Financial Management Report: Approaches, Techniques and Factors

This report delves into the core principles of financial management, focusing on decision-making processes within a business context, specifically using Persimmon plc as a case study. It explores formal and informal approaches to decision-making, highlighting techniques such as T-charts and Pareto analysis, while also considering influential factors like the nature of the business and capital structure. The report emphasizes the importance of stakeholder management, addressing conflicting objectives and the significance of management accounting techniques in cost control and maximizing shareholder value, including cost accounting, financial planning, and budgetary control. Furthermore, it examines fraud detection methods, ethical decision-making, and the application of auditing and corporate governance. The reflection section summarizes key learnings and underscores the importance of these financial management tools in achieving business objectives.

PRINCIPLE OF FINANCIAL
MANAGEMENT

TABLE OF CONTENT
• INTRODUCTION
• TASK 1
• CONCLUSION
• REFERENCES

INTRODUCTION
• Financial management deals with management of financial resources in the best
possible manner. It refers to allocating the financial resources of company to the most
productive operations.
• Present study is about the financial decision-making and its importance for the
business enterprise. The research is based on Persimmon plc that is a real estate
company. The report will cover the decision making approaches, techniques and factors
influencing.
• This will also cover the stakeholder management and cost accounting for minimizing the
costs. Study provides and understanding about information essential for strategic and
operational decisions.
• This covers the investment appraisal techniques in in decision-making and the financial
decision for long term sustainability of business enterprise

Approaches and techniques contributing
to effective decision making.
Formal Approach
• It is the approach comprising of structures, systems and
processes which helps management in decision-making. In
this approach step by step format is followed by
organization for the purpose of making acceptable and
viable decisions.
• The structure defines the information that defines the
alternatives. It is used by organizations for formalizing the
relationship among the staff and processes of company.

Informal Approach
• This could be defined as approach consisting of unwritten
rules, networks and the relationship building for decision
making purposes.
• There should be a strong relationship between the senior
and lower level management for getting correct and
reliable data and information's from all the departments
on which the decisions of management will be based.

Techniques used in Decision-
making.
• T-Chart : This chart is used for assessing the positive and
negative points of a decision. This enables company in
taking decisions with maximum positive points.
• Pareto Analysis : The technique is useful in case of
multiple options are available with the company for
making the decisions. In this technique options are ranked
and the one with highest rank is chosen.

Factor contributing in decision-
making.
Nature of business
• It is the major factor to be considered by the organization in making
decisions. The nature of business defined the viability of choices
available to company. For instance manufacturing concerns decision
are taken considering their production capacity.
Capital Structure
• This refers to sources of funds available to company. The business
is available with enough funds or not for making any decisions is
important.

Stakeholders management and of conflicting
objectives of different stakeholders
• Stakeholders refers to the parties having interest in the
company and it operations.
• They are the individuals or group having interests in
business portfolios, projects and projects as they are also
affected with their decisions.
• Every business enterprise is having stakeholders whose
interest are required to be considered by organization.
They play an important role for the business in decision-
making.

Managing conflicting stakeholder
objectives
• There is a great importance of managing the interests of
different stakeholder.
• These stakeholders are concerned with maximizing their
values. The suppliers of the company are concerned with
the payments schedules for their supplies, customers are
concerned with receiving high quality goods at low costs
(Manes-Rossi, Orelli and Padovani, 2017).
• The shareholders of company are concerned with
receiving high returns over their investments maximizing
their wealth

Management accounting techniques in cost
control and maximizing shareholder value.
• Management accounting is concerned with the
management of business resources and cost control
strategies.
• It is of great importance for company in achieving its
defined goals and objectives.
• Management accountants perform their roles by
ensuring that the resources are used in best possible way
and processes are being run the most cost effective
manner.

Cost accounting
• This is concerned with analyzing the cost associated with
the manufacturing of each product.
• It provides important information about the variable and
fixed costs incurred by organization (Maas,Schaltegger and
Crutzen, 2016).
• The cost accounting uses various concepts and tools for
minimizing the costs of production.