Financial Performance Management: Techniques and Relevance

Financial Performance
Management

Table of Contents
INTRODUCTION...........................................................................................................................4
PART1.............................................................................................................................................4
Brief description of environment cost..........................................................................................4
Use of cost -benefit analysis technique........................................................................................5
Brief explanation about techniques used by management accountants to recognize
management cost. ........................................................................................................................5
Examples of management accounting techniques. .....................................................................6
Importance of managing environment cost..................................................................................6
Brief explanation of the ways environment cost identified. .......................................................6
Explanation of the way through which environment cost can be controlled...............................7
Brief explanation of ways for which environment cost accounted..............................................7
PART2.............................................................................................................................................8
Brief description regarding relevance of decision making process and ways through which
management accounting gain right information..........................................................................8
Explanation of planning tools and their relevance of solving problems ....................................8
Relevance of budgetary control ..................................................................................................9
Brief explanation of use of KPI for improve organization 's performance..................................9
Explanation of how business gain sustain financially..............................................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Financial performance management is systematic procedure of managing performance of
organization by controlling and managing resources. To understand concept of financial perform
ace measurement this report has been formulate. It is divide into two part. This first one is define
meaning and requirement of Environment management accounting, technique use for control
environment cost. And the second part is related with determine relevance of decision making
procedure, use of technique of management accounting for maintain sustainability of
organization. All these information are describe in systemic way.
PART1
Brief description of environment cost
Environment management accounting: It is modern concept of management
accounting and it is part of this approach. It is systemic procedure of identifying, analysing,
collecting and use of information related with environment factor, which includes, rate of water,
materiel, natural asst and monetary cost incurred during maintain environment assets.
Environment cost: The term environment cost refer as expenses incurred due to actual
deterioration of natural business assets which organization use to run their business activities
Environment cost arise due to running economic activities. In other words cost incurred due to
poor quality of environment in which organization work. This types of cost has been categorised
within 4 sector, which include detention cost, prevention cost, external as well as internal
environment failure cost. Management department need to formulate strategies and policies
regarding with paying their liability of environment cost (Johnstone, 2018).
Some times it become the reason or main cause of reduce sales rate and well as failure of
business organization. Environment cost include, fine or penalties take by government from
organizations due to engaged in activities which damage environment. Expense incurred in
purchasing pollution prevention equipments, cost of waste management and remedies formulate
to clean the site where business activities are run. This consider as modern concept include in
accounting and every organization need to formulate those policies after analysing and
considering environment cost.

Use of cost -benefit analysis technique
Cost benefit analysis: This is tool of financial management through which manager find
out strength as well as weakness of particular alternative and on the basis of that manager take
decision. Cost – benefit analysis is used by organization to take decision. Benefits are calculated
on their basis of sum up of expenses incurred and revenue generate within given time period.
Theses benefits are compare with cost and on the basis of that manager took decision
They select those alternative which give or able to attain more economic benefit the as compare
to another alternatives. In this manager find out ability of organization to generate profit upon
their investment after deducting or discounting all essential cash outflow. On the basis of result
arrived from this tool organization take decision this will also useful for measurement purpose
and evaluate value of profit thus most of corporation use cost – benefit analysis tool.
Brief explanation about techniques used by management accountants to recognize management
cost.
With the increment of encouraging green awareness among market economy, the
concept of environment management accounting has been increases. Every business corporation
focus on using those technique through which they can analysing their environment cost which
help in controlling cost and identify those activities which become the reason of incurring this
cost. Following are define below
Cost analysing: Accountant used this technique through which they can find out cost
incurred during resource exploitations, pollution prevention cost, opportunities cost. By using
activity based costing and life cycle assessment manager could find value of these cost .They
also use materiel flow accounting which help in identifying and divide environment and non
environment cost (Schaltegger, 2018).
Investment appraisal: Tools used for investment appraisal are help in finding out all
these opportunities cost which may effect on future business opportunities. By using capital
budgeting tools which includes pay back period, internal rate of return as well as net present
value technique account find out all those cost which use for prevent production pollution
system.