TABLE OF CONTENTS Introduction
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Added on 2019-12-03
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Financial Decisions TABLE OF CONTENTS introduction 1 task 1 1 Impact of three key resource decisions on organization’s performance and effectiveness and the risks that can occur from inadequate resources 1 Analyses financial statements of organization to determine its financial viability and financial recommendations 3 Strategies, tools to monitor and evaluate your organization’s intangible and tangible resources and appropriate techniques to assess how efficiently these are utilized 5 Importance of costs in pricing strategies and recommend improvements to organization’s existing costing system 7 Task 2 9 Evaluation of
TABLE OF CONTENTS Introduction
Added on 2019-12-03
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Financial Decisions
TABLE OF CONTENTSINTRODUCTION.........................................................................................................................1TASK 1...........................................................................................................................................1Impact of three key resource decisions on organization’s performance and effectiveness and therisks that can occur from inadequate resources...............................................................................1Analyses financial statements of organization to determine its financial viability and financialrecommendations.........................................................................................................................3Strategies, tools to monitor and evaluate your organization’s intangible and tangible resourcesand appropriate techniques to assess how efficiently these are utilized......................................5Importance of costs in pricing strategies and recommend improvements to organization’sexisting costing system................................................................................................................7TASK 2...........................................................................................................................................9Evaluation of investment appraisal techniques that can be used by organization.......................9Application of the relevant techniques to conduct an investment appraisal for ABC Ltd........11Identification and explanation of risks in international market and suggestion of strategies andtechniques to mitigate the identified risks.................................................................................13conclusion......................................................................................................................................16references.......................................................................................................................................17
LIST OF TABLESTable 1: Summery of financial information....................................................................................4Table 2: Financial statement analysis using financial ratios...........................................................4Table 3: Net Present Value of investment in France.....................................................................12Table 4: Net Present Value of investment in Switzerland.............................................................12
INTRODUCTIONFinancial decisions are also considered as the important functions for financial managerof an organization. It includes different decisions about investment, dividend and funds whichare required for the further growth of business operations. These decisions focus on theappropriate arrangement and allocation of funds. Including this, financial decisions plays animportant role in improving financial and non-financial performance of an organization (Ojha,Gianiodis and Manuj, 2013). The current research report is based on the financial decisions andregarding this, it has chosen Next PLC which is one of leading organizations of retail industry inUK. It is listed in London stock exchange and is a constituent of the FTSE 100 index. Reportdescribes about the impact of financial decisions on the organization performance. It will alsodetermine the financial viability of the company by analyzing financial statements of theorganization. Further, focus will also be given on the importance of cost and pricing strategiesfor an organization. Afterwards, research study will analyze a case of ABC clothingmanufacturing company for determining profitable investment option for the expansion ofbusiness in the international market. TASK 1Impact of three key resource decisions on organization’s performance and effectiveness and the risks that can occur from inadequate resourcesDecision making is one of the important process for every organization and it plays veryimportant role in effective performance of Next. For accomplishing different operations majorresources of company include financial, human and technical resources (Roxas and Chadee,2012). Decisions regarding these resources have positive as well as negative impacts on financialperformance of Next Plc.Financial resource decisionsThese decisions focusses on needs and requirements of funds in Next plc. So, financialresources decisions provide appropriate way to make arrangements of required financialresources. Along with this, decisions also shed lights on optimum allocation of funds on differentactivities of the company. Analysis of the financial decisions have reflected financial decisionsof Next PLC is very strong. Organization has sufficient financial resources for completingdifferent business operations of the company. Next adopts different resources such as bank loans,1 | P a g e
retained earnings, issue of shares, etc. all these financial resources are associated with differentmonetary cost which augments the total cost of the company. Increment in cost can decline theprofitability and net income of the organization (Siano, Kitchen, and Confetto, 2010). So,inappropriate selection of financial resources can decline financial performance of theorganization. But, on the other hand, appropriate selection of resources for funds help inincreasing the existing capital of the company which plays important role in attaining allbusiness opportunities of the organization. So, by all these effective decisions Next PLC canimprove its overall financial performance in all over the world (Singh, Jain andYadav, 2012). Human resource decisions:Personnel decisions are also included in the key resource decisions of Next. Thesedecisions focuses on the recruitment and selection of appropriate personnel, allocation of rolesand responsibility to every employee, etc. Human resource decisions have direct impact onindividual performance of every employee of the organization which have direct impact onorganizational performance. Sometimes, wrong decisions regarding labor can increasesunnecessary human cost of the organization which can reduce the total financial performance ofNext. Including this, HR policies, training and development program and workshops are alsoimportant decisions which play important role in improving skills and expertise of employee s bywhich they can augment individual as well as organizational performance of Next (Sihler andCrawford, 2004). In addition, Allocation of roles and responsibilities to different personnel isalso one of the important decision about personnel which can also affect the financialperformance of Next. So, organization needs to allocate roles and responsibilities as per theskills, knowledge and experience of every individual. It will improve the total outcomes of everyindividual which will lead improvement in overall performance of the firm (Haron and et.al,2011). Technical resource decisions:Every organization needs to invest specific amount of funds in technical resources whichimproves efficiency and productivity of Next. Technical decisions needs huge investment so,before investing huge funds organization needs to use appropriate investment appraisal methodsfor analyzing profitability (Pratt, 2013). Along with this, sometimes inappropriate decisions oftechnical investment increases unnecessary cost and burden on organization which decline the2 | P a g e
total performance and profitability of the firm. Along with this, technical resource decisionsimprove the quality of products and services of the organization which plays significant role inincreasing customer’s satisfaction which will also improve monetary performance of Next PLC. Risk that can occur from inadequate resources:Inadequate resources can create different types of risks for organization which havenegative impacts on financial performance of Next. Inadequacy of financial resources canincreases the operational risk for Next plc. Due to the lack of funds company cannot complete allbusiness operations in effective manner. It can affect production and operation process of thecompany which can directly affect the volume of finished goods. Therefore, inadequate financialresources negatively affect productivity and efficiency of the company. So, for mitigating thisfinancial risk Next PLC needs to obtain funds from different financial resources such as bankloans, leasing, hire purchase, sales of assets, issues of share and debenture, etc (Moeti and et.al,2007). All these resources will be effective for reducing the risk of inadequate financialresources. Inadequate human resources increases different types of risks such as attainment of goalsand objectives of the company. Due to lack of personnel, company cannot complete its all tasksand operations on time which can delay each and every project. It has negative impacts onhuman resource department of Next. So, for resolving this risk organization needs to makearrangements for appropriate recruitment and selection process which helps in hiring right personat right time for right place. Along with this, it also helps in reducing the personnel risk of Next(Vice, 2013).Inadequate technical resources has negative impact on quality and production of theorganization. Along with this, technical risk can reduce efficiency and proficiency of theproduction and operation process of the company. So, for reducing the technical riskorganization should use appropriate investment appraisal methods which help in gettinginformation about the most profitable projects for the organization. Overall, all these risks ofinadequate resource can harm the monetary and non-monetary performance of Next plc. 3 | P a g e
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