...Lesson # 1 Financial Management: Introductory Notes and Words Concepts of Finance and Financial Management Financial Management refers to the proper management of finance functions of an enterprise or organization. In other words, financial management is concerned with the financial decision-making and other financial aspects. Thus, financial management involves financial planning, financial organization, financial coordination and control, financial reporting, financial mergers, combinations and acquisitions, insurance and tax management etc. Financial planning is concerned with the act of deciding in advance the financial activities that are essential if the enterprises are to achieve their financial goals and objectives. These financial activities mainly consist of properly estimating financial needs; selecting the proper sources of finances; procuring the requisite funds; proper utilization of the funds and custody and safekeeping of funds. Financial organization is the grouping of the finance functions into various divisions, departments, sections and sub-sections of the enterprises for their proper and efficient performance. That is, financial organization deals with the proper allocation of the finance functions amongst the various financial executives. Financial coordination and control deal with the proper adjustment of the finance function and evaluation of the same in relation to the predetermined standards. Financial reporting is the proper collection and...
Words: 2347 - Pages: 10
...Financial Management Is the process of managing the financial resources, including accounting and financial reporting, budgeting, collecting accounts receivable, risk management. Three areas of Financial Management: First is.. Personal Financial Management is mandatory in today’s world. It provides the means of keeping track of personal expenses, personal debt and subsequently helps the calculation of a person's net worth financially. The following are some of the tools used for personal financial management: Expense sheet: Preparation of expense sheet is the key to personal financial management. If one is left with no savings at the end of the month, then the best way to curb the situation is to prepare an expense sheet or make a budget plan. The expense sheet includes the following elements: 1. Calculation of income level: This is the sum of the post tax income or disposable income, spouse's income, investment income, rental income and other sources of income if any like alimony. 2. Calculation of expenses: Expenses on grocery, medical help, house help, laundry, basic amenities, phone, mobile, transportation and cable add up to household expenses. Lifestyle expenses include expenses on books, newspaper, clothing, personal care, entertainment, travel, holiday, eating out, and club or gym membership. Fixed expenses include expenses on house rent, children's fees, home loan, auto loan installments, other loan installments andinsurance premium...
Words: 556 - Pages: 3
...AC108 Lecture 1 Introduction to Cost and management Accounting Accounting is divided into two parts: (i) Financial Accounting (ii) Cost and Management Accounting Financial Accounting is concerned with preparing financial reports, for External users/Stakeholders . Egs of such reports are Statement of P&L and other Comprehensive income, Statement of changes in equity, SOFP, Statement of Cash Flows, etc based on transactions during a past financial period. External Users/ Stakeholders include: shareholders/owners, lenders, tax authorities, regulators and others. Anyone who has a vested interest in the business is a stakeholder: customers, suppliers, employees, and communities. Financial Accounting reports follow a common base line in order for them to be comparable to users: GAAP, and IFRS. Cost and Management Accounting Cost accounting is central to management accounting. According to Kohler it is: ‘…That branch of accounting which deals with the classification, recording, allocation, summarisation and reporting of current and prospective costs.’(Kohler). Cost accounting is concerned with setting up budgets, and determining the actual cost of operations, processes, departments or products and the analysis of variances and profitability. Managers use cost accounting in order to support their decisions whose general aim is to cut costs and improve profits. Cost and management accounting reports are for internal use of the business for taking future decisions and...
Words: 445 - Pages: 2
...Financial and Managerial accounting are used for making sound financial decisions about an organization. They provide information of past quantitative financial activities and are useful in making future economic decisions. (Albrecht, Stice, Stice, & Skousen, 2002) The same financial data is used to derive reports for each accounting process yet they differ in some ways. Financial accounting primarily provides external reports for external users such as stock holders, creditors, regulating authority and others. (Garrison, Noreen, & Brewer, 2010) On the other hand Managerial accounting is concern with providing information that deals with the internal viability of the organization and is tailored to meet the needs of an individual organization. (Albrecht, Stice, Stice, & Skousen, 2002) Managerial Accounting addresses those aspects that relates to an individual organization return on investments (ROI). (Albrecht, Stice, Stice, & Skousen, 2002) A company’s profitability depends on periodic attention to its assets turnover and profit margin. This process is designed to support the de... ... middle of paper ... ...egulator or auditor is going to insist that a company implement a good management accounting system. (Garrison, Noreen, & Brewer, 2010) The choice of how to collect and utilize information in a company is strictly management’s decision and is a part of the company’s competitive strategy. Financial and Managerial accounting are used for making sound financial...
