...Introduction: The primary purpose of financial and accounting management is to organize, plan, control and direct the financial and accounting activities, but to ensure that every stakeholder is adequately served. The effectiveness of financial and accounting management, therefore purely depends on the policies, regulations and frameworks that are designed and being evolved from time to time. According to Gray, Owen and Adams (1996) financial management is the core business discipline which is meant to ensure that financial resources are deployed in the most effective manner, within the best interest of every group of stakeholder. Moreover, the importance the financial management also increases in current business context because of the fact that economic and financial contexts have become uncertain and unpredictable in every region across the world. At the other end, financial management also supports the business activities and operations which include investment decision making, pricing, financial reporting as well as to meet the legal and regulatory obligations. This report also focuses on the different aspects of financial analysis and management to reflect its validity, reliability and usability in practice. The purpose of this report is to understand and examine the different aspects of financial management, which will be helpful to understand the effectiveness of financial management and its different aspects. In order to achieve the report’s objectives, below paper...
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...CONTROL TECHNIQUES 1. INTRODUCTION The assignment requires critically analyzing one of the key aspects of managerial organization and making suggestions to improve the current status of the selected organization. Out of the four areas I chose control techniques for this assignment. Management controls have always existed, in order to control the behavior of employees with the purpose of ensuring that organisational objectives are achieved. Many of these controls were accounting controls, such as budgets, standard costs, variance analysis etc. As organisations became more sophisticated, non financial controls were added. These controls included targets such as quality, waste, delivery lead-time, customer satisfaction etc. When other controls, such as those in respect of personnel, information systems, corporate policies, working practices etc. are added, the result is a system of management control, although often the components of the system lead to different behaviors. In his seminal work on the subject, Anthony (1965) defined management control as: “The process by which managers assume that resources are obtained and used effectively and efficiently in the accomplishment of the organisation’s objectives” His classic categorization of control was of three levels; strategic, management and operational which he saw as linked. In his work, management control was seen as the interface between strategic planning and operational control such that management control...
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...Significance of Management Accounting Techniques in Decision-making: An Empirical Study on Manufacturing Organizations in Bangladesh Farjana Yeshmin* and Md. Amran Hossan** Management accounting is concerned with gathering and reporting internal financial information to facilitate decision-making process. As management accounting is not required to conform to national accounting standards, it allows business to customize the management accounting techniques as per demand of company. As a process of this customization, some advanced quantitative as well as number of qualitative techniques accompany with the traditional techniques, have been emerged to cater the information need in decision making. This study attempts to measure the significance of management accounting techniques in decision making of the selected manufacturing organizations in Bangladesh. In doing so, a total of 74 manufacturing organizations have been surveyed with a structured questionnaire by using 5 point Likert Scale measurement from different categories of manufacturing organizations. Findings reveal that cash flow statement analysis, ratio analysis, budgetary control, CVP analysis, variance analysis and fund flow analysis have been frequently high-ranking techniques. Secondly, the authors have recognized five factors to calculate the variability in decision-making with the help of rotated component matrix which shows that 75.125 % of the total variability has found in the usage of management accounting techniques...
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...Systematic Research to Check Non-Adoption of Latest Business Techniques on Business community: How We Can Improve Them. Systematic research indicates that companies wield a lot of power; particularly in their local business communities. It is found that there are no of reasons exist that the business community hesitates to adopt modern business techniques. It is because they are not following the means to financially the influence people without spending a lot of money and can influence others to do the same. Low-cost initiatives are not taken that won’t break the company bank include: no creation of a culture of financial consciousness and inclusion, no provision of mentor-based skills development programs and no offering workers access to a variety of financial management tools and learning opportunities. There has been much made of corporate citizenship in the past few years but still it is lacked. Businesses that focus on helping individuals rise up out of poverty and financial illiteracy will be helping Pakistanis to reclaim its position as a powerful and human economic leader. Theoretical Framework Latest Business Techniques E-Commerce & E-Banking Mobile- Banking Modern Operations and Management Tech. Financial System Innovations Modern Marketing Techniques Business Community Sole Proprietor Partnership Joint stock Company Non-Adoption Reason Lack of Capital Lack of Technical Education Lack of training facilities Lack of energy High Cost of Productions Lack of...
