EBMA Level 8 Diploma in strategic Business Research and Leadership Direction
Unit Title: Strategic Financial Analysis and Planning

Table of Contents

Executive Summary 3

1.Critique and evaluate research ....... 4

2.Critically apply modern financial tools 6

3.Use main types of investment appraisal tools 8

4.Critically evaluate the importance of research 10

References 11

Executive Summary

The decision making of management is very crucial and involves various analysis to be performed. There are various ratios and methods that can be useful for mitigating the risks and increasing the expected returns with investments. The financial forecast is a mix of the behaviour, perception of management alongwith various techniques used for analysis of the different options available.

Critique and evaluate research in financial theory and apply that research for decision making process

1.1 Describe the economic theory of choice as an illustration under certainty.

The rational behind the economic theory of choice is to choose out of certain economic outcomes and representing the preferences through maximisation of the utility function of the outcomes.
As per the von Neumann-Morgenstern expected utility model (1953), which is the workhorse of recent economics, the choices are made by people, so as to get the maximum utility. These preferences are based on intuition, self interest, past experiences etc. The main idea is under certainty is that if the preferences are to satisfy certain axioms, and uncertainty is in excess of the certainties, then the preferences of the individual can be described over probability distribution over those outcomes. The utility numbers are assigned to every certain outcome possible, assuming that an individual chooses as if to get the maximum “expected