L7-DSML: Information Management and Strategic Decision
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Information Management and Strategic Decision (L7-DSML)
Added on 2020-04-21
L7-DSML: Information Management and Strategic Decision
Information Management and Strategic Decision (L7-DSML)
Added on 2020-04-21
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Running Head: Strategic Financial Management Project Report: Strategic Financial Management1
Strategic Financial Management ContentsTools and techniques of cost accounting..........................................................................4Concepts, features and importance of cost accounting.................................................4Tools of costing design and system..............................................................................5Recommendation..........................................................................................................6Analysis of the financial performance..............................................................................8Financial statement analysis.........................................................................................8Financial statement evaluation...................................................................................11Recommendation........................................................................................................15Budgetary process of organization.................................................................................16Evaluation of budgetary targets..................................................................................16Development of master budget...................................................................................17Evaluation of the budget and its process....................................................................18Long term and short term sources..................................................................................21Need for short term working capital and long term funds..........................................21Appropriate source of short term funds......................................................................21Choice of sources........................................................................................................22Investment appraisal.......................................................................................................25Financial appraisal methods.......................................................................................25Strategic investment decision.....................................................................................27Analysis over strategic investment decisions.............................................................30References.......................................................................................................................32Appendix.........................................................................................................................352
Strategic Financial Management 3
Strategic Financial Management Que 1)Tools and techniques of cost accounting: 1.1)Concepts, features and importance of cost accounting:Cost accounting is the concept of accounting which assists the manufacturing companies to identify the total cost of the company to make various decisions about the production, sales etc of the company. It helps the company to analyze various new strategies for the betterment of the company and for managing the entire activities of the company. Costaccounting is a process of classifying, recording, analyzing, allocating and evaluating variousalternative actions to control and evaluate the total cost of the company1. The main purpose of cost accounting is to offer information for various decisions making in a good manner. Cost accounting assist the company to analyze all the information related to the total cost of the company and it evaluates the information and presents them in an understandable state so that a better decision could be done2. Cost accounting uses the internal as well as external sources to manage and maintain the business in a proper manner. Cost accounting evaluates the internal operations and the activities of the company in order toenhance the overall performance and the business management of the company. Cost accounting is important for every business to manage the cost and activities of the company. The main importance of the cost accounting is its capability to put a light over the entire profitability position and the performance of the company. It depict about the financial position and workings of the business. Cost accounting permits the manager to manage the cash flows of the company. it also assist the manager to identify that whether the 1Don, Hansen, Mowen Maryanne, and Guan Liming.Cost management: accounting and control. Cengage Learning, 2007.2Richard Lambert, Leuz Christian, and Verrecchia Robert E. "Accounting information, disclosure, and the cost of capital."Journal of accounting research45.2 (2007): 385-420.4
Strategic Financial Management company is making profits or not, whether the organization need some tighten system and some priorities must be reassessed according to the current performance and the position. Thus according to the above evaluation, it has been found that the cost accounting is very significant for the organization. 1.2)Tools of costing design and system:Costing design and system of an organization depicts that an organization is always required to look over various factors and aspects while taking a decision about the costing design system. The costing design system is a tool which helps the organization to make the costing reports in order to make better decisions about the performance and the position of the company3. A cost design system helps the manager of the company to collect the information andarrange them in such a manner that the good decision could be taken from the company and the manufacturing process of the company could also be managed. Overhead or indirect cost is calculated through it which assists the company to make various new decisions. The tools of costing design system are as follows:a.external cost design system controlb.internal cost design system controlExternal cost design system control:External cost design control system applied for analyzing the performance and the position of the company4. These standards are used by the companies to shape the firm in a proper way and the cost ratios are also calculated through it. Ratio analysis and the 3Arik Azoulay, et al. "The use of the transition cost accounting system in health services research."Cost Effectiveness and Resource Allocation5.1 (2007): 11.4Charles T.Horngren, Cost accounting: A managerial emphasis, 13/e. Pearson Education India, 2009.5
Strategic Financial Management controlling power of the government and the stakeholders are the external cost design system which is managed by the companies through external sources to analyze and evaluate the position of the company as well as it also helps the company to make various better and new decisions about the position and the performance of the company. Internal cost design system control:Internal cost design control system applied for analyzing the performance and the position of the company through internal factors. These standards are used by the companies to shape the firm in a proper way and the cost ratios are also calculated through it5. Budgeting, capital budget, revenue budget, standard costing and variance analysis are the internal cost design system which is managed by the companies through internal sources to analyze and evaluate the position of the company as well as it also helps the company to make various better and new decisions about the position and the performance of the company.1.3)Recommendation:Lastly, the study has been performed over the costing and pricing system of the comapny to analyze the best policies and strategies for improving the position of the pricing system and costing system of the company. An organization is always suggested to look over various factors and aspects while making a decision about the costing system and the pricing policies of the company. Costing and pricing decision of the organization could be taken through analyzing all the internal and external cost factors of the company. These would help the comapny to makea better decision about reducing the level of the cost and enhancing the level of the price. Theinternal aspect which must be considered by the comapny while making a decision about the costing and pricing is capital budgeting, budget evaluation, variance analysis and standard costing whereas the external costing system are the cost ratios6. All of these technologies and the aspect are the method to evaluate the total cost of the comapny and predict the future on 5Glen, Arnold.Corporate financial management. Pearson Education, 2008.6Horne Van, James and Wachowicz John Martin.Fundamentals of financial management. Pearson Education, 2008.6
Strategic Financial Management the basis of financial information so that a better policy and strategy could be made by the company for managing the cost and pricing of the company. 7
Strategic Financial Management Que 2)Analysis of the financial performance:2.1)Financial statement analysis:Financial statement analysis is the accounting method which is used by the companiesto analyze the financial position of the company. The financial position of the company is analyzed on various bases. Mainly, the analyst and the financial manager of a company analyze the financial position and the performance of the company through analyzing the financial statement of a company7. For this analysis, ford motors have been analyzed and thestudy has been done over the financial statement of ford motors. The financial statement of Ford Motors could be analyzed by the financial analyst andfinancial manager of a company on various bases such as through analyzing the last 3 year statement, through analyzing some key financial figures from the financial statement of the company, by conducting the study of the trend analysis of the company, by analyzing the study of horizontal analysis of the company and by conducting the study of ratio analysis over the company and through comparing these figures from the financial statement8. The analysis study over the financial statement of ford motors is as follows:7Robert Higgins, Analysis for financial management. McGraw-Hill/Irwin, 2012.8Alan Shapiro, Multinational financial management. John Wiley & Sons, 2008.8
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