Words: 1819 - Pages: 8
...Financial Management means the efficient and effective management of money (funds) in such a manner as to accomplish the objectives of the organization. It is the specialized functions directly associated with the top management. The significance of this function is not only seen in the 'Line' but also in the capacity of 'Staff' in overall administration of a company. It has been defined differently by different experts in the field. It includes how to raise the capital, how to allocate it i.e. capital budgeting. Not only about long term budgeting but also how to allocate the short term resources like current assets. It also deals with the dividend policies of the share holders. Financial management has emerged as a distinct field of study only in the early part of this century, as a result of consolidation movement and formation of large enterprises. Its evolution may be divided into three phases. The Traditional phase, The Transitional phase and The Modern phase The Traditional Phase: This phase has lasted for about four decades. Its finest expression was shown in the scholarly work of Arthur S. Dewing, in his book tilted the Financial Policy of Corporation in 1920s. In this phase the focus of financial management was on four selected aspects. It treats the entire subject of finance from the outsider's point of view (investment banks, lenders, other) rather than the financial decision maker in the firm. It places much importance of corporation finance and too...
Words: 1366 - Pages: 6
...successive governments has been the creation of a ‘New Public Sector’, which is more strategic and corporate in its thinking. This ‘New Public Sector’ is intended to replace a public sector characterized by bureaucracy, professionalism and departmentalism. In this paper we take a specific look at the National Offender Management Service (NOMS) from an accounting perspective to shed light on the influence and changes involved of defining something as an accounting entity. We will look closer at and critically evaluate the issues involved in the representation of NOMS as an accounting entity. Furthermore, we will analyze the implications of the representation of NOMS as an accounting entity on definitions of organizational accountability. Therefore, we look in a next step which aspects of NOMS’ accountability are highlighted in the Accounts and what aspects are left out? Finally we examine what issues, items and risks are kept “off-balance sheet”? And what might be consequences of this. According to Hendrikson (1970) defining something as an accounting entity is to represent an area of interest, to make real and to circumscribe the objects and activities of which financial reports will speak. Therefore the concept of an economic or accounting entity assumes a more or less common agreement that something concrete, bounded and whole...
Words: 1384 - Pages: 6
... 5 6. Reference 6 Executive Summary This article is going to explain the reason for companies to present their sustainability behaviors and highlight the key feature of an effective sustainability report. Sustainability reports refer to disclose companies’ social and environmental performance. It is essential for the financial service industry to convey their sustainability profile and integrate this to their financial report. This article also makes an evaluation about Westpac’s sustainability report. Westpac’s sustainable reporting has used the table and bar chart to illustrate their sustainability performance accurate and transparent. Therefore, this report has a good quality. 1. Introduction Since the environmental and social problems have become the focus of public concern, a considerable of companies have laid emphasis on disclosing their sustainable performance. Especially under the great depression caused by global financial crisis, a number of financial service industries...
Words: 1561 - Pages: 7
...CUM PROCESSING: Its Impact to Regional Development” aims to explore the viability of producing soybeans in Isabela and processing the same for the consumption of region 02. Specifically, the study endeavors to: Present sufficient information and analyses on the five major aspects of the problem namely: Market, Technical, Financial, Organization and Management, and Socio-Economic implications. To ascertain the need for and viability of Soy Bean Production and Processing, the answer to the following questions were sought: a. Market Aspect 1)What are the benefits that can be derivedfrom the products? 2)What are the products to be produced? 3)Are the products produced competitive with other existing brands? 4)Is the production capacity of the productadequate for the market? 5)Are the products produced acceptable by theprospective market? b. Technical Aspect 1)Are there enough areas for plantingsoybeans? 2)Are the farmers technically knowledgeable inproducing soybeans? 3)Are there enough technologies and skills intheprocessing of soybeans? 4)Are the machineries and equipment readilyavailable for processing? c. Financial Aspect 1)Is there any financial assistance that canbe sought for this...
