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Finance for Strategic Managers

   

Added on  2020-01-15

20 Pages7341 Words167 Views
Finance for Strategic Managers

Table of ContentsINTRODUCTION ..........................................................................................................................4ACTIVITY 1....................................................................................................................................41. Assessing the financial information need in the business ......................................................42. Identifying the business risks which are related to the financial decisions.............................63. Summarizing the financial information which are required to make strategic businessdecisions......................................................................................................................................7ACTIVITY 2....................................................................................................................................81. Explaining the purpose, structure and content of published accounts....................................82. Interpreting the financial information of published accounts.................................................93. Calculating financial ratios from the accounts which supports strategic business decisionmaking ......................................................................................................................................10ACTIVITY 3..................................................................................................................................121. Distinguishing long and short term financial requirements for the business .......................122. Comparing the sources of long and short term finance for business....................................133. Examining the cash flow management techniques and stating the significance of cash flowfor the business..........................................................................................................................14ACTIVITY 4..................................................................................................................................151. Contrasting the roles and responsibility of owners and managers in making businessdecisions....................................................................................................................................152. Evaluating the methods for appraising the investment projects............................................16CONCLUSION..............................................................................................................................19REFERENCES..............................................................................................................................20

INTRODUCTION In an organization’s finance manager has the responsibility to strategically make use ofmoney which contributes in attaining organizational goals and objectives. Plans and policies ofthe firm can be executed within the suitable time frame only when they make use of optimumutilization of fund (Simons, 2013). In the dynamic business arena, business entity can getcompetitive edge over others only when they execute strategies within the suitable time frame. Inthis, finance manager play a vital role in the growth and success of the firm by taking costeffectual business decisions. Finance personnel undertake several tools and technique to beforemaking investment in the projects. Capital budgeting tools as well as ratio analysis is the mosteffectual techniques which provides assistance to the manager in making profitable decisions. On the basis of the given scenario, small but growing business organization has appointedone of the family members to manage the financial resources in an effectual manner. The presentreport will describe the information need of the different decision makers. Beside this, it will alsodepict the business risks which have high level of influence on the financial decisions of thefirm. Further, this report will also provide information about the financial health andperformance of Morrison through ratio analysis. This report will also shed light on the extent towhich capital budgeting tools help in making suitable investment decisions. ACTIVITY 11. Assessing the financial information need in the business In the present time, each organization is required to prepare financial statements to assessthe financial status of the firm. Financial statements serve information about income,expenditure, cash position, capital structure, assets and liabilities aspect of the firm. Further,company is also required to prepare and publish such statement according to the rules andregulations which are framed by the government. Through this, business unit is able to build andmaintain faith or trust in minds of the stakeholders. In addition to this, financial statements alsooffer valuable information to the manager which helps them in making further investment andbusiness decisions (Mintzberg, Ahlstrand and Lampel, 2005). By taking into account thefinancial statements business unit is able to make optimum utilization of funds. Severalstakeholders who make use of financial information for making decisions include employees,

manager, government, supplier, shareholders, banking institutions etc. Users of financialstatements are enumerated below:Managers: They review the financial statements to evaluate financial strategies andpolicies framed by them. Final accounts provide information to the manager about therevenue generated by the firm over the expenditure. Besides this, such statements alsohelp the manager in assessing their cash flow position. With the help of all theseinformation, business entity of Morrison is able to frame competent strategic frameworkfor the near future.Employees: Personnel of Morrison's also have keen interest in the financial informationand performance of the firm (Narayanan and Nanda, 2006). Moreover, salary increment,bonuses, attractive incentives and other allowances etc. are highly influenced by growthand performance of the firm. Thus, employees of Morrison use financial informationwhile making decision about their future. Shareholders: Investors use financial information to establish the relationship betweenthe risk and return. Getting high return from the investment is one of the main objectivesof shareholders. Thus, with the help of financial information investors are able to conductratio analysis which provides deeper insight about the financial health and performanceof the firm (Mantere, 2008). Thus, on the basis of the results of ratio analysis investorsare able to take effective investment decision. Suppliers: It consists of those who supplies raw material to the firm for producing goodsand services. Suppliers of Morrison's are highly concerned with the creditworthiness ofthe firm. It is the main reason due to which suppliers need financial information(Alkaraan and Northcott, 2006). Through this, they are able to identify that whetherbusiness organization will make payment on time or not. It enables the supplier to makeeffective decisions regarding the company. Financial institutions: Usually, company takes loan from the financial and otherinstitution to meet their monetary requirements. In this, business unit is obliged to repaythe amount of loan in installments with interest amount. In this, banking and othermonetary institutions require information to assess financial capability of the firm.

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