Assignment: Finance for Strategic Manager

Added on - 03 Dec 2019

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Finance for StrategicManager1
TABLE OF CONTENTSINTRODUCTION.....................................................................................................................................1ACTIVITY 1..............................................................................................................................................11. Assessment of needs for financial information in business..........................................................12. Risk related to business and financial decisions...........................................................................23. Summarizing financial information which are needs to make strategic business decisions.........3ACTIVITY 2..............................................................................................................................................41. Purpose, structure and content of published accounts...................................................................42. Interpretation of financial statements............................................................................................53. Analysis of financial ratios for strategic decision making............................................................5ACTIVITY 3..............................................................................................................................................71. Distinguishing long term and short term financial requirements for business..............................72. Comparison of long term and short term sources of finance........................................................73. Importance of cash flow management and its techniques.............................................................8ACTIVITY 41 Analysis of corporate governance, legal and regulatory requirements....................92. Evaluating methods for appraising strategic capital or investment project.................................10CONCLUSION........................................................................................................................................11REFERENCES.........................................................................................................................................122
INTRODUCTIONFinance is the life blood of an organization which plays a significant role in achievingorganizational goals and objectives. Financial information enables the finance manager of thecompany to make effective and appropriate decisions. Financial strategists frame competentpolicies and strategies which provides assistance in making proper utilization of financialresources. It provides benefit to the company in increasing organizational productivity andprofitability (Hershey, Austin and Gutierrez, 2015). For this project report, Morrison is selectedwhich is the fourth largest chain of supermarket in UK. This report depicts financial informationneed in business environment. Besides this, it also states assessment of business risk whichclosely affects the financial decisions of the company. This project report also presents financialstatements of the company and indicates financial health and performance of the organization.Besides this, it indicates importance of cash flow management techniques which helps the firmin attaining success in the dynamic business environment.ACTIVITY 11. Assessment of needs for financial information in businessEvery business organization prepares financial statement which provides valuableinformation regarding financial health and performance of the company. To build and maintainfaith of various stakeholders company is required to prepare and publish financial statement ofthe company. Financial information is the essence of business decision making which enables thefinance manager to make appropriate decisions and there by helps in achieving success.Financial information assists the finance manager to make proper usage of fund with the help ofsuitable policies and strategies. Several users of financial information or statement are asfollows:Manager:Manager of Morrison requires financial statements to make strategic policiesand decisions which ensures smooth operations of business activities (Brown and et.al,2014). Through this, company is able to assess its financial health and performance as ithelps in making effective judgments.Shareholders:Shareholders also are the owner of the company so they are highlyconcerned with organizational growth and performance. They usually invest money toearn extra income in the form of dividend. Shareholders of Morrison make use offinancial statements to assess risk and return factor before investing money.3
Customers:They also evaluate financial statements to identify that company has theability or not to make arrangements in relation to regular supply of goods. Sometimescustomers are highly dependent on specific supplier for product.Suppliers:Suppliers are the main user of financial statements which helps them inassessing credit worthiness of the company. It enables them to make suitable decision inrelation to whether he needs to supply goods to Morrison on credit basis or not. Betterfinancial performance ensures them that, company is able to make credit payment withina definite period of time.Competitors:Competitors undertakes financial statement or information to compare itsoverall performance with rivals companies (Graham, Harvey and Puri, 2015). It enablescompetitors to learn competencies and strategies which aid in building competitiveadvantage in the strategic business environment.Government:Tax is one of the majorincome sources of the government. It makes analysis of financial statements of the firmto assess appropriate tax amount as well as to ensure that company operates their businessactivities more ethically (Users of Financial Statements.2015).2. Risk related to business and financial decisionsRisk is the factor which closely impacts business activities, performance and productivityof the company. Business risk enforces huge problem in front the finance manager and Morrisonas well. There are several risk factors which affects financial and business decisions of thecompany because they are closely related to the profitability aspects of the firm.Changing needsand wants of customers imposes high business risk in front of Morrison.Customer is a wantedanimal and their needs and wants never comes to an end. Besides this, their like and dislikes arecontinuously changing which impose problem in front of Morrison.Thus, in order to reduce suchbusiness risk firmneeds to undertake research and development activity to identify consumerlikes and dislikes which further affects financial decision of the company.Along with the micro economical factors economic conditions such as recession ordeflation are also the subject of high business risk.Macroeconomic or market conditions suchas recession also affects business decision of Morrison. During recession, purchasing power ofthe customers decreased so to attract more customers Morrison offered high discount to theircustomers (Valentin and Mihaela–Andreea, 2015). In addition to this, it also made investment inpromotional activities to attract both existing and potential customer base due to presence of high4
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