Words: 1515 - Pages: 7
...B1. Adequacy of Funds Finances are one of the most crucial parts of any business. Every business has to be aware of what type of resources, especially financial resources, it has available to work with. The financial aspect of a business determines almost every other aspect of that business. Being able to utilize budgets, in order to reduce costs and make profit, is imperative. Pro forma accounting is a way of using the budget to analyze what to expect in the future. This statement should be used to forecast any issues that might lie ahead. It also should be used to provide time to the company to make any necessary changes, before it is too late. By using budget and pro forma accounting any company should have a good understanding of what type of financial resources are available to them in order to cut costs and increase profits. During the simulation I initially did not pay too much attention to the budget or the pro forma accounting statements, which did not do me any favors. After reviewing the pro forma statement at the end of the first quarter, I should have made adjustments. The cash flow was lower than the recommended $300,000, so I reviewed my decisions, but did not want to change anything. Which inevitably put my company in a high risk situation right from the start. When the quarter was done and I was able to review the actions that had taken place, I realized I was way over budget and the simulation automatically set me up with a loan shark to help...
Words: 3406 - Pages: 14
...Management Planning for Tyco International, Inc By Robin Hoopes Takeaways managment planning Tyco International Tyco International's management planning affects every aspect of the business from employees to community. Management planning includes identifying what goals the company wants to accomplish. Legal issues and ethics also effect management. Many influences, external as well as internal, also affect the way Tyco does business. Applying Tyco's strategic, tactical, operational and contingency plans will help manage these outside and inside influences without disrupting the ongoing success of the business. Function of Management Tyco believes that governance, customers, growth, teamwork, operational excellence and financial strength will aid them in the success of the company. Governance will provide the company to put in place practices that encourage employees to ensure that the integrity of the company shows in the work and the distribution of the products (Tyco). Policies need to be put in place for employees that will tell exactly what is expected of them to maintain the image of the company. Without governance the company would not be able to make a clear statement to each of the employees about what is expected of them. Employees knowing what is expected of them will ensure the future success of the company. Tyco understands what the customer's wants and needs are. By providing their wants and needs and giving them the performance they expect will give...
Words: 1427 - Pages: 6
...Project Economics and Management Paper Code: 3.1 Unit-1 Concepts of projects; project identification; formulation, analysis, risk, planning, design, report and appraisal; location of an enterprise; factory design and layout. Unit-II Understanding financial analysis; ratio analysis; fund flow analysis; breakeven analysis; social cost-benefit analysis; budgeting and planning process. Unit-III Sources of development finance; institutional finance to entrepreneurs; working capital management; incentives and subsidies; policies governing entrepreneurship; role of a consultancy organization. Unit-IV A review of project performance; post evaluation approach; community participation in projects; SWOT analysis; managing risk and exposure. Suggested Readings: 1. 2. 3. 4. Note: 1. 2. Four case studies will be discussed in a paper by the concerned teacher in the class. Instructions for External Examiner: The question paper will have two sections. Section ‘A’ shall comprise eight questions (two questions from each unit). The candidates will be required to attempt four questions (selecting one question from each unit). Section ‘B’ will contain one CASE STUDY which will be compulsory. All five questions will carry equal marks. Chandra, P., Project Planning Analysis, Selection, Implementation and Review, Tata McGraw Hill, New Delhi. Hedemey, J.W., Control and Management of Capital Projects, John Wiley, New York. Wysocki, R.K., R. Bick and D. B. Crane, Effective Project Management, John Wiley and...
Words: 6873 - Pages: 28
...Planning (ERP) is one of the major issues the modern-day entrepreneurial world. This paper discusses ERP in details and extensively. The paper introduces ERP by giving background information, discusses the evolution of ERP systems, analyses the advantages and limitations of ERP systems, and concludes by giving a summary of the important aspects of ERP discussed. Enterprise resource planning in the global marketplace, advantages and limitations Introduction The entrepreneurial scene and global market have become more vibrant in the recent years, and for this reason, there have been debates and concerns on how enterprises and companies should enhance their competitiveness and agility. The greatest concern in the business world is profitability, and in accomplishing this, enterprises have put in place strategies and measures that gradually help make strides towards the desired direction. Another primary focus of enterprises is to see an improvement of their business agility and to accomplish this, enhancements have been made including efficiency of production, product and service quality, as well as response time to consumers. A fundamental aspect of the accomplishment of the mentioned enhancements and objectives is information technology. As much as its installation and implementation in enterprises is costly, the myriads of benefits that accompany it cannot be overlooked. Attention should be shifted from integrating information technology solely to into the automation of enterprises'...
