Discuss about Financial System and its impact on the strategic Financial Management

The modern Financial System is based on a central bank that controls the monetary base (but not the money supply), and in fractional reserve banking. The implicaton of this, is that banks loan out some of the money that they obtain as deposits, and in this process they create money.

Explanation:

The Financial System is influenced by this process of money creation, because when the money that circulates in the economy (the money supply) changes, interest rates also change.

Interest rates are the price of investment, and the most important indicator that a financial manager has to take into account when making a financing decision.

Financial managers must also take into account the different types of financial institutions that exist, from hedge funds, to commercial banks, to cooperatives, and the different types of securities, from stocks, to bonds, to derivatives and futures.

both are integral parts of a corporate balance sheet. the cash flow statement, or statement of cash flows, measures the sources of a company's cash and its uses of cash over a specific time period. the income statement measures a company's financial performance, such as revenues, expenses, profits or losses over a specific time period (in fact, it's sometimes called a statement of financial performance).

a cash flow statement shows exactly how much money a company has received and how much it has spent, traditionally over a period of one month. it captures the current operating results and changes on the balance sheet, such as increases or decreases in accounts receivable or accounts payable, and does not include noncash accounting items such as depreciation and amortization. the cash flow generally comes from revenue received as a result of business activity, but it may be augmented by funds available as a result of credit. a cash flow statement is used to determine the short-term viability and liquidity of a company, specifically how well it is positioned to pay its bills and vendors.

explanation:

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