Financial Management Answer Essay
National Institute of Business Management
Chennai – 020
FIRST SEMESTER EMBA/ MBA
Subject : Financial Management
Attend any 4 questions. Each question carries 25 marks (Each answer should be of minimum 2 pages / of 300 words)
1. What are the significant factors of Financial Statements? Discuss the various tools of financial Analysis. (Answered)
2. What is a Fund Flow Statement? Discuss the uses and preparation of Fund Flow Statements. (Answered)
3. What is financial Forecasting? Explain. (Answered)
4. Examine the various tools of Financial Analysis. (Answered)
5. What is Zero Base Budgeting? Explain.
6. Describe the various aspects of Zero Based Budgeting with its merits and demerits.
25 x 4=100 marks
ANSWER SHEET
1. What are the...show more content...
For periodic reporting purposes, accrual performance numbers nearly always differ from cash flow numbers. This creates a demand for periodic reporting on both income and cash flows. The statement of cash flows details the cash inflows and outflows related to a company's operating, investing, and financing activities over a period of time.
Statement of Shareholders' Equity. The statement of shareholders' equity reports changes in the component accounts comprising equity. The
statement is useful in identifying the reasons for changes in owners' claims on the assets of the company. In addition, accepted practice excludes certain gains and losses from net income which, instead, are directly reported in the statement of shareholders' equity.
Financial analysis tools include the following:
a.Comparative financial statements
i. Year–to–year change analysis
b.Common–size financial statements
c. Ratio analysis
d. Cash flow analysis
ii. Index–number trend analysis
Comparative analysis focuses on exceptions and variations and helps the analyst to formulate judgments about data that may be interpreted in various ways. In short, the usefulness of comparative analysis is the notion that a number is more meaningfully interpreted when it is evaluated relative to a comparable quantity. A comparison, to be meaningful and fair, must be made between data, which are prepared on a similar basis. If data are not directly
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The purpose of this paper is to analyze the role and function of management in society and the workforce and to look into how it is implemented. Three main questions will be discussed, outlining, "What is management? aWhat do managers do? And what skills do managers need?" We will define management as a profession, look into what managers undertake and deliver in their daily output of work, different levels of management, and what skills managers need in order to produce the desired beneficial outcome for their organization.
What is Management?
To begin with lets look at management through the last 30 years. In 1980 management was defined by Dale S. Beach, The management of people at work (1980, p5), as 'The...show more content...
It could be said that the idea of having both of these methods is both ineffective and inefficient as they clash on how a manager should go about his/her job, but Mintzberg's model is a more in depth version of Fayol's model, that takes into consideration the wide variety of daily activities a manager must perform, not just a basic input/output/review scheme. A Study from the University of Nebraska by Fred Luthans challenges both Fayol's and Mitzberg's models and puts forward a new concept. This concept being that there are 4 main roles a manager must undertake, those being Communication, Traditional management, human resource management and networking (Luthans, 1988). Looking at all three of these models we can depict some similarities; that being that all models include the basic premise of planning, organizing and implementing, leading and motivating subordinates and then reviewing progress of both the project as a whole and employee output and work satisfaction. Depending on a manager's responsibilities held, there are different levels of management; top manager, middle manager and first level (front line) manager. In relation to what each of these levels of manager do, front line managers will automatically be more involved in leading and motivating as their main purpose is to supervise and make sure the job is being done. Middle managers will be heavily involved in organizing and implementing as they will delegate to the front line managers what must be done
What is Management? Essay Essay 1: What is Management?Financial Management Introduction ============
Every organization, irrespective of its size or ownership pattern, has to manage its finances. The overall objectives of an organization cannot be achieved in the absence of financial management. Many organizations fail in their objectives because of financial mismanagement and this failure rate is quite high among the small business enterprises. Hence, financial management is vital for all types of organizations, profit making as well as non–profit making. In case of non–profit making organizations also the effectiveness and performance depends on their financial resources management. Financial Management ====================...show more content...
3. Managerial Accounting deals with procuring of data for the organisation's management i.e. to serve the internal users with necessary accounting information to carry out the management tasks of planning, organising, actualising and controlling. " Management Accounting is the presentation of accounting Information in such a way as to assist management in creation of policy and in the day to day operations of an undertaking".
4. Financial Management deals with the process adopted by an organisation for taking financial decisions through analysing and interpretation of financial data for meeting the organisations objectives. Hence, the tasks involved in Financial Management include: Г Analysing financial needs
Г Forecasting financial needs
Г Managing working capital Г Planning capital structures Г Organising financial operations Г Monitoring and controlling finances etc. In fact raising funds and allocating funds for business are the two prime financial management tasks. Financial Planning Financial planning is an appraisal of those financial aspects that may or are likely too occur in future but need immediate decision making. It involves setting financial objectives in terms of profits, sales or acquistion of assets along with financial foorecasting for the organisation. This includes estimation in the areas of: Г
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Emerging Economies Selected: India and China Money Market
1.India
It is a market where short–term funds with maturity ranging from overnight to one year in India which are close substitutes of money even the financial instruments. It had diversified from conventional platform of treasury bills and call money to commercial paper, certificates of deposit, repos, forward rate agreements and most recently interest rate swaps.
