Approaches and Techniques for Effective Financial Decision Making

This presentation provides insights into the approaches and techniques used for effective financial decision making. It covers topics such as knowledge-based approach, decision matrix, factors contributing to decision making, role of stakeholders, setting objectives for financial goals, ethical financial management, and the role of management accountants. The presentation also discusses financial management systems, techniques for fraud detection and prevention, and concludes with the importance of financial decision making in business.

FINANCIAL
MANAGEMENT

TABLE OF CONTENT
■ INTRODUCTION
■ MAIN BODY
■ CONCLUSION
■ REFERENCES

INTRODUCTION
■ Financial management refers to strategic planning, to organize,
direct and control of financial undertakings of the organization.
■ Financial management include application of management
principles over financial assets of organization. It plays and
important part in fiscal management of business (Matthew, 2017).
■ Present report will be providing approaches used for supporting the
financial decisions.
■ It will also provide principles for supporting the effective financial
strategies. The role of accountants and management accounting in
business and the ways in which the financial decision making helps
in sustainable performance.

Different Approaches used for supporting
the effective decision making.
■ Knowledge based approach
■ Knowledge based approach involves recognizing
knowledge as the resource to gain organizational
competitiveness, knowledge suggests the method for
managing and improving the performance of
organization.
■ It is essential for the business enterprise to have
knowledge based approach so that the decisions taken
for the improvements are having some authentic base.
■ This have significant impact over the decision
making approach of the executives of organization.

Techniques used in decision making
■ Decision matrix – It is used by managers in
evaluating all options for decisions. In this
matrix all options are placed in first column of
the table and factors affecting the decisions in
first row. It involves scoring and weighing
factors based on their importance and selects the
best options.
■ T -Chart – The chart is made for weighing plus
and minus of options. This ensures that all the
negatives and positive are considered in making
decisions.

Factors contributing in effective decision
making
■ State of Economy
■ Economic conditions greatly contribute in
decision making process. Strong economic
conditions attract high investments for the
organizations. The expectations are also
high of the investors.
■ Capital structure and money market.
■ It is easy to make decisions for raising
capital in companies having strong and
developed capital market. This provides the
manager with the bargaining powers.

Role of stakeholders in decision making
■ Stakeholders are important for the business and
play critical role in decision making process of
company. All the stakeholders have different
interests in the business and managers are
required to manage their conflicting objectives.
■ It is concerned with systematically identifying,
analyzing, planning and the implementation of
the actions concerned with engagement with the
stakeholders

Managing conflicting objectives of
different stakeholder groups
■ Manager is required to understand necessity of
balancing interests of various stakeholders.
■ Shareholder and sales teams are concerned with
the revenue and profit generations for having
adequate returns over their investments.
Operations team expects to complete task in less
time increasing their efficiency.
■ Every departments and stakeholders have their
own interests and it is essential for the manager to
identify their interests

Setting objectives for achieving the
financial goals
■ Companies are require to make short term as
well as long term goals for the business. A
business is required to set goals for overreaching
the goals and objectives of business.
■ Short term goals are made by organization for
achieving and getting near to the future goals.
Success of the business is achieved by short term
goals helping to achieve the long term vision of
company (Mohagheghi, Mousavi and Vahdani,
2017).

Ethical Financial management
■ Ethical financial management is focused
towards achieving the financial goals and
objectives using ethical means.
■ The finance should not be raised through
unethical means. It should not include
misstatements or mold its financial figures for
representing profitability in the financial
statements.
■ There are many companies who misrepresent
their financials for raising funds from outside
authorities.

Role of management accountants and
management accounting control systems
■ Role of Management accountant
■ Management accountant performs series of tasks for
ensuring the financial security handling all the
financial matters of company. It helps the business in
driving its management and strategies.
■ A management accountant ensures that all the
processes and operations are carried on properly by
the business keeping all the costs under control
(Zhang, 2016).

Financial Management Systems
■ Financial planning
■ Objective of every business is to earn maximum
possible profits. The objective is achieved when
management have sound and proper financial
planning. It is management accounting techniques
that helps the organization to plan before investing
funds.
■ This prevents unnecessary wastage of the resources
and costs. It ensures that the resources of company
are allocated appropriately. Sound financial plans
will result in achieving the objectives maximizing the
wealth of shareholders.

Techniques for fraud detection and
prevention
■ It is important to detect fraud as it may put the
whole business in danger. Businesses suffers million
of loss because of frauds.
■ It is important for the organization to detect the
frauds at early stage and to implement the fraud
prevention techniques so that if any fraud is
undergoing it can be prevented at early stage.

CONCLUSION
■ Based on the above study conclusions can be drawn
that financial management play an important role in
the business. A business cannot run successfully
without making sound financial decisions. Decisions
for the business are taken on various facts and
information's.
■ Companies follow different approaches for making
effective business decisions. The financial
performance and position can be analyzed using
ratio analysis. This provides important information
for making the decisions related to business.

REFERENCES
■ Almumani, M.A.Y., 2018. An Empirical Study on Effect of Profitability Ratios &
Market Value Ratios on Market Capitalization of Commercial Banks in Jordan.
International Journal of Business and Social Science. 9(4).
■ Ax, C. and Greve, J., 2017. Adoption of management accounting innovations:
Organizational culture compatibility and perceived outcomes. Management Accounting
Research. 34. pp.59-74.