Managing Financial Principles and Techniques

Topics: Strategic management, Strategic planning, Forecasting Pages: 12 (3110 words) Published: July 7, 2011
MANAGING FINANCIAL PRINCIPLES AND TECHNIQUES

DESCRIPTION OF THESIS:

This thesis is the first of two that provide learners with a foundation in financial principles and techniques relevant to the strategic management process. In this unit, the focus is on the management of costs through the use of forecasting, appraisal and financial reporting procedures. The main objective is to provide learners with the tools and confidence to apply analyze and evaluate financial information. This will enhance their decision-making skills through the use and validation of forecasting techniques, and the consideration of financial statements.

To complete this unit effectively learners will need to show an ability to judge the sources, nature, accuracy and completeness of cost-based information. They will also need to apply strategies associated with determining sound management information with reference to the sources of funds, the potential investment of resources, and the interpretation of financial statements.

 This unit is the first of two that provide learners with a foundation in financial principles and techniques relevant to the strategic management process. In this unit, the focus is on the management of costs through the use of forecasting, appraisal and financial reporting procedures. The main objective is to provide learners with the tools and confidence to apply analyze and evaluate financial information. This will enhance their decision-making skills through the use and validation of forecasting techniques, and the consideration of financial statements.

To complete this unit effectively learners will need to show an ability to judge the sources, nature, accuracy and completeness of cost-based information. They will also need to apply strategies associated with determining sound management information with reference to the sources of funds, the potential investment of resources, and the interpretation of financial statements. 

1. Apply relevant forecasting techniques to obtain information for decision making

2. Examine and apply the financial appraisal techniques used to evaluate potential investment decisions

3. Interpret financial statements for planning and decision making 

CONTENT
1. Forecasting
Forecasting: forecasting costs, cash flow forecasts, forecasting techniques of scattergraph, time series, linear regression, forecasting and price movements, using indices, limitations of index numbers, forecasting problems, recommendations.

Funds: sources, supporting proposals for obtaining funds internally and externally, gearing ratios, effect of different types of funding on shareholder and market perception, selecting appropriate sources of funds for different projects, comparison of costs.

2. Financial appraisal techniques
Investment: definition, capital and revenue expenditure, types and interaction with risk, sensitivity analysis

Investment appraisal: accounting rate of return; payback period and cash flows, discounted

cash flow - net present value and internal rate of return, time value of money and allowance for inflation in money and real rates of discount, taxation and project appraisal, post audit

Public sector capital budgeting: social and ethical costs and benefits and the use of cost benefit analysis

3. Financial statements
Statements: estimates and assumptions relating to the profit and loss account, balance sheet and cash flow statement, use of spreadsheets in financial planning, financial resources audits and the use of balanced scorecards — Kaplan and Norton

Financial ratios: employment of financial ratios internally and externally, financial profiles of businesses, calculation of key relationships reflecting business liquidity, efficiency and profitability

Interpretation and limitations of ratio analysis: emphasis on the interpretation of ratios and encouragement of the use of contingency and risk analysis to justify decisions. This thesis enables the...
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