Financial Management and Decision Making in an Organisation

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Table of Contents
INTRODUCTION...........................................................................................................................3
PART-1............................................................................................................................................3
A critical evaluation of a range of approaches, techniques and factor which contribute to
effective decision making in an organisation.........................................................................3
How the management accounting function will support organisation decision making........5
Evaluate the principles which guide effective and efficient financial strategies to maximize
shareholder value and meet stakeholder need........................................................................6
Criticality evaluate the role and function of the management accountant especially in regard to
financial control and monitoring............................................................................................7
Techniques for fraud detection and prevention and approaches to ethical decision-making.8
Recommendations on how management accountant can improve financial decision-making9
Part-2................................................................................................................................................9
A critical evaluation of the business using appropriate ratios................................................9
Explanation and justification for how data obtained might help to inform operational and
strategic decisions.................................................................................................................10
Compare and contrast three investment appraisal techniques and how these can assist in
maximizing return on investment (ROI)..............................................................................11
The role of cash flow statements and break-even analysis in informing financial decision
making..................................................................................................................................12
A critical evaluation, including recommendations, of how management accounting techniques
can be used to support good decision making and ensure long term financial stability of the
organisation..........................................................................................................................12
CONCLUSION .............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Financial management is a very important technique of the business. It is a managerial
activity which helps of the organisation of taking financial decision. It manages and controlling
the financial assets to achieve the objective of the business organisation. The positive cash flow
is more important than the book profit. It also help to taking decision for forecasting to ensure
the optimum cash flow. It is also known as the science of money management. It comprise of
forecasting, planning, organisation, directing, co-ordinating and controlling of all business
activity relating to acquisition and application of the financial resources. The decision is based
on inflow and outflow of funds. The financial management works on the five principles such as
timeliness, justification, consistency, documentation and certification. Financial analysis is a tool
of identifying business, budgets, and financial related transaction to evaluate the performance of
the organisation. It analysis whether firm works as a going concern principles (Al-Dmour and
et.al, 2020). In the first part of report discuss about the approaches, techniques, management
accounting function and financial strategies to maximize shareholder value. Further in the second
part of the report discuss about the financial ratios, investment appraisal techniques, cash flow
statements and break-even analysis informing financial decision-making.
PART-1
A critical evaluation of a range of approaches, techniques and factor which contribute to
effective decision making in an organisation
Decision making is the method of identifying a decision, collecting important information
and evaluating alternative resolutions. It is step by step process which is help to the taking best
decision of an organisation. The process of decision-making are as follow-
 Identify the decision- It is very important step for taking decision. The management
should understanding the nature of the decision (Angel and et.al, 2018).
 Collecting information- Before taking decision to gather the information, the information
can collected both external and internal environment.
 Determine the alternative- After gathering information to determine the best way. The
management also use other information to build alternatives.

 Evaluate evidence- To evaluating all the evidence and selected those evidence which is
best for an organisation.
 Take action- After selected the best alternative the management implements of alternative
(Chakrabarty and et.al, 2018).
There are mainly three approaches to effective decision making they are as follow
1. Behavioural Approach- This approach is also known as descriptive and administrative
approach. This approach tells about how to take decision. Managers have narrow view of
problems because they do not gather full information related to problems and they do not
have all solution to resolve the problems. This approach is based upon two values-
Bounded Rationality: The managers have limited knowledge of the external environment
factors so that they can not control. The bounded rationality forces the managers to work in real
life challenges, resources limited, time boundation, pressure of political parties and external and
internal factors. The managers do not take the proper rational decision.
Satisfying- Those decision which is best for an organisation the management chooses
those action. The satisfying decision includes best prices, appropriate income, fair market value
and good quality products (Henager and et.al, 2019). Bounded rationality bounds the manager to
take best decision rather than ideal.
2. Implicit Favourite Model- It is also known as Retrospective approach. Under this
approach the manager determine the best alternative to the problem and compare with the
other alternative and evaluate the strength and weakness of the alternatives.
3. Classical approach- This approach the manger to take decision which is economic interest
of the organisation.
There are various type of technique of decision making are as follow:
 Cost analysis
 Influence diagram approach
 Decision making trees
 Linear programming
 Different method of decision analysis
The factor of decision making process are as under:
The some factors are affected to decision making process they are given below:
 Personal factor