Finance in Management and Leadership Assignment

FINANCE IN MANAGEMENT
AND LEADERSHIP

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Which users are interested in receiving financial information’s contains stakeholder map. .1
TASK 2............................................................................................................................................3
Financial data and information required for decision making in the contemporary organisation
................................................................................................................................................3
TASK 3............................................................................................................................................4
Different type of financial data and information required for decision making.....................4
TASK 4............................................................................................................................................6
Evaluation and comparison of data using financial statements subject to stakeholder’s
perspective..............................................................................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Financial management is said to be an efficient and effective administration of capital. It
will assist an organisation to accomplish the objectives which are set for the period of time.
While, financial leadership helps to guiding a non-profitable firm to attain future sustainability.
Both management and leader is held responsible for all financial aspects of an organisation and
plan to increase profitability of the company (Brigham and Houston, 2012). In this report,
leadership and management concept is structured according to financial perspective. 3M
organisation which is a science based technology company engaging in emphasising the lives of
communities and business operations in right way. A critical discussion is being provided
regarding communication with 3M stakeholders. Various types of financial data are being taken
in context to the chosen organisation. Apart from this, comparison with types of financial
statements those are prepared by 3M is also being mentioned under this report.
TASK 1
Which users are interested in receiving financial information’s contains stakeholder map
There are two type of main users as internal users and external users remain interested to
get financial information of organisation. The information related to financial operations remains
essential for both the users, Internal users which are also considered as managers and
accountants use accounting information for making effective decisions policies and plans
associated with the organisation's operations and management. For managers it is required to
analyse the financial information to evaluate performance in finance terms. It is analysed
whether the financial resources are being used in proper manner or utilised at required area.
External users contain owners, creditors, lenders, investors, government, general public
of organisation. These stakeholders do not take interest in internal operations and management.
The financial information related to return on investment, profitability and market share,
financial position in terms of assets, long term debts, equities and shareholders’ funds are the
main information’s important for external users. Investors are the most common external users of
financial statements. Both credit and equity investors make and assess their investment decision
through using relevant financial data of the company.
Stakeholders' map of 3M company
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Stakeholders mapping is said to be collaborative process of research, debate and
discussion that are made from multiple perspectives in order to determine a key list of
stakeholders across the entire stakeholder’s range. It is categories into various parts:
Identifying: Under this particular stage company need to determine who are the primary
stakeholders of 3M company. Such as:
 Owner: It consists of investors, shareholders, rating agencies and so on.
 Customers: Under this, direct and indirect customers and legal advocates.
 Employees: Present and potential employees, retirees and representatives of the
company.
 Industry: It consists of suppliers, competitors and industries opinion leaders.
Analysing: Once an individual identified proper lists of stakeholders, it is helpful to do further
analysis to better examination of their relevance and perspective they offer to the company. 3M
has developed complete lists of specific criteria to assist individual to determine stakeholders
such as:
 Contribution: All the stakeholders of 3M company is having information on the issues
that could be helpful to the company is being analyse effectively.
 Legitimacy: Position in organisation is primary surest avenues to power. It is related with
the follower’s beliefs that higher authority is having right to influence person and has an
obligation to deal with the decision made by the top management.
 Willingness to engage: It means that how stakeholders of 3M is willingly coordinating
with the decision making or policy formulation they are associated with the company
(Molina and Preve, 2012).
Mapping: Under this stakeholder is a visual exercise and evaluation tool that can use to
determine which stakeholders are most useful to engaged with the decision making within the
department. By this, it can easy to analyse where stakeholder stand in the complex situations. It
is basically done to examine the key stakeholders which is giving maximum attention in overall
growth of the company.
Prioritizing stakeholders: It has been seen that usually, it is not essential to engage with all
stakeholder’s groups with the same level of intensity of the time. it can save time and cost in
case, company can determine clearly regarding whom they are engaging with and why within an
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organisation. A specific action can be taken by the company through closely analyse the
stakeholder’s issues and decide whether they are material to company engagement aims.
TASK 2
Financial data and information required for decision making in the contemporary organisation
Financial information is communicated with different stakeholders of organisation to
analyse the actual performance and position within organisation. Financial information is
communicating to both the internal stake holders and external stakeholders.
For internal stakeholders
A clear reporting structure is followed by organisation in terms of addressing the
financial information correctly and properly. A clearing reporting standard assist to deliver the
information and details to stakeholders effectively and efficiently (Allen, Hemming and Potter,
2013). In internal stakeholder group board of directors, management and leadership team are the
main elements used financial information for making financial plans and strategies. For effective
strategic planning and decision making type of information remains important like performance
data and evaluation reports, innovation and technological development report, revised mission
and vision statement. This information’s are communicated among 3M's stakeholders as follows
 In the form of statutory reports and disclosure documents
 By releasing the annual prospectus or annual reports
 Through sustainability report and transcription data
 Managerial reports contain the information related to annual team performance chart,
targeted groups and annual spending upon innovation and development.
