(solved) Financial Management Principles
Added on 2020-11-12
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Financial management
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1. Types of formal and informal approaches used in effective decision making.....................1TASK 2............................................................................................................................................3P2: Key financial principles used in the making the financial strategies....................................3TASK 3............................................................................................................................................4P3:Role of management accountant............................................................................................4TASK 4............................................................................................................................................5P4 Accounting control system and their value as part of integrated business sytem..................5P5: Evaluating ways in which financial decision making is important for long term:...............6Ratio analysis: ............................................................................................................................7CONCLUSION................................................................................................................................9REFERENCES..............................................................................................................................10Books and journals:...................................................................................................................10
INTRODUCTIONFinancial management is evolved now a days in the complex business organisationbecause the financial requirements of the companies are increasing day by day with the increasein the functioning of the business in different sectors. It is very important for the companies tomeet the financial needs of the company as and when required so that the functioning of thecompany does not get hampered( Amenc, 2010 ). For these the financial managers are appointedto make important financial decisions such as efficient procurement of finance and utilising thatfinance in activities that are most profitable. So that the cost which is incurred in procuringfinance is covered by investing in the projects which are most profitable. For managing this the financial managers use various formal and informal methods foreffective decision-making. Financial management principles that are required to be adopted bythe organisation for achieving effective financial strategies for long term financial stability.Evaluating the role of management accountants and their value. And deciding the ways in whichfinancial decision making is important for supporting long term financial stability.TASK 1P1. Types of formal and informal approaches used in effective decision making.These days financial management has evolved as the most crucial function of theorganisations. Finance is said to be the life blood of any organisation, and finance management isconcerned with efficient procurement and effective utilisation of that find in the most productiveactivities. In the companies finance management functions are practised as corporate finance orbusiness finance. The finance managers of the companies are concerned with the decisionmaking activities of the organisations. Financing is the study of how much amount of money acompany will require in its operations and how to distribute that fund according to the needs ofthe various departments. On the other hand , management is related with the effective planning,organising and direction of the activities of human resources( Bengtsson, and Wang, 2010.. ).The department heads are responsible for the efficient utilisation of funds in their respectivedepartments. There are various approaches for the effective decision making in the organisationwhich are discussed as under:Formal Approach: It is the approach which is used by the management to formallyorganise relationships with the members of the company and using the processes by which theycan create an efficient and formal environment. Formal decision making helps in clarifying who1
is participating , when and how if it is documented properly. The formal approach helps inbuilding equality and trust in long-term way , which means that the longer this approach is usedthe more it increases the trust among the employees. There are different types of formal decisionmaking approaches used by the companies that are proved to be effective these are discussedbelow:Personal meeting: Also called as one on one meetings, are the meetings in which twopersons meet personally face to face and exchange important informations regarding theissue and mutually come at a particular decision. It helps in saving the time as well ascosts therefore leads into effective decision making.Department meetings: This is the most important formal approach which is to be usedin every organisation in order to make effective decision making. The departmentsmeeting are held by calling all the employees of the department and discussing the issueswith them altogether , then finding a solution to the problem.Regular status reports on projects: This is a effective document that is used by theproject heads for formal reporting on the status of the project to the head committee.This committee includes crucial members of the company such as senior manager orvarious stakeholders( Brounen, Derwall 2010 ). Informal: In this approach of decision making the institutions are assured to wide extent bydevelopment by creating a system of informal regulations and process for ensuring effectivedecision making. It is considered as an reliable source for existing support network to makeanalysis of the performances internally as well as determining skills of employees working in anorganisation.Popping on an colleagues desk at the workplace : This method is an essential aspectwhich is related with transferring information or communicating by popping at theemployee's desk. This method distracts other employees from their work. Informal meeting: These are the meetings which are not as much planned and regulatedor crucial in comparison with the formal meetings. The primary characteristic of thismeeting is that it is unplanned. This meeting is arranged by the management at any timefor the crucial decisions that are needed to be taken for the purpose of growth andsustainability.There are few factors which affect an effective decision making: 2
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