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...Option Pricing, Interest Rate Risk in U.S Diana PĂUN & Ramona GOGONCEA (2013). Interest Rate Risk Management and the Use of Derivative Securities. Economia Seria Management. Retrieved from: <http://www.management.ase.ro/reveconomia/2013-2/4.pdf> The study by these two authors aims at demonstrating how derivative financial instruments can be utilized to prudently manage interest rate risk majorly faced by numerous banks and financial institutions as well as enable the efficient application of monitoring and control tools. There are a couple of risk management methods at the disposal of banks including both balance sheet and off the balance sheet such as the gap method of managing interest rate risk for purposes of controlling short-term rates exposure, combined with derivatives such as options to manage the residual interest rate exposures. Interest rate risks emanate from interest rates sensitivity differentials of capital outflows and inflows. Due to the common view or misconception that high interest rates are the best way of fighting inflation, banks’’ engaging in monetary policy. Financial institutions play a major role in influencing interest rates since they engage in releasing capita to the public by buying assets in the primary markets and selling securities in the secondary market so as to fund purchase of assets. Furthermore, any interest-bearing asset for instance a loan or bond may face interest rate risk caused by changes in the value of assets resulting...
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... CHAPTER 1 INTRODUCTION Risk management structure should be well thought-out, as well as a cultural fit and sustainable. (Smiechewicz, 2001) Uncertainty is not measurable. Risk is. - Frank Knight, Risk, Uncertainty and Profit (1921) 1.1 Introduction Success in business, to a certain degree, requires owners and managers to take calculated risks. The most successful business is usually managed by people who know when to push forward and when to pull back, when to buy and when to sell, when to stand firm and when to compromise. The successful company is managed by people who understand what risk in business is, and how this risk should be managed and mitigated. Risk is an undeniable reality of doing business today, whether domestically or globally. A successful entrepreneur does not fear risk, but strives to understand it, to manage it, even to take advantage of it. As risk management tools and techniques become more and more complex, however, companies require the services of a Risk Management specialist. A growing specialty in this field, globally, is that of international accounting risk management. International accounting professionals can contribute to the 2 success of their companies must have a strong grasp of financial risk management techniques for multinational and multilateral business transactions of great complexity. Unfortunately, as the world of business becomes increasingly borderless, risk management becomes, likewise, borderless, and thus...
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...their high reported earnings. As accountants, we are responsible for preparing financial statements and “calculating” the profit figures. In your opinion, do you think the big banks are managing their reported earnings to show lesser profits than what they are actually earning (i.e. using earnings management techniques)? You are required, and must, read and incorporate academic journal articles and other relevant materials to justify your viewpoint. INTRODUCTION Accounting can be broadly defined as the ‘measurement and communication’ of economic information to the decision makers (Watts and Zimmerman 1986). Accounting is divided into internal and external accounting on the basis of the users of the information (Spohr 2005). Spohr (2005) further highlights that the responsibility for preparing the external accounting information and publishing it lies with the managers of the firm. These managers rely on their inside knowledge of the firm’s current state to provide an accurate and fair picture of the financial state of the firm. The existence of accounting regulations and guidelines aims to improve the relevance and accuracy of the financial reports. However, this insider knowledge gained by managers can lead to information asymmetry. This occurs when some parties have an “information advantage” over others (Scott 2003). Information asymmetry allows managers to prepare and publish their financial statements in a manner which is most advantageous to them. Although this opportunism...
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...are many definitions of management accounting, this paper will stick with the definition formulated according to the American Accounting Association. It defines accounting as a process of providing both financial and non-financial to decision makers. The varying nature of business characteristics implies that also techniques used in managerial accounting for each business differ as the business grows. During start up the business rely on capital investment and budgeting techniques. A mature business relies upon quality control and cost management. Techniques used ultimately assist the business to achieve its long-term and short-term aims via efficient decision-making. The objective of this paper is to study each concept available in the accounting definition and provide a framework needed for deep understanding of aspects and issues involved in the process of accounting. The paper will have two part. The first part will look at the first aspect that is to define managerial accounting and look at its role, techniques and ethical issues facing managerial accountant. We will also highlight the role of a managerial accountant. In the second part, three topics will be covered. The three topics are; cost investment techniques, budgeting, and quality control. In the selected topics, real-world cases will be presented in relation to how they relate to managerial accounting techniques. Managerial accounting is defined as process involving preparation of management accounts and reports so...