Words: 3324 - Pages: 14
...Balanced Scorecard (BSC) 2.2 Objective 2.3 Design 2.4 Original design method 2.5 Improved design method 2.6 Popularity 2.7 Variants and alternatives CRITICAL ANALYSIS ON THE CONCEPT & USING OF BALANCED SCORECARD WHETHER IT IS THE UNIVERSAL SOLUTION FOR THE BUSINESS MANAGEMENT? 3.1 Crucial investigation of the concept and using of Balanced Scorecard 3.2 A comprehensive new approach for the measurement and management 3.3 Is the Balanced Scorecard a universal key to the business management? 3.4 Balanced Scorecard: a question of conjecture and application CHAPTER FOUR: THE SUSTAINABILITY OF THE BALANCED SCORECARD 4.1 The Balanced Scorecard: an instrument for sustainability management 4.2 Different possible approaches of integrating environmental and social aspects 4.3 The process of formulating a sustainability Balances Scorecard 4-7 5 5 5 6 7 8-15 9-11 12 12-13 13 14 14 14-15 16-25 CHAPTER TWO CHAPTER THREE 17-21 21-22 22-23 23-25 26-32 CHAPTER FOUR 27-28 28-30 31-32 1 A iti al a alysis of Bala ed “ o e a d as a pe fo a e easu e e t tool: a o e ie of its usage a d sustai a ility CHAPTER FIVE FINDINGS 5.1 Balanced Scorecard links the performance measurement for better business management and it is an universal solution 5.2 The sustainable Balanced Scorecard 5.3 Why sometimes BSC fails? 5.4...
Words: 10563 - Pages: 43
...Chapter 1 Introduction to Managerial Accounting Regardless of your major or intended career path, most of you will become managers one day. A manager has responsibility and control of selected parts of a company’s operations, or in some cases, multiple aspects of operations. Only those of you that happen to stay at the ‘bottom’ of a company, prefer never to get promoted, or never accept any responsibility for some aspect of a business, will miss the ‘management’ opportunity. Fortunately, none of you will likely fall into this persona given that you have taken the initiative to attend college. Understanding managerial accounting will help you move up the ladder more quickly, regardless of your chosen career path. How Can Managerial Accounting Help You? In any responsible business capacity, your boss and all other management levels above you will want to know how well you handle your responsibilities. To do so requires that they measure your performance. The evaluation process is similar to your perceptions in each college course in which you enroll. During your first class meeting in each course, one of your initial goals is to find out how your performance will be evaluated. In a business environment, you want to know what they expect, i.e., how they will measure your performance. While you won’t be earning letter grades in the business world, your performance will ultimately translate into promotions, bonuses, raises, reprimands, or perhaps dreaded walking...
Words: 2506 - Pages: 11
...Earnings management is an important aspect of a firm financial performance and valuation. In this article, Authors study earnings manipulation among corporate firm. He discusses (I) three income benchmarks managers tend to beat or exceeds at all costs; a) managers avoid negative to zero profit, b) earnings below prior period earnings, c) and earnings that fall below analysts’ forecast. Authors called these earnings benchmarks or earnings shortfalls. The article (II) develops two main tools that managers use (1) discretional income accruals and (2) non-operating income to manipulate their earnings. Authors discuss (III) some reasons that motive managers to engage in such practice and behaviors; for instance managers may inflate the firm’s real income to improve the market value of the firm, the stock price and its expected return. Managers may manipulate earnings to maximize their compensation, bonuses, stock options, or simply to secure their position. Others reasons managers mislead earnings is to maintain a loan or a line of credit from a financial institution and to distract and fool the beliefs of firm’s stakeholders as a whole that lead to deceive public trust. I- Managers Earnings Benchmarks In corporate organization especially, financial Managers’ main goal is to maximize shareholders’ firm value, to achieve their goal, managers make various analysis and financial decisions throughout many aspects of the company. One of the aspects is earnings management. In this...
Words: 430 - Pages: 2
