...monitoring of a budget, the use of effective financial management practices cannot be overemphasized. To begin with, the budget construction form must identify all relevant data. An operating budget is best presented as a profit and loss statement projection. With that in mind, estimates of expenses and revenues (future) must be prepared. To ease monitoring, Finkler et al. (2006) notes that an operating budget should be presented together with the appropriate schedules as well as statements which act as supportive documentation? This paper will discuss the most effective and least effective budget management practices. According to Gapenski (2008), an effective operating budget must be created on an annual basis. However, for purposes of effective monitoring of an operating budget, it is important to note that an entity can come up with a number of quarterly or monthly budgets for utilization as the year progresses. An operating budget must also include all the important information including inventory and operating expenses, costs associated with manufacturing as well as sales forecasts. The inclusion of all this information as well as the categorization of the various items according to Boyd et al. (2010, May) is vital as this is what avails the financial outlays necessary for sales generation as well as other activities. Based on the size of the company or entity, Campbell et al. (1998) note that it may be prudent for the management to create operating budgets for a number of distinct...
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...community Hospital's 2009 operating budget and 2010 budget assumptions showed the accuracy of the 2010 operating budget projection. The operating budget is the yearly statement of profit and loss for the organization. Healthcare organizations prepare projected operating budgets for the approval of senior management. At the end of the fiscal year, a detailed accounting provides the report for how the company performed. There are effective and ineffective ways to manage the fiscal status of healthcare entities. This paper will take everything into consideration and identify effective and ineffective financial management practices in the health care setting. Healthcare businesses thrive on a foundation of strong fiscal management. There are effective management practices in the creation and monitor of an operational budget. An effective management practice is to link budget development to corporate strategy. When the budget is linked to the overall corporate strategy, managers and employees can get a clearer picture of the company's strategic goals. Capital management aligns an organization's long-range strategic, financial, and related operating plans (Nugent, 2001). Obtaining employee buy in leads to the coordination of support for organizational goals, leading to strong fiscal performance. Effective communication between departments ensures a same page mentality in budget development. Streamlining budget procedures reduces budget complexity. It allows management to collect budget...
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...Executive Summary This assignment outlines the practices of effective budget in two entirely different businesses and the importance of effective working capital management in a manufacturing company. The first part of this paper describe that how the budget is exercised in two businesses where one of the business operates in a static market place and another one business operates in a very dynamic environment. Traditional approach of budgeting and budgetary control is still widely used by most companies throughout the world despite of limitations but In current very fast innovative modern environment, traditional budgeting approach is not only budgeting model there are some effective alternatives budgeting models that business are using to fulfill the modern requirements of company’s strategy such as: activity based budgeting, zero based budgeting and beyond budgeting approaches. I describe each of budgeting method that how can such models help the modern company more efficiently with their budgeting and budgetary control. The second part of this paper describes how a working capital cycle plays an important role in a manufacturing business and how each of cycle can be improved individually such as inventory, trade debtors, trade creditors and cash to achieve optimal profit for the company. Budget and Budgeting “A budget is a plan which is expressed in financial and or more general quantitative terms that extends forward for a period into...
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...already captured a 23% market share in Europe, and is poised for further growth. Statoil has shown consistent growth over the past few years through its expanded operations and cost efficiency strategies, as is evident in their performance and activity ratios. Statoil has maintained a strong financial position and continue to generate solid cash flow. Management has demonstrating their ability to achieve strategic initiatives and have outlined plans to enhance profitability and capture a larger international market share in order to increase operating efficiencies. Statoil’s competitive position in the oil and gas industry will allow them to achieve strong growth moving forward, as they continue to build upon their recent successes. Their well-defined business model, growth initiatives, and efficient production processes indicate that they will continue to generate value. We suggest their stock for consideration in the Energy Fund Company Analysis Strategy and Growth The development of Statoil’s Technology and Projects unit in 2004 is indicative of the company’s commitment to increasing operating efficiencies through effective project development and execution of strategies. Statoil’s main plans for growth involve exploiting profitable options on Norwegian Continental Shelf and securing...
