Corporate Financial Management: Time, Risks and Returns

Corporate Financial Management 1
Corporate Financial Management
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Corporate Financial Management 2
CORPORATE FINANCIAL MANAGEMENT
Introduction
Too often corporate financial management documentaries concentrate on various
crunching issues of investments. Usually, in practice, the numbers side of things is peripheral at
best, probably of a lesser effect than the strategic problems of the investment decisions. Now,
just like the activity-based cost, it is all too simple to concentrate on the monetary aspects to the
exclusion of the non- financial factors (Gallery and Palm 2011). Therefore, to be a successful
employee in all theses perhaps misleading factors and adopt the classification related to activity
based cost, a new strand emerges: Time, Risks, Returns and consequently quality. This paper
focuses or examines the assessment of financial decisions concerning two of the itemized strands
above; that is Time and Risks.
Time
The lead time to investment implementation is usually one of the variables to which the
investment outcomes are most sensitive. In this context, the tertiary sector employees should of
course estimate or calculate both the probability of delays as part of the risk management
strategy and the financial effect as an integral part of the assessment of the sensitivity of the final
returns (Brigham et al. 2016). There may exist the scope for varying the order in which the super
fund is assessed or the amount of the superannuation contributions into the defined benefit plan.
Either way, one must know all the investments opportunities available and be aware of their
costs and long and long-term benefits. Various techniques like the critical path analysis are very
essential for assisting an individual’s choices concerning the timing and the related value of the
super fund.

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These assessments and the techniques may be used to minimize the risks attached to a
superannuation investment while quantifying the range or the extent of the increased
involvement. The most familiar form of individual scheduling challenge, for the tertiary sector
employees, is the job scheduling. Financial scholars and professionals are frequently involved in
the identification of the most profitable investment choices (Chandra 2011). They are bound to
appreciate and fully understand how monetary value fluctuates over time. The time value of
money is, therefore an integral concept for the financial planners, accountants, business
managers and consequently the employees to know because its utilization ore application will
provide them a more transparent image of how to invest money and develop their companies
(Gallery and Palm 2011). The time value is a significant aspect of finance, stating that the
resources like for example, money existing at present may be worth more than the very same
amount in the future. This is founded on the notion of potential earning capacity (Brealey et al.
2012). The fundamental aspect of this notion is that money can accrue and earn interest and
increase in value over time, thus, it poses a more significant profit in the present. Some
professionals also argue that it is financially beneficial for an individual to have a certain amount
of money and spend it the very same time, since things like inflation, devaluations or even the
stock market crash may reduce the purchasing power of the same amount in the future. Time
value aspects apply to all segments of financial management and can probably be consulted
during the determination of capital budgeting techniques, bond and stock valuation, leaning,
financial vehicle analysis, investments and cost of capital (Black and Kirkwood 2010). Time and
again the need for investment decisions is to attain the long-term goals of either the firm or the

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workers, preserving a share of a specific market and to maintain leadership in some economic
activity.
In many occasions or situations, professionals like for example the accountants; use the
time value of money when undertaking some critical investments choices and even the budgeting
decisions. In times of enormous share market volatility, it may seem inappropriate for an
employee to put his or her superannuation contributions in the minimal risk options to try to
reduce loses over the short term. However, such reactions to short-term possibilities may
significantly decrease the employees' super fund balance over the long term (Zhang and Zhu
2009). Therefore, when monitoring any investment performance, it is essential to take into
consideration that switching between options from time to time may not yield more returns in the
long run. Similarly, before changing your investment choices and options or how you invest your
superannuation contributions, it is critical for a person to ensure that he or she fully comprehend
the range of investment options available, the time frame allocation for that particular investment
and subsequently the ultimate impact of changing the investment option.
How Time affects return and risks
Time is the very fundamental role player when it comes to investments. Usually, as a
standard rule, it can be said that it is your time in the market, but not your timing of the market.
With that said the most significant opportunities to maximize the potential resources to achieve
superior long-term returns lies in the aforementioned fact. For instance, when an employee or an
individual invests his or her superannuation contributions in a defined benefit plan, he or she is
making a long-term investment (Aebi and Schmid 2012). This denotes that the short-term decline
in the value of their investments may not have a significant effect on the balance over time-based