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...Executive Summary The report is developed to analyse the importance and the role of the resource decision in the strategic development and the strategic planning of Tesco. The report also analyse the different strategic tools and techniques used for the strategic decision making and which are also helping the organization in developing strategic plans of the organization. There are various issues which are described in this report like the ratio analysis, break even analysis, and the other appraising methods which are used in strategic decision making and planning of Tesco. The management of the tangible and intangible assets of Tesco are also analysed by the different analytical tools and the report reveal that the organization is taking effective steps and it is managing its resources effectively and efficiently. Contents TESCO PLC: 2 Task 1: 3 Resource Decisions and their Impact on Strategy of the Organization: 3 Task 2: 5 Role of financial Analysis and techniques in the strategic planning and strategic development: 5 Task 3: 8 International Financial perspectives of Tesco: 8 Risk Assessment and Management 9 Financial Performance 9 Task 4: 11 Task 5: 16 Contemporary management Accounting: 16 Task 6: 18 Analysis of environment of Tesco: 18 Political Factors 18 Economic Factors 18 Social/Cultural Factors 18 Technological Factors 18 Steps Taken By Tesco to respond these changes: 19 Task 7: 20 Importance of Communication: 20 References...
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...IMPORTANCE OF QUANTITATIVE TECHNIQUES IN MANAGERIAL DECISIONS *P.Murugesan Abstract The term ‘Quantitative techniques’ refers to the methods used to quantify the variables in any discipline. It means the application of subjects like mathematics and statistics, econometrics and operations research to understand and solve problems.. It is a study of the application of differential calculus, integral calculus and matrix algebra, measures of central tendencies, measures of averages, correlation and regression etc. It also includes the application of the techniques of management science such as Linear programming, Game theory, CPM and PERT analyses to business problems. The relevance and usefulness of Quantitative Techniques in seven functional areas of Management are discussed in this paper. Introduction: Truly, the importance of Quantitative proficiency cannot be over emphasized to Management Professionals! This body of knowledge involving quantitative approaches has been given various names likeBusiness Mathematics, Business Statistics, Operations Research, Decision Science and Management Science. All are concerned with rational approaches to decision making based on the scientific method. For example, consider the following simple mathematical problem: A) “A Mayor of a town wants to improve the bus services between 2 destinations falling within his district. The destinations are 1 hour journey apart and he wants the bus services in such a way that a traveler need not wait for more...
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...MP A R Munich Personal RePEc Archive Financial management practices and their impact on organizational performance Babar Zaheer Butt and Ahmed Imran Hunjra and Kashif-Ur- Rehman Foundation University, Rawalpindi, Pakistan, Iqra University Islamabad Campus, Pakistan 2010 Online at http://mpra.ub.uni-muenchen.de/32685/ MPRA Paper No. 32685, posted 15. August 2012 01:05 UTC World Applied Sciences Journal 9 (9): 997-1002, 2010 ISSN 1818-4952 Financial Management Practices and Their Impact on Organizational Performance 1 Babar Zaheer Butt, 2Ahmed Imran Hunjra and 2Kashif-Ur-Rehman 1 2 Foundation University, Rawalpindi, Pakistan Iqra University Islamabad Campus, Pakistan Abstract: This study measures the relationship between organizational performance and financial management practices like capital structure decision, dividend policy, investment appraisal techniques, working capital management and financial performance assessment in Pakistani corporate sector. Sample of the study consisted of forty companies operating in Pakistan, related to different sectors and listed at Karachi Stock Exchange. The finance executives and financial analysts of the companies responded to questionnaire that identified through company profiles and references. The questionnaires were self administered to collect the data from respondents. The results show a positive and significant relationship between financial management practices and organizational performance in Pakistani corporate sector...