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...The need for an organization to keep accurate financial records is essential for the effective running of the business and as an indicator of performance and the economic health of the company. This can be achieved in one of two ways; the cash basis method or the accrual basis method. The former captures expenses at the time they are paid and revenues when payment for goods or services is received. This is perhaps more familiar to those without knowledge of generally accepted accounting principles, because it more closely resembles personal financial management. Although credit and other fiscal instruments are used in some cases by individuals in their personal matters, most people generally manage personal financial statements on a cash basis. This method is effective for an individual, or perhaps a very small business with a small number of accounts and minimal transactions to record. There are, however, a number of disadvantages with this method; chiefly among these is the difficulty it causes businesses in associating operating expenses to revenues. Cash flows alone do not accurately reflect the operating activities of the organizations, and “The accrual basis of accounting overcomes the chief limitation of the cash basis – a possible mismatch of revenue and expenses.” (Ristea, Doros, Ioanas, & Morega, 2010, p. 208). When employing the accrual basis of accounting, financial events are recorded at the time they occur. For example; when a service is rendered to a customer...
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...most important method for Nordstrom to collect its revenue. At the same time, Nordstrom also offers credits and debts to customers by his banks. In this case, we are trying to analysis Nordstrom’s financial statements and calculate few simple ratios to approach the performance of this company. The main point in our analysis is to figure out how Nordstrom is using its operating assets to get returning. a). ROE is used to measure the net profit in a period as a percentage of shareholder’s equity. In other word, ROE means how much net income we can get by using shareholders’ investment. ROE is more important than net income in dollar terms because ROE is a ratio. Ratio allowed analysts to compare companies’ performance over the period. In fact, the ratio can also help us compare companies in a different size or different industry. Net income in dollar terms is not widely used because this method is limited by companies’ different situations. b). ROE and RONA are both useful methods to determine a company’s performance. However, ROE and RONA measure a company’s performance in a different way. ROE considers entire company’s income, expenses and gain/loss of a company’s profit; RONA only consider a company’s net profit from operating activities. On the other hand, ROE calculates all returns which come from shareholder’s building of equity; RONA only calculates the operating assets and liabilities which don’t include the financing activities. The non-operating portion of ROE represents...
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...examine lean thinking methods and some alternative approaches to discovering the most effective process and best practices for efficiency across multiple layers of any organization as it transforms raw materials into a finished product. In addition, this paper will explore how senior level executives can deploy lean thinking systems across its operations and internal processes to drive end profits and increase margins for an organization. Through articles, research, and evaluating previous studies to define and determine the best lean thinking to produce a strong value oriented product or service that produces positive financial results. This in turn, will create an effective yet efficient atmosphere that is all encompassing benefiting the organization, consumers, and the environment in which the organization is apart of. Operational Effectiveness and Efficiency via Lean Thinking Introduction Due to turbulent economic times and stronger competitive forces in the market place, it has become increasingly harder for firms or organizations to operate effectively and efficiently in the era we live in today. For this reason, this paper weighs heavily on lean thinking systems to arrive at effective and efficient operations while still producing a value oriented product or service. Yet, this paper does deliver other mechanism to get to operational effectiveness for the overall organization. Therefore, this paper has presented a scale of importance of operating systems to present...