 Financial KPI (Key Performance Indicators) are used for explaining the reports and
information in summarised way. For instance, information related to use of liquid assets
is presented in particular format which is called as cash flow statement.
 A management dashboard is to be prepared to categorise the financial information in
more effective and better manner.
 Financial information isolated according to particular financial period.
 Infographic, graphical representation and pictures are some convenient methods to
addressing the financial information to internal stakeholders.
For external stakeholders
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For external stakeholders it is important to determine the value of investment at present.
Stakeholders, Investors, bankers and financial institutions, owners, lenders and customers seeks
for better returns and consideration in exchange of their investments contributed with in
organisation (Cole, 2013). Financial information related to returns, interest, dividend payout,
market share and current market price of share are some key information executed as per the
guidelines given by GAAP (Generally Accepted Accounting Principles). It is important for long
term growth and development of organisation by considering these financial information and
details.
3M company is one of the wider organisation provides vital technological and research
services to different communities. The communication of financial information for 3M is
categorised as follows;
Banks: Type of financial credits are provided by banks and financial institutions. Data
related to flow of cash is the main information related important for banks that is produced in the
form of cash flow statement.
Investors: For investors it is important to determine the income and profitability of
organisation in terms of managing the operations and management of business. Income statement
as per guidelines of GAAP.
Strategic partners: A strategic partner are required to determine the resources which
remain essential for determining the resources for communicating this information. Certain
financial report such as inventory, account receivable job costing reports are important resources
for the partners.
TASK 3
Different type of financial data and information required for decision making
There are various kind of information which is provided in the form of income statement,
financial position statement and cash flow statement (Martin, 2016). These information plays
vital role in terms of making the decision and effective plans for better growth and development.
A sustainable success and growth of organisation based upon effective strategic decision plans
and policies. A proper management and control is done by analysing the requirements of
resources for addressing the task and projects. There is type of financial statements produce
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information which assist the decision making (De Santis, 2014). The financial results are
discussed below which assist the decision makings for better development and growth of 3M.
Sales results: As per sales figures received in the last of the 2016 year presents the
following information reading sales turnover. As per above analysis of sales results following
results come across as $29.9 billion were received in 2012, 30.09 billion for the year 2013, $31.8
for the year 2014, $30.3 billion for the year 2015 and $30.1 billion for the year of 2016.
theseThese figures indicates towards ups and down for in sales turnover. Sales got decreased
form the last year and it is tried to attain the desired target by sales managers for developing the
plans and strategies. More over this information remain are important to build a strong base for
stakeholders and suppliers. Preparing budgets like sales, production for future and cost cutting
decision those are affecting the profitability of the company.
Cash dividend reports: theThe cash dividend report presents following result like $2.36
billion cash dividend paid by 3M in 2012, $2.54 million pain in 2013, $3.42 in 2014, $4.10 in
2015 and $4.44 for 2016. Global environment will continue is becoming change and effective
plans are considered for better growth and development. Decision related with dividend which
will be paid to the stakeholder can easily be analyse by the company.
Summarised final financial information used in decision making
The overall analysis mainly associated with earning per share $8.16 +7.7% year over
year, organic local currency sales growth worldwide analysed as -0.1% year over year, return on
capital recorded as 22.6%. Free cash flow conversion indicts towards net flow conversion as
104%. There is a fluctuation recorded of 24% shows operating income margin with +1.1
percentage points year over year. -1.2% impact of currency on worldwide sales are required.
Impact of acquisitions net of divestitures on worldwide sales are considered in this context. A
proper analysis is required in terms of managing the investment in capital expenditure are
considered as $1.4 billion. Local currency growth is evaluated as safety and graphics as +2.2%,
health care +3.5%, Electronics and energy -7.5%, consumer +1.9% and united states 0.5%. Asia
pacific -2.8%. This mainly associated with managing plans and strategies. In order to make
necessary decision to make future planning for increasing efficiency and profitability for 3M
company. These statements are helpful in forecasting budgets, preparation of cash flows as well
as controlling expenses of the company (Financial accounting, 2018).
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TASK 4
Evaluation and comparison of data using financial statements subject to stakeholder’s
perspective
Income statement: As per income statement of organisation $30109000 for the year
2016, $30274000 for the year 2015 and 31821000 for the year 2014. The gross profit for the year
was calculated as $15069000 and $14931000 in 2016 and 2015 respectively. It is summarised
that the managers are required to analyse the financial statement as research development
$6567000, for managing the business the operating expenses. The research and development are
required to operate the business operations in major forms (Titley, 2013). Income from
continuing operations are mainly associated with analysing the total expenses as earnings before
taxes. Net income from continuing ops are the main aspects in terms of managing the developing
the business. Basically, financial manager used to consider two of the best techniques such as
cash receipts and accrual techniques. These two techniques are primarily helpful for the investors
as well as owner to make future investment decision.
