The Financial Management Decision Process

Identify three fundamental types of decisions that financial managers make and identify which part of the balance sheet each of these decisions affects.

1)Capital budgeting
: Capital budgeting is the decision which is important in long-term. In a business, it is required to asses and evaluate potential capital or investments. That would leads a company to have maximized benefits. Building new facilities or expanding a training program are one of the examples. Long-term assets is categorized as this type of fundamental decision in balance sheet.

There are four basic divisions of financial management one planning, two controlling, three reorganizing and directing and four decision making. The reason for four separate divisions are based on the purpose of each task.

The decision making of management is very crucial and involves various analysis to be performed. There are various ratios and methods that can be useful for mitigating the risks and increasing the expected returns with investments. The financial forecast is a mix of the behaviour,

Define the scope of financial management. What role should the financial manager play in a

a. Capital budgeting is the process of analyzing projects and determining which ones to accept and include in the capital budget.

Capital budgeting is the process of making long-term planning decision relating to planning for capital assets as to whether or not money should be invested in the long term projects

Capital budgeting is the most important management tool that enables managers of the organization to select the investment option that yields comprehensive cash flows and rate of return. For managers availability of capital whether in form of debt or equity is very limited and thus it become imperative for them to invest their limited and most important resource in perfect option that could prove to beneficial for the organization in the long run (Hickman et al, 2013). However, while using capital budgeting tool managers must understand its quantitative and qualitative considerations that are discussed below.

The purpose of this assignment is to study the finance sources available to a company. Here according to the assignment requirement, we have to select a British public company to study the available sources of finance from where the firm collects its capital requirement. Following the guidelines we have to analyze various sources with their potentiality and then we make viable analysis of Cash and sales budget. Here some salient financial ratios are employed for the purpose of analyzing the financial statement of the company.

Among the most important decisions that a company takes are the following ones: dividend distribution, investment decisions and financing decisions.

In a company, when evaluating multiple opportunities for investment, capital budgeting is an important tool that is used. Every company has a certain amount of capital available that they need to use in the most effective way possible. Capital budgeting involves analysis techniques, planning and justifying how capital dollars are spent on long term assets and projects. It provides methods through which projects are evaluated to decide whether they make sense for a particular business at a point in time. It also provides a basis for choosing between projects when more than one is under consideration at the same time (Lasher, 2013, p. 458-475). There are capital budgeting techniques that are applied and used in capital budgeting decisions, and each having some strength and weaknesses between them.

Financial Management is concerned with achieving the overall goals of the business firm by acquiring, financing and controlling the assets of the firm. Financial Management can be described as an integrated decision-making process as it has a virtual impact on the achievement of the overall organizational goal. There are three key elements in financial management namely financial planning, financial control and financial decision-making. In financial planning the management needs to ensure that enough funding is available to meet the requirements of that business. Financial control is the most important activity which

Let me begin by explaining what a cash budget is. A cash budget is a tool that helps individuals and companies forecast a short term financing needs. Investopedia defines a cash budget as, “an estimation of the cash inflows and outflows for a business or individual for a specific period of time.” (Cash Budget) A cash budget is used to determine the borrower’s ability to generate cash and repay debt. A cash budget also provides an estimate of a company’s or an individual’s short term cash position.

Financial management deals with analysis, interpretation and evaluation of all financial records of the business. It also deals with the planning, monitoring and controlling of a business’ financial resources.

Capital Budgeting gives us the answer to “if it is worth putting money or capital into a project”. It is a decision making tool for a company or an individual who is looking to invest his capital and has multiple options which can be mutually exclusive or not. For example if a company is looking forward to buy a machine for its factory then is it worth it to put money into that machine and how much beneficial will that machine be to the company. All these answers are given by capital budgeting. Lets say you are thinking of borrowing

1.Traditional Approach: Financial management emerged as a separate field of study in the early 1900’s. The role of financial management is limited to fund raising and administering needed by the corporate enterprises to meet their financial needs. Enterprise requires funds for certain episodic events like merger, formation of new firms, reorganization, liquidation and so on. Put it simple the scope of financial management in traditional approach was in the narrow sense. The field of financial management was interrelated with aspects viz.,