![]() ![]() ![]() Credit policy which includes credit standards, credit terms and collection efforts. This can be further split into: Receivables management Which includes investment in receivables that is the volume of credit sales, and collection period. If you act ethically, you’re in the clear. Reputation and Ethics in Finance Another role of ethics in financial management is to guard your and your employer’s reputation. ![]() Being able to be positive and negative, indicating the companies current financial position and the health of the balance sheet. Strategic CFO magazine suggests that a proper code of ethics could have led to better protection for people’s data and more transparency after the breach occurred. The main indicator to be used here is the net working capital: which is the difference between current assets and current liabilities. They also have to make the firm’s decision in investing into current assets: which can generally be defined as the assets which can be converted into cash within one accounting year, which includes cash, short term securities debtors, etc. Rd = cost of debt E = market value of the firm's equity D = market value of the firm's debt V = E + D E/V = percentage of financing that is equity D/V = percentage of financing that is debt Tc = corporate tax rate Liquidity and working capital decisions The role of a financial manager often includes making sure the firm is liquid – the firm is able to finance itself in the short run, without running out of cash. ![]()
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