Principles of Financial Management

Principles of Financial Management
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Contents
Contents...........................................................................................................................................2
INTRODCUTION...........................................................................................................................3
P1 Uses of different formal and informal approaches to support decision making....................3
M1 Advantage and disadvantages of formal and informal approaches.......................................4
D1 Uses of approaches of financial management within decision making.................................4
P2 Explanation of financial management principle required to maintain long term
sustainability................................................................................................................................4
M2 Analysis’s of key financial principle.....................................................................................6
D2 Importance of key financial management principle..............................................................6
TASK 3............................................................................................................................................6
P3 Explanation of role of financial management accountant as part f an integral system.........6
P4 Uses of accounting control system........................................................................................8
M3 Role of management accountant and accounting control system.........................................9
TASK 4............................................................................................................................................9
P5 Importance of financial decision making...............................................................................9
Manager department of Tesco use principles of financial management a these principles help
in decision making process. For this purpose they us effect on analysis and each financial
statement and ratio analysis.......................................................................................................10
M4 Different ways of financial decision making support long term sustainability..................12
D3 Recommendations of importance of management accountant in decision making.............12
CONCLUSION..............................................................................................................................12
REFRENCES.................................................................................................................................12
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INTRODCUTION
Financial management is special branch of management in which mangers plans, organize, direct
and control activities related to financial. For this purpose they use certain principles of financial
management. In order to understand this concept in effective manner , Tesco has been taken. It is
world famous supermarket supply chain organization of United Kingdom. It play essential role in
maintain economy cycle of London. In this report, is of facials principles by mangers to take
decision have been define briefly. This rep[ort also contains role of management accountant and
importance of accounting control system in decision making. This report also define how
management accountant use various financial management technique to make effective division
in order to maintain long term sustainability and help in achieving business organization goals in
brief manner.
TASK 1
P1 Uses of different formal and informal approaches to support decision making
Decision making is a systematic process of managerial function in which manager takes
decision in the base of analysis the overall approaches, framework identifying information and
collect resolutions. In formal decision mange approach a systematic framework has been applied
through which manager use and plan their business strategies. On the other side informal
decision making approach is different from formal decision making in this approach systematic
format is not followed by the busies organization to take decision. Formal approaches includes
those approach in which manager takes decision on the basis of critically evaluate every poet and
stage of business organization (Folsom, Hribar, Mergenthaler and Peterson, 2017).
Management department of Tesco used formal approaches as well as informal approves for
taking decision.’
They apply capital besetting methods, dividend growth model as formal approaches of decision
making within the use of these approaches they can easily take decision regarding future policies
of business organization. Tesco is one of the most famous and multination organization of
Britain they have word wad tagger market area. Thus they need to take decision for maintain
their position within to origination in a systematic wa .For this proofs they used formal decision
making approaches. By using capital budgeting approve, dividend model approaches,
Management department of Tesco can easily recognized ad take decision regarding which
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alternative provides them more benefits and beneficial for future prospective. They also take
decision regarding dividends decision. Number of dividend approval by business organization
and rate of dividend. All these are cover up under the formal approach.
On the other side in informal approach management department of Tesco not take decision on
the basis of systematic procedure rather they us relationship network . They directly talk with the
employers or with shareholders though their review and suggestions though which they able to
identify retain of shareholders regarding future decision and pans and policies of business
organization. Tesco believes in proving satisfaction to their shareholders and work according to
fulfils the demand of their shareholders and customers thus before taking any relevant decision
they use their principles and take decision. N the baits of informal method of taking decision
management department is that it is time procedure and with the use of this approach
management department will be able to analyse the perception of shareholders regarding
business organization. Tesco is a big firm the us their each decision regarding investment,
financial or operating in affect and influence with their shareholders thus it is requited that the
shareholder play vital role in their operating business environment and they take decision by
using informal method technique though which the can retain their shareholder within the
business organization (Bondarenko, 2016).
M1 Advantage and disadvantages of formal and informal approaches
Financial management use formal and informal approaches through which they can take
decision. In Tesco they use capital budgeting and dividend model technique as formal way to
take decision and ask their shareholders regarding the business decision. These help in increasing
attachment of shareholders as well as motivating of employs.
D1 Uses of approaches of financial management within decision making
Manager of Tesco use formal and informal techniques or approaches through which they
can easily take effective decision to attain profit and maintain sustainability within the
organization.
TASK 2
P2 Explanation of financial management principle required to maintain long term sustainability.
Financial management principles provides general guideline to business organization
regarding their investing financiering and operating business decision trough which they can abet
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