Financial Decision Making Essay Example | Topics and Well Written Essays - 1500 words

Financial Decision Making - Essay ExampleTherefore, it wont be an exaggeration to say that finance is the lifeblood of every enterprises. This is particularly so when economics are undergoing structural changes and economic reforms are in the making to introduce greater elements of militant forces. In a competitive environment managers are faced with a challenge to compete for resources and to find a better utilization of such resources. Finance is a specialized humble in itself but it draws heavily on other related functions like marketing, production, personnel, purchase etc. Drury (2004, p.5) states Management accounting is concerned with the provision of information to population within the organization to help them make better decisions and improve the efficiency and effectiveness of existing operations(Lev, 2001) stated that existing pecuniary accounting standards astutely distinguish between physical and intangible assets. While physical assets (e.g., property, plant, an d equipment) are valued on the balance sheet at the price paid to get them, less accumulated depreciation, intangible assets are expensed as incurred. bill is therefore considered an integral part of the knowledge precaution within an organization. ... What mix of equity and debt to intent How much financial risk to take Making a calculated financial decision makes a big difference between a comfy and growing business and a liability. The prime function of a management executive in a business organization is decision-making and forward planning. Decision making means the process of selecting one action from two or more alternative courses of action whereas forward planning involves means establishing plans for the future. The question of choice arises because resources such as capital, land, labor and management are limited and can be employed in alternative uses. The manager is thus supposed to analyze the past data, current information and the estimates about future predicte d as best as possible. This application of economic theory to business management is known as managerial economics. This is micro-economic in character as the unit of study is the company. The following aspects are said to be generally under the ambit of managerial economics consider analysis and forecastingCost and production analysisPricing decisions, policies and practicesProfit managementCapital management.Often a distinction is made between management accounting and financial accounting. Management accounting measures and reports financial and non-financial information that helps managers make decisions to fulfill the goals of the organization. Its focus is on internal reporting. On the other hand financial accounting is considered to have a focus on reporting to external parties. It measures and records business transactions and provides financial statements that are based on the Generally Accepted Accounting Principles (GAAP). Therefore managers are responsible for the financ ial statements