports on Silky Parijatah in accordance with applicable
standards, namely SAK EMKM, because SAK EMKM came into effect
effectively on January 1 2018. Application of financial reports prepared by Silky
Parijatah it is still very simple, namely only calculating money in and money out,
even if you look at the payroll system at Silky Parijatah, it still uses memory
without writing it down. So that the financial reports expected by the owner of
Silky Parijatah can be used as a business evaluation and used as a basis for
decision making. Thus the company is not well controlled, so the researcher got
the idea to apply the preparation of financial reports on Silky Parijatah in
accordance with applicable standards, namely SAK EMKM, because SAK
EMKM came into effect effectively on January 1 2018. Application of financial
reports prepared by Silky Parijatah it is still very simple, namely only calculating
money in and money out, even if you look at the payroll system at Silky Parijatah,
it still uses memory without writing it down. So that the financial reports expected
by the owner of Silky Parijatah can be used as a business evaluation and used as a
basis for decision making.
 So the researcher got the idea to apply the preparation of financial reports
on Silky Parijatah in accordance with the applicable standards, namely SAK
EMKM, because SAK EMKM came into effect effectively on January 1 2018.
The application of financial reports prepared by Silky Parijatah is still very
simple, namely only calculating money. money comes in and money goes out,
even if you look at the payroll system at Silky Parijatah it still uses memory
without writing it down. So that the financial reports expected by the owner of
Silky Parijatah can be used as a business evaluation and used as a basis for
decision making. So the researcher got the idea to apply the preparation of
financial reports on Silky Parijatah in accordance with the applicable standards,
namely SAK EMKM, because SAK EMKM came into effect effectively on
January 1 2018. The application of financial reports prepared by Silky Parijatah is
still very simple, namely only calculating money. money comes in and money
goes out, even if you look at the payroll system at Silky Parijatah it still uses
memory without writing it down. So that the financial reports expected by the
owner of Silky Parijatah can be used as a business evaluation and used as a basis
for decision making. The application of financial reports prepared by Silky
Parijatah is still very simple, namely only calculating money in and money out,
even if you look at the payroll system at Silky Parijatah, it still uses memory
without writing it down. So that the financial reports expected by the owner of
Silky Parijatah can be used as a business evaluation and used as a basis for
decision making. The application of financial reports prepared by Silky Parijatah
is still very simple, namely only calculating money in and money out, even if you
look at the payroll system at Silky Parijatah, it still uses memory without writing
it down. So that the financial reports expected by the owner of Silky Parijatah can
be used as a business evaluation and used as a basis for decision making.(Mutiah
2019)

Analysis of the case:

The Silky Parijatah case illustrates the challenges faced by many small and
medium enterprise (SME) owners in managing their financial reports and business
management. In dealing with this situation, here are appropriate case solutions and
suggestions:

1. Implementation of EMKM Financial Accounting Standards (SAK

EMKM): Implementation of SAK EMKM is a very good step, because it
will help Silky Parijatah to prepare more structured financial reports, in
accordance with applicable standards. An understanding of these standards
will help owners to properly record all of their business transactions,
including employee payroll.
2. Human Resources: One of the obstacles faced is limited human resources.
Therefore, owners need to consider recruiting or training staff who have
 knowledge and skills in accounting and finance. This will help in
preparing more accurate financial reports.
3. Documented Payroll System: It is important to set up a well written and
documented payroll system. This will help avoid payroll errors and make
it easier to record in financial reports.
4. Using Accounting Software: Silky Parijatah may consider investing in
accounting software that can assist in recording transactions and preparing
financial reports. This software can simplify the process and increase
accuracy.
5. Consultation with a Financial Professional: If the owner finds it difficult to
manage financial reports, it is important to consult this issue with a
financial professional or accountant. They can provide more specific
guidance and advice.
6. Education and Training: Owners and staff must continue to improve their
understanding of financial management, SAK EMKM, and good business
practices. Training and education can be carried out regularly to ensure
better understanding.
7. Evaluation and Decision Making: Once better financial reports are
available, owners can use this information for business evaluation and
more informed decision making. This will help in planning growth and
managing risks.

The suggestions above include concrete steps to help Silky Parijatah overcome
obstacles in preparing financial reports and improve their financial management.
With these improvements, companies will be more controlled, have a better
understanding of their business performance, and can take smarter strategic steps
for the future.
 Bibliography

Lorde, T., Jackman, M., & Waithe, K. (2017). Corporate Governance, Firm
Performance, and Financial Management Practices in the Caribbean.
Emerging Markets Finance and Trade.

Mutiah, Rizky Aminatul. 2019. "Application of Financial Report Preparation for

MSMEs Based on SAK EMKM." International Journal of Social Science
and Business 3(3):223. doi: 10.23887/ijssb.v3i3.21000.

Sanchez, J. (2018). Behavioral Factors in the Financial Management of Small and

Medium Enterprises. Review of Behavioral Finance.

Shah, SMA, Iqbal, A., Anwar, S., & Ullah, H. (2018). Financial Management
Practices and Their Impact on Organizational Performance: A Conceptual
Framework. Management Science Letters..

Uyar, A., & Kuzey, C. (2019). The Impact of Working Capital Management on
Firm Profitability in Different Business Cycles: Evidence from Finland.
International Journal of Managerial Finance.