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

Financial Decision Making - bear witness ExampleTherefore, it wont be an exaggeration to say that finance is the lifeblood of all enterprises. This is break upicularly so when economics are undergoing structural changes and economic reforms are in the making to introduce greater elements of competitive forces. In a competitive environment managers are faced with a challenge to compete for resources and to find a best(p) utilization of such resources. Finance is a specialized subject in itself but it draws heavily on other related functions like marketing, action, personnel, purchase etc. Drury (2004, p.5) states Management accounting is concerned with the provision of development to people within the organization to help them make better decisions and improve the efficiency and effectiveness of vivacious operations(Lev, 2001) stated that existing financial accounting standards sharply distinguish mingled with physical and intangible assets. While physical assets (e.g., proper ty, plant, and equipment) are valued on the balance sheet at the price paying to obtain them, less accumulated depreciation, intangible assets are expensed as incurred. Accounting is therefore considered an integral part of the knowledge management within an organization. ... What mix of equity and debt to use How much financial risk to wee Making a calculated financial decision makes a big difference between a prosperous 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 live up to from two or more alternative courses of action whereas forward planning involves means establishing plans for the next. The question of survival of the fittest 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 informati on and the estimates about future predicted 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 economicsDemand 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 centralize is on internal reporting. On the other hand financial accounting is considered to have a accent on reporting to external parties. It measures and records business transactions and provides financial statements that are based on the Generally recognised Accounting Principles (GAAP). Therefore managers are responsible for the financial statements