Principles of Financial Management

Principle of Financial
Management

Contents
INTRODUCTION.......................................................................................................................................4
SCENARIO A.............................................................................................................................................4
1. Evaluation range of approaches, techniques and factors contribute to effective decision making.......4
2. Stakeholder management and the management of conflicting objectives of various stakeholder
groups......................................................................................................................................................6
3. Value of management accountings in cost control and maximizing shareholder value.......................7
4. Techniques for fraud detection and prevention approach for ethical decision making.........................8
5. Reflection on understanding................................................................................................................9
Scenario B.................................................................................................................................................10
1. Evaluate how data obtained might help to inform operational or strategies decisions for the
organization...........................................................................................................................................10
2. Compare and contrast the three different investment appraisal techniques and evaluate their
effectiveness to help to maximise return on investment (ROI)..............................................................13
3. Demonstrate the value of techniques in helping to inform financial decision making.......................17
4. Analyze that how financial decisions making support the long term sustainability...........................18
5. Recommend that how management accountant helps to improve financial sustainability.................19
CONCLUSION.........................................................................................................................................19
REFERENCES..........................................................................................................................................20

INTRODUCTION
In a business setting financial accounting is a daily exercise. This includes controlling the
monetary capacity of an industry to achieve that inefficiency is small or no. This governs each
particular facet involving the financial business of the organisation that involves the acquisition
of money, the allocation of financial resources, transactions, valuation, financial reporting and
other items relating to financial. And this is one of the purposes it's viewed to become an
important part of a business, as this corporation could go back without appropriate need for
financial resources. It would not have what someone requires conducting development or tasks,
either. The business administration concepts are also applicable to the corporate accounting
planning too. Yet the key emphasis should not be on establishing values or division for handling
the company's financial position (Alkaraan, 2018). It is essential to use the financial resources.
That's the purpose financial management is more like the corporation's engine compartment but
if not properly managed it can impact some other division. Thus in order to avoid any sort of
obstacle that may impede the companies' development, businesses should guarantee that the
correct financial management system is placed in position. This report is mainly based on the
Continental clothing company. It is established in UK and conduct activities in Clothing. This
report categorized into two parts first part contains approaches, techniques and factors that
impact on the decision making procedure. Along with stakeholder management, value of
management accounting and techniques for fraud detection are defined in specified manner. In
second part analysis the financial situation of company and calculate ratios. Moreover, analysis
different investment techniques to select particular project for further investment.
SCENARIO A
1. Evaluation range of approaches, techniques and factors contribute to effective decision making
Effective decision-making has been understood as the method by which solutions are
identified and instead expected to accomplish business goals by execution. 'Smart decisions arise
from a structured process that is done in a distinctive series of instructions, with precisely
articulated aspects'. For the effective decision making A business focus on various approaches,
techniques and factors for the effective decision making such as:

Approaches for decision making
Knowledge based approach: This methodology requires acknowledging details as an
instrument for improving organizational performance; awareness suggests a plan for
accomplishing and optimizing organizational efficiency. For either a commercial business,
supplying a knowledge-based approach is extremely important, such that the decisions made for
systemic change also have scientific evidence. It is having a huge effect on the management
decision-making system of the firm. Such as Continental clothing business organization can use
that method to make informed decision given the information gathered (Asongu, 2017).
Formal and informal approach: This enables the decision-making process of the
organization to present a rational method. This finding the difference the reasonable decision-
making process and gives details of the methods utilized for decision-making. It tends to boost
the chances of picking systems that meet the multiple investors’ needs of the organisation. The
development of remote only with activities is limited by the availability of reasonable
optional methods. The strategy allows for quick reassessment of the conditions, desires or target
improvements of the stakeholders. It lets corporations produce more educated decisions across
all aspects.
Techniques for decision making: To make the effective decision require the use various
techniques in order to understand the situation of business. There are mentioned some techniques
that apply by the company such as:
Decision Tree: This is an important method employed to evaluate a decision. A feature
selection is an advanced computational device that helps a decision-maker to analyze and choose
the strongest possible alternatives. A decision tree is a hierarchical description of available
alternatives as well as the potential ramifications and expenses inherent between each step. The
decision-maker follows the optimal direction across the decision tree in this method. In the tree
structure a triangle represents the base, recognized as the 'decision point.' At the moment of
judgment two or more instances of opportunity proceed.
T-Chart: The graph is required to ensure possibilities vertical and horizontal. That
implies both pleasant and unpleasant factors are taken into account whenever making decisions.

Factors for decision making
Financial factor: The creation of a business decision focuses on a firm's capital
framework Hence it is easy to bear the resources and the potential to build judgments on the
expenditures on the entity of these project costs. Continental fashion label managers analyze
these strategic aspects that influenced the process of decision - making and then further influence
both aggregate efficiency and profit margin (Berger, Imbierowicz and Rauch, 2016).
Social factor: Such as Continental clothing company partnerships with recently
developed industry, trustworthy connection only with customer and that enterprise have a full
effect on its life span in enterprise. To develop public confidence with executive is required to
take customers supportive acts. Socioeconomic forces could also continuous changing the
interests of the public at the point of preparing key decisions which maximize their engagement.
2. Stakeholder management and the management of conflicting objectives of various stakeholder
groups
Stakeholders are someone who has an interest or an involvement in a venture or plan
pursued by a corporation or an entity, they may be influenced by the project sometimes in
manner, and therefore have an opportunity in controlling it. They may advantage from the
information and therefore will be enthusiastic and optimistic about any of it; alternatively, the
initiative may harm certain values or they may consider it to get a poor result for themselves
such that they may try to avoid it or at minimum portray it in a negative light.
Stakeholder management requires investor recognition, review of their preferences and
causes, implementation of improved approaches to collaborate with participants, and
implementation of the method. Repeated contact with the shareholders is needed. The
Shareholders are desire and aspiration to be recognized as per requirements. Also important is
the management of competing interests and role of citizens in project related actions and
decisions. These are all component of management control cycle. Such companies have a higher
impact on the outcome’s success or failure. Relationship system is based on harnessing positive
forces and decreasing detrimental effects (Burger, Kaufman and Atkinson, 2015) (Cantillon,
Maître and Watson, 2016). This starts with the concept of participants, the identification of goals
and impacts, and the creation of a plan for customer relationship and investor function and effect.