Managing Financial Principles and Techniques

MANAGING FINANCIAL PRINCIPLES AND TECHNIQUES

TABLE OF CONTENTS

INTRODUCTION…..…………………………………………………………………………………3

COST CONCEPTS TO THE DECISION MAKING PROCESS……..…………………………...4

FORECASTING TECHNIQUES TO OBTAIN INFORMATION FOR DECISION MAKING…..8

BUDGETARY PROCESS………………………………………………………………………….13

COST REDUCTION AND MANAGEMENT PROCESS………………………………………...16

FINANCIAL APPRAISAL TECHNIQUES FOR STRATEGIC INVESTMENT DECISION ….17

INTERPRETING FINANCIAL STATEMENTS FOR PLANNING AND DECISION MAKING 19

BIBLIOGRAPHY…………………………………………………………………………………….35

INTORDUCTION

As the business environment changes, the organizations are also expected to change their business processes. There are several business processes in an organization that needs to manage effectively, so that the organizations may survive in the foreseeable future, meanwhile achieving their short term objectives as well.

The most important business process of an organization is its Finance Function. Finance function is being managed through a set of financial principles and techniques. Various financial experts have developed different financial theories and techniques that allow organizations to manage their finance function in the most effective way by following those principles and applying different techniques.

In this report we will analyze and interpret different financial principles and techniques with the context of predetermined set of criteria.

LEARNING OUTCOME 1: COST CONCEPTS TO THE DECISION-MAKING PROCESS

IMPORTANCE OF COSTS IN THE PRICING STRATEGY

Once a business has decided its strategy for the next five years, in terms of, for example, market share, revenue and profit growths, diversification into new areas, development of new products etc, it then has to set about planning the achievement of the strategy. At this point, it will need to recognize any "key factors" that may limit the extent to which targets can be achieved, at least in the short term.

One most important key factor that can impact the achievement of those targets to a great extent is the costing

...