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Principles of Risk and Return
The bigger the risk, the bigger the potential for return. That
means if you are putting out a product that costs a lot to
make, you have the potential to make more money from it.
This is great, but the key word is potential because there is a
bigger risk of losing more if the product does not do well.
Think about this in terms of investments. If you invest $1 and
it doubles, you will make $1; but if you invest $100 and it
doubles, then you make $100. I am sure you have heard the
expression, "It takes money to make money." That is the
basis of this principle.
What is important to understand is that you may need more
up-front capital to take a bigger risk and potentially get a
bigger return.As a product designer, you often have
awesome and creative ideas, but the cost to produce
(inclusive of time and labor) and the price to sell must be
taken into consideration. As we discussed, understanding
market prices will generally help you ensure that you are on
track with your pricing and cost.

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Financial Planning and Forecasting
Financial management, refers to the procurement of funds and effectively
managing and utilising the same in business, While the term "financial
management Planning & forecasting" refers to the application of management
principles to financial resources, in basic terms, it is
Planning
Organising
Directing
Controlling
Cash Management
The primary function of financial manager is to determine the revenue a
company will need to reach its goals. When determining how much capital a
company needs, the role of a finance manager includes estimating the size of the
business, predicting profitability, and understanding company policies. The
manager must also know how to measure financial risk management to secure
the business from losses.
Determining the Capital Structure
When the capital requirement estimation is complete, one of the other major
financial management functions is deciding on the capital composition. Both
long-term and short-term debt equity research and analysis are involved in this
function. It will mostly depend on the amount of equity capital that a company
already has and the additional revenue required from other sources. The
structure must be decided upon after assessing the necessary capital.
9 Major Functions of Financial Management
Listing down the top 9 financial management functions can help you take a deeper
look into the functions of a financial manager. And, if you are interested, you can opt
for financial management courses and certifications.
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Funding Sources
Identifying the source of the capital is one of the next financial management functions. In order
to raise capital in exchange for equity, the company may choose to contact investors, take bank
loans, or hold an initial public offering (IPO). The advantages and restrictions of each funding
source are taken into consideration while choosing and ranking them.
Forecasting Cash Flows
Estimating the upcoming expenses is part of the cash flow forecasting process. A cash flow
prediction is an essential tool for your company because it will let you know whether you'll have
enough money to run or grow the enterprise. It will also let you know when the company is
losing more money than it is making. The funding sources may be internal or external.
Income Distribution
The financial manager functions include making the judgement regarding net revenues. This is
possible in two areas of an organization's financial management functions. First, when a
dividend is declared, the rate of dividends and, if applicable, bonuses are also determined. 
Investing the Business Capital
Making decisions on how to distribute money to successful ventures is another one of the
functions of financial management. For each investment, the financial manager must be aware
of the financial management risk and projected return. Also, the investment strategies must be
designed to maximise profit potential and minimise capital loss. Financial management
functions are required to invest funds in viable businesses to ensure investment protection and
consistent returns on investment.
Financial Command
The finance manager must develop tactics and ways to work on financial control of funds in
addition to developing strategies to raise, allocate, and spend funds. A number of strategies can
be used to accomplish this when it comes to financial management functions, including ratio
analysis, financial forecasting, pricing, cost control, and others.
Pricing & Price Control
Many sizable businesses have thorough cost-accounting systems in place to keep track of
expenditures related to financial management functions. Moreover, systems are made to
emphasise statistically significant information on tasks and activities that will be displayed on a
monitor. Financial management functions may offer insight into variations in spending at
various manufacturing levels and the revenue margins required to run the firm successfully.
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