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...Risk-Based Inspection API RECOMMENDED PRACTICE 580 SECOND EDITION, NOVEMBER 2009 --``,,,,,``,,`,``,``,`````````,,-`-`,,`,,`,`,,`--- --``,,,,,``,,`,``,``,`````````,,-`-`,,`,,`,`,,`--- Risk-Based Inspection Downstream Segment --``,,,,,``,,`,``,``,`````````,,-`-`,,`,,`,`,,`--- API RECOMMENDED PRACTICE 580 SECOND EDITION, NOVEMBER 2009 Special Notes API publications necessarily address problems of a general nature. With respect to particular circumstances, local, state, and federal laws and regulations should be reviewed. API is not undertaking to meet the duties of employers, manufacturers, or suppliers to warn and properly train and equip their employees, and others exposed, concerning health and safety risks and precautions, nor undertaking their obligations under local, state, or federal laws. Information concerning safety and health risks and proper precautions with respect to particular materials and conditions should be obtained from the employer, the manufacturer or supplier of that material, or the material safety datasheet. Neither API nor any of API’s employees, subcontractors, consultants, or other assigns make any warranty or representation, either express or implied, with respect to the accuracy, completeness, or utility of the information contained herein, or assume any liability or responsibility for any use, or the results of such use, of any information or process disclosed in this publication, or represent that its used would...
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...Cost Allocation Definition¶ All of us have used cost allocation, the process of assigning common costs to ending inventory and cost of goods sold (COGS), as part of our Financial Services offerings since it is required by GAAP. Our goal has been to either reduce taxes or increase reported earnings, depending on our client's needs and circumstances. But what about cost allocation's other uses? Are we shortchanging our clients by not offering services in this area (usually referred to as cost or management accounting services)? Managers’ use cost allocation for a number of reasons. First and foremost, cost allocation provides a methodology for assigning overhead costs of various activities, usually support departments, to products or services being produced and/or sold allowing upper management to assess and analyze their profitability. By knowing what the true "cause-and-effect" relationship is, managers are able to more accurately assess the true cost of a product or service and determine if carrying certain products and/or services contributes to overall profitability given the demand for and price these products/services sell for. This is especially important as it pertains to both operational decisions (such as calculating the maximum price a firm can charge, especially for a "commodity" product, determining the maximum cost a firm is willing to pay to provide this product or service, and in making special order and transfer pricing decisions) and capital/long-term decisions...
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...Actions Introduction The first phase or the starting up of a new project in the life cycle of project management is the initiation phase. This is where the new project has definition…definition of its objectives, scope, purpose and deliverables to be produced. This is the most crucial phase because of the scope and hiring of a project team because only with a clearly defined scope and a suitably skilled team, can you ensure successful project. This is also the point of hiring the project team, setting up the project office and reviewing the project to gain approval so the next phase can begin (Project initiation phase, 2003). This paper will outline categories of project leadership tasks and present examples of actions/considerations for each category that needs to be performed and explanations of why the action is critical to initiating the project. In addition, this paper will apply the Ned Herrmann Model of thinking styles and describe the type of thinking style that would best fit with the delegated individual. Outline the categories of project leadership tasks and provide an example of actions and considerations for each category that would need to be performed. For each example, explain why the action is critical to initiating the project. The Initiation phase is the conceptualization point in the project or the project’s reason for being (Project management guideline, 2006). There are seven categories of project leader responsibilities…Align project with parent...
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...Inventory Management is a necessary Evil General Area: Supply Chain Management (SCM) Problem Area: Inventory Management a necessary Evil Ravi Kumar PGP/17/108 Email: ravik17@iimk.ac.in Indian Institute of Management, Kozhikode Abstract This article tries to explore how inventory management is one of the integral part of various business units in today’s business world. There are many modeling techniques available in Inventory management evolving very rapidly over a period of time, which can be used for performing different functions of meeting the customer satisfaction and helping the firms to achieve highly efficient SCM and in turn increase their profit margin. Not just that Inventory management systems have capability of meeting the uncertainty of demand by providing planned and effective way countering these uncertainties. This articles also discuss the critical point of inventory being a necessary evil i.e. with inventory firms have to bear certain cost but without it they can’t beat the demand uncertainties. The current models available however have discussed various issues related with the inventory management in real world but models are evolving to get rid of obsolescence and be competitive. There is lot of potential locked up in these models which can change the way managements make decisions in today’s world. Thus there is scope for applying systems thinking methodology this area and bring out synergies in different applications of Inventory management. Keywords:...
