How to understand the conversion formula of nominal annual interest rate and real annual interest rate in financial management?

Suppose m is the number of interest calculations in a year: the real annual interest rate =( 1+ nominal annual interest rate /m) to the power of m-1. When calculating interest once a year, the actual annual interest rate = nominal annual interest rate; When the interest is calculated several times a year, the actual annual interest rate is greater than the nominal annual interest rate.

1. financial management: financial management refers to the management of asset acquisition (investment), financing (financing), operating cash flow (working capital) and profit distribution under certain overall objectives. Financial management is an integral part of enterprise management. It is an economic management work to organize enterprise financial activities and handle financial relations according to financial laws and regulations and financial management principles. To put it simply, financial management is an economic management work to organize enterprise financial activities and deal with financial relations.

2. Fund-raising management: the funds raised by enterprises can be divided into two categories; First, the equity capital of an enterprise can be obtained by absorbing direct investment, issuing stocks, and retaining income within the enterprise. Second, corporate debt funds can be obtained by borrowing from banks, issuing bonds, and dealing with funds.

3. Working capital management: (1) Maintain cash balance. (2) Strengthen the management of inventory and accounts receivable and improve the efficiency of capital use. (3) Reduce consumption, improve production efficiency and save costs by formulating various expense budgets and quotas.

4. Financial planning: financial planning helps the company to formulate the guiding principles of business and financial planning. Rationalize the company's key objectives and consider capital investment. The company's goals are translated into tangible financial indicators. Investment decisions and objectives produce comprehensive financial statements, linking financial objectives with financial indicators. Then the whole organization operates around these goals and indicators. Financial planning includes three activities: 1) setting goals; 2) Establish tangible indicators; 3) Measure and adjust targets and indicators. In the process of financial planning, the key is to establish a complete financial statement and its connection with operational planning. Key financial planning and forecasting produce consistent income statement, balance sheet and cash flow statement, and finally form financial indicators.