Finance for Strategic Managers

Finance for Strategic
Managers
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TABLE OF CONTENTS
Introduction......................................................................................................................................3
Activity 1.........................................................................................................................................3
1. Assessment of why financial information is needed in business.............................................3
2. Business risks related to financial decisions............................................................................4
3. Summary of the financial information needed to make strategic business decisions..............5
ACTIVITY 2....................................................................................................................................5
1. Purpose, structure and content of published accounts.............................................................5
2. Interpretation of the financial information in these accounts..................................................7
3. Ratio Calculation.....................................................................................................................8
Activity 3.........................................................................................................................................9
1. Long and short-term financial requirements for businesses....................................................9
2. Sources of finance....................................................................................................................9
3. Cash flow management technique.........................................................................................10
ACTIVITY 4..................................................................................................................................10
1. Various business ownership structure, roles and accountability of owners and managers in
decision making.........................................................................................................................10
2. Evaluating methods for appraisal of strategic capital or investment projects.......................11
CONCLUSION .............................................................................................................................11
REFERENCES..............................................................................................................................12
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INTRODUCTION
Looking at the competitive environment of current corporate market managers have
various responsibility regarding carrying out the operations. In particular finance managers play
crucial role because he/she have authority and responsibility regarding managing the inflow and
outflow of funds within the company so that desired results and outcomes can be generated
(Duffy, 2000). Herein, researcher has undertaken the case of healthcare organisation which
requires proper management of money so that proper medical services can be given to the
patients. Therefore, investigator focuses on evaluating the need of financial information within
the NHS along with this, its financial position has been evaluated on the basis of ratio analysis.
Further, variance between short and long term economic requirement of business is illustrated
with the help of different cash flow management tools and their significances. Lastly, ownership
structure of structure and accountability of managerial level people in making decisions has been
understood and viability of project is computed through the capital budgeting techniques.
ACTIVITY 1
1. Assessment of why financial information is needed in business
To carry out the operations of business, varied information is required and especially
financial information so that managers can make smart and effective decisions. Following are the
financial information required by the managers of NHS:
 Raise finance: The main purpose of gathering information related to economic prospects
is to evaluate the need of funds or money within the NHS. Further, it assist in analysing
the current position of NHS and if required managers can take potential measures
accordingly (Guzman, 2015).
 Supportive investment decisions: having adequate and proper financial information leads
to assist the managerial people to make smart and effective investment decisions.
However, it is because, for investing the fund managers should identify the position of
available funds which can be done only by assessing financial information.
 Setting and meeting targets: On the basis of current financial position, managers of NHS
set the future targets of business and accordingly employ the strategies to accomplish the
goals (Kaplan and Atkinson, 2015).
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 Managing risks: NHS being of the biggest healthcare system in UK, needs to manage its
risks and uncertainties in every department. Thus, managers requires proper financial
information to manage all the risks associated with funding because without proper funds
NHS will be unable to provide superior quality of medical services to its patients. In
addition to it, to overcome technological failures and financial shortage as well as to meet
needs of changing environment, managers requires proper information (Ryan, 2009).
 Satisfying external and internal needs: In context to NHS, managers need such
information because it helps in satisfying internal and external need of business i.e.
employees, shareholders, suppliers, creditors, customers etc.
2. Business risks related to financial decisions
There are several risks and uncertainties associated with the NHS and it may directly
hamper the decisions related financial position. Thus, managerial level people require adequate
and accurate internal and external information to support their decisions so that hurdles and
hindrance can be avoided or mitigated.
 Market risk: In decision making process, market risk is considered as the most because
constantly changing environment of corporate world, companies facing various risks
associated with it (Kevin and et. al, 2010). Further, NHS managers required to assess the
conditions of market appropriately so that they minimize the effect of risk on services and
operations.
 Operational risk: It is considered as the most common risk in all because it is an
influencing risk that hampers the financial decisions of NHS managers. It is linked to the
internal process of the hospital functioning (Ryan, 2009). Present of such risk may affect
the course of services offered to the patients as well as create obstacle in growth and
development of certain departments of NHS.
 Compliance risk: There are various law and regulations that NHS has to comply in terms
of operating smoothly within the market. However, change in policies or regulations like
trade policies, health and safety regulations, taxation policy etc. may impact on the
financial decision of business (Schuster, 2007).
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