Finance for Managers: Data Analysis, Decision Making, and Tools

This report provides a comprehensive analysis of financial data and strategic decision-making within a managerial context. It begins with an analysis of two hypothetical projects, Project Alpha and Project Beta, using data to calculate Net Present Value (NPV) and determine the more beneficial investment. The report then delves into the assessment and evaluation of strategic financial decision-making, highlighting the importance of internal competencies and competitive advantage. It outlines a six-step decision-making process, including program objectives, accounting considerations, financial considerations, and risk factors. Key concepts such as financial statement analysis, financial evaluation, and financial concepts, including valuation principles and ROI forecasting, are discussed. The report concludes with a summary of the advantages and disadvantages of the NPV method, emphasizing its role in maximizing company wealth and considering the time value of money. The report uses several academic sources to support its findings.

Finance for managers

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
(a): Analyse and interpret data...............................................................................................3
(b): Assess and evaluate financial strategic decision making................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Manager is aspiring with unit aims to build knowledge and skills by reviewing financial
tasks. It is review, interpret and prepare by effective analytical judgement with financial internal
and external information. Company lead by recording transactions and considering effective
management of cash flow. Main aim of this project is to evaluate strategic decision making and
interpret relevant tools assessment. Apart from that company is solving problems mechanisms
from effective decisions and assess tools and techniques.
TASK 1
(a): Analyse and interpret data
Project Alpha
Year 0 1 2 3 4 5
Income 2250000 2500000 3000000 3250000
Expenses (Less) 1000000 1100000 1250000 1500000
PBT (Profit before
tax) 1250000 1400000 1750000 1750000
Tax 20% 250000 280000 350000 350000
PAT 1250000 1150000 1470000 1400000 -350000
Capital expenditure 1500000 0 0 0 0 0
Net cash flow
-
1500000 1250000 1150000 1470000 1400000 -350000
DCF 10% 1 0.909 0.826 0.751 0.683 0.621
PV
-
1500000 1136250 949900 1103970 956200 -217350
Project Beta
Year 1 2 3 4 5
Income 2200000 2200000 2200000 2200000 0
Expenses (Less) -900000 -990000
-
1000000
-
1100000
Hire charge -375000 -375000 -375000 -375000
PBT (Profit before
tax) 925000 835000 825000 725000 0
Tax 20%
-
185,000
-
167,000
-
165,000
-
145,000
Net cash flow 925000 650000 658000 560000 145000
DCF 10% 1 0.826 0.751 0.683 0.621

PV 840825 536900 494158 382480 -90045 2164318
Description: Project Alpha will generate net present value of £ 2,428,970 and Project
Beta will generate net present value of 2164318. Therefore, it is beneficial for Company A to
exercise Project Alpha since it will generate incremental net present value of £ 264652
(2,428,970-2164318) as compare to Project Beta.
(b): Assess and evaluate financial strategic decision making
Strategic decision making is based on fundamental success by viewing internally
competencies and competitive advantage by carefully evaluated in form of implementation and
monitoring. Managers and business owners are leading with financial consideration with making
involvement in taking major decisions (Choi, Kahraman and Mukherjee,2016). Financial
discussion is involved in capital; expansion, hedging assets and making solid analysis by
assuring with best availability of information. Them include six steps where decisions are made
by financial management are describe below.
Program objective:
This decision is based on responsible financial policy which is leading unit and
profitability of an organization. They are determining by strategic decision making in
understanding finance and accounting concepts for growth and success.
Accounting Consideration:
Decision making is based on analysis made on accounting preform. Them include
balance sheet, income statements and projected cash flows which is necessary for taking
decisions by convince investors. They are made by managers in detailed form in order by
justifying expenses of project that is being undertaken.
Financial considerations:
They are regarding with project cost, working capital and sources of funds. If decisions
are made in terms of borrowing funds, then lender is making weights of cost and terms.
Company make effective decisions by determining collateral requirement with special terms and
conditions.
Risk Factors:
It is an essential factor which cannot be avoided by manager of company. Their risks are
of many types like accidents on job, interrupting in business, fire etc. In this case managers are

making decisions regarding assessing probabilities and alternatives. Financial risks are
uninsurable; they are factored with environmental impact made by analysing risks.
Program Content:
Finance is intended with making effective decision by unique valuing and making
decisions by particular focusing on terms are defined.
 Financial Statement and analysis: In this, decision is based on income statements,
balance sheet, cash flow, ratio analysis by analysing performance and growth.
 Financial Evaluation: This evaluation is determining by concepts such as turnover,
growth rates, competitors and internal based sources in performing financial analysis.
 Financial Concepts: In this, model assets are priced by evaluating risk and return trade
off which alternatively measures performance. They are computing use of cost of capital.
 Understanding key strategic financial management decisions: Here decisions are
made on the basis of capital budgeting, structure and managing working capital. Valuation Principles: Manager is valuing capital investment decision in order by
understanding approaches by evaluating methods from making mergers and acquisition
(Fernandez, 2014).
ROI (Return On Investment) forecast:
This forecasting is based on preform of financial statements which is addressed by return
on investment, in presenting best- case and worst scenarios. Company is making decisions in
regarding with business conditions offering with range of assurance to investors. They are
resolved worst case of project which is resolved by having with acceptable return.
Working capital requirement NPV is a difference between present value of cash inflow
and present value of cash outflow. making (Fields, 2016). NPV has denote present value of
future expected cash flow. In NPV selection of discounting rate important factor. NPV is an
important tool to analyse the profit of the company. It is relevant for decision below;
Example-
Sales 10000
purchase -2500
direct expense -1200
depreciation -1400
profit before tax 4900

depreciation 1400
cash profit after tax 6300
Advantages
 The basic advantage of this method is that present value of currency is more than the
 Future value of currency.
 NPV is also consider the cost of capital and inherent risk relating to occurrence of
 Future expected cash flow.
 NPV is very useful for the projects which require large amount of investment.
 NPV is maximising the wealth of company.
 NPV also consider the time value of money.
Disadvantages
 When life of project is not equal than NPV method is not relevant.
 NPV method is difficult to use.
 In NPV method the selection of rate of cost of capital is very difficult.
CONCLUSION
From the above mention report it is concluded that effective making decisions are leading
growth for an organisation. As per interpretation data is investigated and solved relevant
problems of assessment. After this it is concluded that company has solved problems with
making effective decisions.

REFERENCES
Books and Journals:
Choi, D., Kahraman, B. and Mukherjee, A., 2016. Learning about mutual fund managers. The
Journal of Finance. 71(6). pp.2809-2860.
Fernandes, N., 2014. Finance for Executives: A practical guide for managers. NPVPublishing.
Fields, E., 2016. The essentials of finance and accounting for nonfinancial managers. Amacom.
Gitman, L. J., Juchau, R. and Flanagan, J., 2015. Principles of managerial finance. Pearson
Higher Education AU.
Lim, J., Sensoy, B. A. and Weisbach, M. S., 2016. Indirect incentives of hedge fund managers.
The Journal of Finance. 71(2). pp.871-918.
Ozo, F. K. And et. al. 2015. Corporate dividend policy in practice: the views of Nigerian
financial managers.Managerial Finance. 41(11). pp.1159-1175.
Tihanyi, L., Graffin, S. and George, G., 2014. Rethinking governance in management research.