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Dissertation in the Field of Information Technology in Financial Management in Partial Fulfilment of the Requirements for the Master of Business Administration Degree with a Major in Finance and a Minor in Systems

APPLYING COMPUTER TECHNOLOGY IN FINANCIAL MANAGEMENT

Indian Institute of Social Welfare and Business Management MBA (Day) 2005 -2007 20 April 2007

Brinda Raymahasay Flat no 12-G 116 Southern Avenue Calcutta 700029 (033) 2466 2677 98311 81188 brinray@gmail.com

B Raymahasay

107/MBA/050022

Table of Contents
I Introduction ……………………………………………………...3 1.1 1.2 1.3 II Definition and scope of financial management……………..3 Importance of keeping records……………………………..6 FIS used at different managerial levels……………………...7

Discussion of various types of financial information systems……...9 2.1 2.2 2.3 2.4 2.5 Financial Decision Support Systems………………………...9 Financial Expert Systems…………………………………..11 EIS and how it helps with financial decision making……….12 Business Process Analysis………………………………….13 Oracle Financials E-business Suite…………………………15

III

Impact of IT on managing the financial aspects of business………17 3.1 3.2 3.3 Advantages of using these systems…………………………17 Limitations of these systems………………………………..21 An optimistic look into the future of using financial information

systems…………………………………………………………………..23

IV V

Conclusion……………………………………………………….25 References………………………………………………………...26

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I

Introduction

1.1

Definition and scope of financial management

Sound financial management is at the core of any business. What exactly is meant by financial management?

• In short, the main objectives of financial management would be to:

• Create wealth for the business

• Generate cash, and

• Provide an adequate return on investment bearing in mind the risks that the business is taking and the resources invested

• Even non-profit organisations need to manage and keep records of all transactions (income and expenditure) 3

B Raymahasay

107/MBA/050022

The key elements to the process of financial management encompass three key management functions:

Financial Planning

No business can thrive unless enough funding is available at the right time to meet the needs of the business. In the short term, funding may be needed to invest in equipment whereas, in the medium and long term, funding may be required for significant additions to the productive capacity of the business or to make acquisitions.

Financial Control

Financial control is a critically important activity to help the business ensure that the business is meeting its objectives. Financial control addresses questions such as:

• Are assets being used efficiently and are they secure?

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• Is the firm moving in the right direction i.e. is it making profits?

• Does management act in the best interest of shareholders?

Financial Decision-making

The key aspects of financial decision-making relate to investment, financing and dividends:

• What is the best and most profitable investment?

• How to raise cash for a new project?

• What venture is likely to attract investors?

• What percentage of profit should be retained and how much should be given away to investors?

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107/MBA/050022

1. 2

Importance of keeping records

A firm needs to keep track of its revenues and expenditure. This system goes back to hundreds of years, but a scientific accounting system where it is possible to detect errors did not exist not until the double-entry accounting system was developed in the 1400s in Italy.

A transaction processing system is a type of information system that keeps records of processes that can be divided into individual, indivisible operations, called transactions. A transaction is defined as the smallest unit of business activity and the purpose of a real-time transaction processing system is...
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