Revenue 12/31/2016 12/31/2015
Total Revenue 30109000 30274000
Cost of Revenue 15040000 15343000
Gross Profit 15069000 14931000
Operating Expenses
Research Development 1735000 1751000
Selling General and Administrative 6222000 6167000
Total Operating Expenses 22997000 23261000
Operating Income or Loss 7112000 7013000
Income from Continuing Operations
Total Other Income/Expenses Net -59000 -190000
Earnings Before Interest and Taxes 7112000 7013000
Interest Expense -199000 -149000
Income Before Tax 7053000 6823000
Income Tax Expense 1995000 1982000
Minority Interest 45000 39000
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Net Income From Continuing Ops 5058000 4841000
Non-recurring Events
Net Income
Net Income 5050000 4833000
Net Income Applicable To Common Shares 5050000 4833000
Cash flow statement: The cash flow from operations was recorded as $6662000 for the
year 2016 and $64200000 for the year 2015. For decision making perspective it is required to
analyse the aspects of capital expenditure to be utilised in future (Girvin and Murphy, 2013).
Cash flow from investing activity present the figures and data related to investment done in near
future. Cash flow from investing activity is evaluated as -$14030000 for the year 2016 and -
$2817000 for the year 2015. cash flow from financing activity is calculated as -$46260000 in
2016 and -$36480000 for the year 2015.As, cash flow statements are prepared by the taking only
cash related amount from various activity so by taking only cash receipts techniques they can
present this to the creditors and banks to analyse the follow of cash.
Balance sheet statement: Total current assets was calculated as $11726000 for the year
2016 and $10986000 for the year 2015. Total fixed assets are considered as $329060000 for the
year 2016 and $32883000 for the year 2015. In this, accountant used to use accrual or working
capital management techniques to prepare balance sheet of the company. This will be shown to
the financial investors and other financial institution for the purpose of raising funds.
Period Ending 12/31/2016 12/31/2015
Current Assets
Cash And Cash Equivalents 2398000 1798000
Short Term Investments 280000 118000
Net Receivables 4501000 4260000
Inventory 3385000 3518000
Other Current Assets 341000 211000
Total Current Assets 11726000 10986000
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Long Term Investments 153000 150000
Property Plant and Equipment 8516000 8515000
Goodwill 9166000 9249000
Intangible Assets 2320000 2601000
Other Assets 1025000 1382000
Deferred Long Term Asset
Charges 422000 675000
Total Assets 32906000 32883000
Current Liabilities
Accounts Payable 1798000 1694000
Short/Current Long Term Debt 11695000 10844000
Other Current Liabilities 1844000 1873000
Total Current Liabilities 6219000 7118000
Long Term Debt 10678000 8754000
Other Liabilities 5621000 5497000
Minority Interest 45000 39000
Total Liabilities 22563000 21415000
Change in equity position statements: Change in equity present net tangible assets as -
1188000 for the tear 2016 and -4210000 for the year 2015.
CONCLUSION
The above report summarises the information which remain related to stakeholder’s
perspective. There is an evaluation of financial information from stakeholder’s perspective in
above report. There is a use of type of financial statements for making decisions and financial
plans are also summarised in this report.
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REFERENCES
Books and Journals:
Allen, R., Hemming, R. and Potter, B. eds., 2013. The international handbook of public financial
management. Springer.
Brigham, E. F. and Houston, J. F., 2012. Fundamentals of financial management. Cengage
Learning.
Cole, R. A., 2013. What do we know about the capital structure of privately held US firms?
Evidence from the surveys of small business finance. Financial Management. 42(4).
pp.777-813.
De Santis, R. A., 2014. The euro area sovereign debt crisis: Identifying flight-to-liquidity and the
spillover mechanisms. Journal of Empirical Finance. 26. pp.150-170.
Girvin, B. and Murphy, G. eds., 2013. Continuity, change and crisis in contemporary Ireland.
Routledge.
Martin, L. L., 2016. Financial management for human service administrators. Waveland Press.
Molina, C. A. and Preve, L. A., 2012. An empirical analysis of the effect of financial distress on
trade credit. Financial Management. 41(1). pp.187-205.
Titley, G., 2013. Budgetjam! A communications intervention in the political-economic crisis in
Ireland. Journalism. 14(2), pp.292-306.
Winand, M., Zintz, T. and Scheerder, J., 2012. A financial management tool for sport federations.
Sport, business and management: an international journal. 2(3). pp.225-240.
Online
Financial accounting, 2018. [Online]. Available through: <
https://thismatter.com/money/tax/accounting-methods.html>.
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