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...printers and imaging products. HP Company has been described as one of the most successful companies of the 20th Century. The reason why this company was so successful over such a long period of time may well lie in the management of its corporate culture ‘The HP Way’. The HP Way reflects the personal core values of Bill Hewlett and David Packard, and the translation of those values into a comprehensive set of operating practices, cultural norms, and business strategies (Collins, 2005). However, since the late 1990s, the company has been experiencing a new and different culture is emerging, ‘The New HP Way’. Today, many companies take the tenets of the HP way almost for granted but when first formulated, they were visionary. This report would briefly outline ‘The HP Way’ and ‘The New HP Way’ organisations which is a balance between profits for the owners and shareholders of the company and the rights, job security and working conditions of its employees. * Organisational Behaviour Effective communication & Leadership Behaviour The HP’s way of communicating was unusual and unique. A two-way communication was opened to everyone and allowed employees to share their thoughts each other including the President oh HP. This called the ‘open door’. In effective communication, the sender’s message is fully understood by the receiver. In order to gather rational feedbacks accurately, the senders and receiver should be able to communicate freely...
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...Management Accounting Assignment Activity-Based Costing (ABC) is a theory for cost management controlling. Activity based on the management aims to describe a company as a series of activities which are related to customers’ desires and costs. Activity-Based Costing is a process for calculating the cost of the activities of an organization. Activities within an organization are identified and an average cost is related to each activity. The total cost of a product is the sum of the total costs of activities required to produce the product. The cost of every activity for products is identified as (the average cost of the activity) * (the number of times the activity, which is required for that product). Cooper and Kaplan (1992) explained how Activity-Based Costing allows the very important distinction between resource usage and resource purchase. The difference is the unused capacity. Removal of this unused capacity allows costs to be decreased. Turney (1992) thought that the important non-temporal links between cost and company quality. He also explained how it is important between assets, resource drivers, activities, activity drivers, processes, company performance, cost drivers, and cost. Turney (1989) claimed that underlying Activity-Based Costing is type of an assumption that activities cost resources and products consume activities. Activities contain the establishing vendor relations, spending, paying out, setting up a machine, running the equipment, reorganizing...
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...Segment Reporting, Decentralization, and the Balanced Scorecard. A decentralized organization is when decision-making authority is spread throughout the organization rather than being confined to a few top executives. Most large corporations are forced to have some sort of decentralization, however some to a certain extent. There are highly centralized corporations that give lower-level managers very little decision-making ability. Then there are highly decentralized corporations that allow lower-level managers to have the freedom to make decisions. Being highly decentralized corporation has many advantages. It allows for the managers/employees to make decisions that have the most up-to-date information about daily operations. Top-Management doesn’t have to worry about making little decisions and can concentrate their efforts on other issues. Decentralizing allows for better customer service by having the people making decisions easily available. Also, giving the lower-level managers freedom to make decisions increases their motivation and job satisfaction leading to higher productivity and higher loyalty to the company. However, there are some disadvantages to decentralized organizations. Lower-level managers may not make the best decision when it comes to looking at the whole picture. Also, something that might be good for the manager might be bad for the company as a whole, and vice versa, which could cause bad decisions. To combat these disadvantages, decentralized...
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...13 | 6. | SUPERVISER CERTIFICATE | 14 | 7. | STUDENT DECLARATION | 15 | CONTENTS INTRODUCTION 1.1CONCEPT OF WORKING CAPITAL The term working capital is used to mean that proportion of working capital of a business which is employed in short Term or current operations. There are two type of working capital: gross and net. Gross working capital is the sum total of all current asset, while net working capital is the difference between current asset and current liabilities. IMPORTANCE OF WORKING CAPITAL * The business can avail the advantages of cash discount facilities offered by its supplier. * It creates a sense of security and confidence in the management of officials of the company. * It enhances the liquidity, solvency, creditworthiness and reputation of the firm. * It increases operating efficiency of fixed assets because of their proper maintenance. * It...
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