Report on Finance for Strategic Managers: Data, Risks, and Projects

This report delves into the significance of financial data for strategic managers, emphasizing its role in informed decision-making. It begins by identifying various sources of financial data, such as net cash available, revenue growth, profitability ratios, and capital efficiency, and explains how these inform business strategies. The report then explores the crucial need for financial data in formulating business strategies, highlighting the insights gained from P&L accounts and balance sheets. Furthermore, it analyzes the different types of risks associated with financial business decisions, including market, credit, liquidity, operational, and interest risks. Finally, the report examines methods for appraising strategic capital expenditure projects, such as Net Present Value, Pay-back period, and Internal Rate of Return, concluding with a summary of how financial data supports strategic decision-making. The report uses examples of Samsung Plc to illustrate the concepts discussed and provides relevant references to support its findings.

Finance for
Strategic Managers

Table of content
 Introduction
 Main body (Task 1)
 Conclusion
 References

INTRODUTION
 Financial data is the ground based on which finance managers takes
their crucial decision making.
 They use different sources through which they inform their
interested stakeholders regarding their business strategy.

An evaluation of the sources of financial
data which can be used to inform
business strategy
There are different sources of financial data through which business organizations
facilitates themselves for the purpose of informing business strategies. These are as
follows:
 Net cash available: This measures the financial fitness of a firm. Net cash available
with the Samsung Plc indicates the interested stakeholders regarding how efficiency
it has used its resources for generating more cash to make new investments.
 Revenue growth: Growth rate of revenue inform about how long will the company
is going to stay in the market which is one of the fundamental of strategic planning.

To be conti…
 Profitability ratios: This tool helps in assessing the operational
efficiency of Samsung Plc. It highlights the areas which needs to be
improved
 Capital efficiency and Solvency: Stakeholders such as investors
and lenders are interested in the capital efficiency of the business.

Need for financial data and information
in relation to the formulation of business
strategy
 Financial data and information plays a crucial role in the creation of business strategy.
 P&L accounts reveals about the operational efficiency of the company which in turns
highlights the areas which are high performing ones and the other ones which calls
for improvement.
 Balance offers information that helps the company in formulating strategies regarding
debtors policy for quickly converting the receivable into cash, investing more into
marketable securities which can be used for meeting the short term liabilities of the
company.

An analysis of the risks related to
financial business decisions
 Two kinds of risks exists within a business enterprise; one is
financial risk which is concerned with the ability of company to
pay back its debt, borrowings and other financial leverage.
 Other one is business risk which is concerned with ability of
creating sufficient revenues for recovering its operational expenses.
Financial business decisions involves:
 Market risk
 Credit risk

To be conti..
 Liquidity risk
 Operational risk
 Interest risk

Methods for appraising strategic capital
expenditure projects and strategic
direction
There are different methods for appraising capital expenditure projects or
investments which are as follows:
 Net Present Value: This methods evaluates the present time value of all
the cash inflows that will be generated by taking up of a capital
project/expenditure.
 Pay-back period: This is a technique which identifies the time which an
investment will require to recover its costs.
 Internal Rate of Return: This is that interest rate at which net present
value of all the cash inflows of an investment or capital expenditure is
equal to zero.

CONCLUSION
 It can be summarized that there are different sources of financial data
through which company informs its business strategies to its interested
stakeholders such as net cash available, profitability ratios, operational
efficiency, growth rate of revenue.
 It was seen in the report that a company needs financial data for the
purpose of forming strategic business decision-making.

REFERENCES
 Mohamad, B. and Bakar, H.A., 2018, March. Corporate communication and
strategic management: history, operational concept and integration. In 15th
International Symposium on Management (INSYMA 2018). Atlantis Press.
 Golnaraghi, M., 2018. Climate change and the insurance industry: taking
action as risk managers and investors. Geneva Association, Talstrasse, 70.
 Nguyen, Q.T. and Almodóvar, P., 2018. Export intensity of foreign
subsidiaries of multinational enterprises: The role of trade finance
availability. International Business Review, 27(1), pp.231-245.
 Alam, A., Uddin, M. and Yazdifar, H., 2019. Financing behaviour of R&D
investment in the emerging markets: the role of alliance and financial
system. R&D Management, 49(1), pp.21-32