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Financial Management: Principles, Techniques, and Importance

   

Added on  2023-01-13

26 Pages1522 Words55 Views
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FINANCIAL
MANAGEMENT
Financial Management: Principles, Techniques, and Importance_1

TABLE OF CONTENT
INTRODUCTION
MAIN BODY
CONCLUSION
REFERENCES
Financial Management: Principles, Techniques, and Importance_2

INTRODUCTION
Financial management in a business refers to
strategic planning, organization, directing &
controlling the financial undertakings of
business. The financial management also
includes application of management principles
in the business.
They also play an effective role in decision-
making and also have an effective role in fiscal
management. Present report is explained
taking Sainsbury for financial management.
Financial Management: Principles, Techniques, and Importance_3

FORMAL AND INFORMAL APPROACHES IN SUPPORTING
THE DECISION MAKING PROCESS.
Formal Approach
In the organizational context formal approach comprises of the
systems, structures and the processes that helps them in business
decision making.
It is an approach where the step-by-step structure is followed by the
organization for making more deliberate and thoughtful decisions
by adequately structuring the information and defining alternatives.
The formal approach is used by the organization in formalizing
relationships between the processes and staff of Sainsbury.
Financial Management: Principles, Techniques, and Importance_4

TECHNIQUES USED IN
DECISION-MAKING
Decision tree – It refers to business tree which is a graphical
representation of the business options available and possible
outcomes of every option. The decision tree is used as statistical
analysis.
Pareto analysis – It is technique that is used for making choice
between multiple options. In this different options are ranked on
their importance. It involves the business to take decisions
regarding the projects that is having highest ranking.
Financial Management: Principles, Techniques, and Importance_5

CONTRIBUTING FACTORS IN
DECISION-MAKING
Business Nature
This is an important factor to be considered by the organization before taking any
decisions. This is important for analyzing the reliability of business decisions as the
chosen decision may not bring same results for the business as compared with other.
Economic-financial factors
This includes the economic trend of the market. It involves considering inflations,
customer behavior and like factors in its decisions. Financial factors include the
resources available with the company for making decisions.
Financial Management: Principles, Techniques, and Importance_6

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