"The money market fulfils the borrowing and investment requirements of providers and users of short–term funds, and balances the demand for and supply of short–term funds by providing an equilibrium mechanism" (Money Market in India, 2017). It serves as a mechanism through which central bank's intervention in the...show more content...
Commercial Paper
"It is an unsecured, short–term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories and meeting short–term liabilities." Maturities on commercial paper is usually below one year. It's issued at a discount from face value and shows market interest rates. It has collateral and so it is unsecured. It is usually issued by firms which have high credit rating.
India
It was introduced in India in 1990 and it is issued in the form of promissory note. "It was introduced in India with a view to enabling highly rated corporate borrowers to diversify their sources of short–term borrowings and to provide an additional instrument to investors" (Singhania, Singh, & Prajapat, 2016). "Subsequently, primary dealers and all–India financial institutions were also permitted to issue CP to enable them to meet their short–term funding requirements for their operations" (Singhania, Singh, & Prajapat, 2016).
China
"In an effort to promote the direct funding of corporations, improve the liquidity of the shortened of the interest rate market and foster a more responsive pricing of credit risk, in May 2005 the PBoC allowed non–financial firms to issue commercial paper (CP)" ("BRICs and Beyond", 2007). At End–September 2006, this segment of the market was already worth ($33bn, or 1.3% of GDP), representing just over half of all non–bank corporate interest–bearing liabilities and nearly 5% of the total market.
We live and work in a condition with challenging opportunities and dramatic uncertain economic environment, especially for managers, must have enough skills and knowledge to manage the changeable business environment. This essay will discuss whether the managers nowadays have the tendency to focus on economic results at the expense of more important things or not, and yes, the managers have the tendency to focus on the expense of more important things, the discussion will be demonstrated from the following concepts: contemporary management challenges–downsizing, workplace diversity, restructuring, globalisation and quality; organisational culture in Australia, managers' role in managing organisational culture. Managers today must be able...show more content...
Quality means the total features and characteristics of a product or service that has effects upon its ability to satisfy stated or implied needs (Davidson et al. 2006). All the challenges that managers need to face to are mentioned and defined above, the analysis of the relevance of these challenges and economic results will be addressed in the next paragraph.
All profit–orientated organisations are focus on strategies to measure the value they produced in financial terms. In that case, managers need to provide strategies and action plans to achieve organizational goals, encourage efficient employees, reward good performance, and support risk and creativity to achieve higher profits (Thach & Thompson 2007). Moreover, satisfy the customer needs is very important, because their purchasing activities can bring the profit (Thach & Thompson 2007). Financial performance not only can show whether the business gain or loss money, if gain more money means the business running well and is successful on financial terms, but also is an important measurement when evaluating the abilities of the manager. Although financial performance is important for the organisation, managers should not only focus on it, should also focus on the Get more content
Managing Personal Finances
Managing personal finances is an important skill to acquire. However, no where in school is this subject taught. As a result of a lack of preparation, our society is subject to a high percentage of people who lack financial success. Those who are successful at managing their personal finances will find that they are successful in many other areas as well. To learn how to manage personal finances there are books and web sites that provide a step by step guide to successfully managing personal finances. Those who lack financial success often possess many of the same traits.
The first reason most people lack financial success is because they lack knowledge, or better yet, a desire to gain knowledge....show more content... This is similar to goal setting in respect to that one must dream to make a dream come true.
A bigmistake commonly made by the financial failures is conforming. Listen to the advice of mother's: "If so and so jumped off a cliff would you?" Don't do what everyone else is doing; dare to be different! Don't be afraid to take calculated risks. This does not mean that you can actually jump off of a cliff, because that would be a foolish risk, this means again to foresee the results and consequences of your actions. The successful people in society are the ones who don't do the same thing as everyone else. For example, look at the modern art. This type of art is so profitable because it is so different from any other art created.
It is also important to beware of credit. Don't borrow excessively, because it will soon become debt, which has interest and other consequences. Instead, set a budget and stick to it firmly! Attitude is also an issue in financial success. If a person has a poor attitude, he will only get what he deserves! If the worst is expected, the worst will happen. It all comes down to the power of one's mind. Think positively! When setting goals, focus on the positive aspects, and don't include any negative words. Everything can be rephrased to be positive. Successful people are optimists! In order to be an optimist, only associate with optimists. The