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...Risk mitigation techniques Risk management involves the process of continuous identification of the risk factors and devising way and methods of dealing with them. The identification process can be done using different types of models depending on the type of organization being analyzed (Chapman, 1996). Dr. Kallman a professor of risk management, has several techniques which he has discussed regarding the risk management which will be compared with other techniques recommended by other authors like Victoria Duff. Understand the risk According to Dr. Kallman on risk management, he has given the following techniques to be used. Dr. Kallman says that before giving the mitigation techniques to the risk, there must be identification of the risks. A risk manager should understand the type of risks which are likely to face a firm and list them down. This is what we call risk identification. For one to know this, there must be clear understanding of the companies’ goals, mission and objective. From these factors, the risk that is likely to face an organization can be identified easily. When the risks have been identified, they can be categorized to three distinct groups such as, operational, strategic and economic. Strategic risks include those risks with long term varied effects on the firm and they are composed of factors like, the reputational risk, quality risk and brand risk. The next set of risk is operational risks which include things like the hazards which expose the business...
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...What is management accounting? Management accounting or managerial accounting is the process of identifying, analyzing, recording and presenting financial information that is used for internally by the management for planning, decision making and control. In contrast to financial accounting, managerial accounting is concerned with providing helpful information and reports to internal users such as managers and entrepreneurs, so that they can control and plan the business activities. According to the Chartered Institute of Management Accountants (CIMA), Management Accounting is "the process of identification, measurement, accumulation, analysis, preparation, interpretation and communication of information used by management to plan, evaluate and control within an entity and to assure appropriate use of and accountability for its resources. Management accounting also comprises the preparation of financial reports for non-management groups such as shareholders, creditors, regulatory agencies and tax authorities". For fulfilling the purpose of management accounting there are already many techniques and tools prevail in the market. The first management accounting tools and techniques contribute to the attainment of organizational objective is standard costing. Standard costing is an accounting system designed to properly allocate costs of direct labor, indirect labor, materials, overhead, and selling / general / administrative accounts on a unit basis for the purpose of accurately...
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...ANALYSIS OF MANAGEMENT ACCOUNTING OF ANGLIAN WATER SERVICES LIMITED. EXECUTIVE SUMMARY The main purpose of this report is to know about the Management Accounting of Anglian Water Services Ltd. The importance of this report is detailed explanation of over all management accounting system of the organisation. The report is categorised into four parts. The first part consists of company’s product, processes, competitors and policies. The second part cover about the review of management accounting, what it fulfil and what are its key functions and techniques. The third part of the report is very important as it describes the key techniques of management accounting used by the Anglian Water Services Plc. Where as the last part explain the strengths and weakness of the analysis. TABLE OF CONTENT Executive Summary…...………………………………………………………………2 1. Introduction…………………………………………………………………………4 1.1 Anglian Water Service…………………………………………………………….4 2 Background………………………………………………………………………….5 2.1 Product…………………………………………………………………………….5 2.2 Processes…………………………………………………………………………..5 2.3 Competitors………………………………………………………………………..5 2.4 Policies…………………………………………………………………………….5 3. Management Accounting…………………………………………………………...6 3.1 What it fulfil……………………………………………………………………….6 3.2 Key Techniques …………………………………………………………………...6 4. Techniques Recommended…………………………………………………….…...7 5. Techniques Not Recommended……..……………………………………………...9 6. Strength…………….……………………………………………………………...
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...Chapter One Introduction 1.1 INTRODUCTION Foreign exchange refers to the financial transaction where currency value of one country is traded into another country’s currency. The whole process gets done by a network of various financial institutions like banks, investors and governments. The exchange rate varies according to the value of each country’s currency which is based on the health of that particular country’s economy. Any individual or company engaged in overseas business should be aware of the risks of currency fluctuations. Customers without commercial contracts expressed in domestic currency (or fixed by an agreed rate of exchange) are fully exposed to what is known as an exchange risk. Exchange risk may arise because of exchange rate movements in the period from the original commercial contract, to the time of settlement of the domestic equivalent of the foreign currency amount. Foreign exchange risk management is designed to preserve the value of currency inflows, investments and loans, while enabling international businesses to compete abroad. Although it is impossible to eliminate all risks, negative exchange outcomes can be anticipated and managed effectively by individuals and corporate entities. Businesses do so by becoming familiar with the typical foreign exchange risks, demanding hard currency, diversifying properly and employing hedging strategies. No countries of the world can produce all their necessary commodities and services. So it has to buy the commodities...
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