Exploring the different concepts of financial management

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In this assignment the student is discussing the different concepts of financial management. The selected organization for this purpose is Intel Corporation. That is a well known semiconductor manufacturing company and a major player in the industry. In this assignment the student will cover all the necessary outcomes relating to financial analysis, budgeting and financial proposal.

1.1 financial data and validity

Annual Report to shareholders mainly used by most public companies to disclose to shareholders company information document. Usually the company's state chief executive, financial data, and continuous operation of the inaugural address, market segment is the result of the information, and new products and sub-activities and future plans for programs, including research and development activities, a report is. Annual report is probably the best source of information about public companies.

SEC Filings

Securities and Exchange Commission (SEC) rules require that companies that (public company) file financial reports with the Commission a number of sell securities. These public reports, and provide a wealth of information.

Financial information to private companies

Some private sector companies publish annual reports for internal use or for promotions. The company or the company could include this content on your website by contacting such a report may be able to get.

Find articles about the company. Maybe someone has written about the company include some financial details. Also, you can read about their activities through the company's financial position can put a few impressions.

Despite the resources of most libraries and is worth mentioning that there are companies that research and credit report or other similar reports, including financial information that companies sell.

Reliability and accuracy of financial statements

The financial statements may not be useful if they are based on recording transactions can be unreliable and inaccurate. Preparation of financial statements in there and trash from the doctrine of waste is a great example. The problem is that users of financial statements usually by reading the data can assess not only the presence of junk. Data may look good, but the fact that many of confusion.

Financial statements and deliberate dishonesty and incompetence, are the two main sources of inaccuracy. There are two main ways to deal with these problems. The first method of accounting for regular financial statement audit firm is to hire. Audit, the test according to the accountants out balances account and ensures accuracy.

The second method to prevent fraud and false financial reporting is to adopt adequate internal control is used. Internal controls, policies and procedures that businesses can take to protect your property and the right financial reporting, and to ensure the prevention of fraud. These methods are not mutually exclusive.

1.2 financial documents and stakeholders

Financial statements are used by all the stakeholders of an enterprise. Generally these stakeholders belong to one of two groups: internal users and external users. Internal Users are directly involved with the day-to-day operations of the enterprise while external users are not.

Internal stakeholders

Employees - Employees are stakeholders who are engaged, for various time periods, to help an enterprise achieve its objectives. Financial statements help employees make decisions about their long-term commitment to the enterprise.

Managers and owner/operators - An analysis of the financial statements help managers make informed decisions about the economic achievements of the enterprise and so adjust strategics and tactics to exploit identified opportunities and mitigate potential threats.

Boards of directors - Financial statements allow the board of directors to review the performance of the management in relation to the achievement of the objectives.

External stakeholders

Investors - Investors are stakeholders that buy shares in a company. Shares entitle the investor to a proportional share of the company's equity and profits. Shares in public companies are traded on stock exchanges and provide investors with dividends. Investors use financial statements to assess the financial strength of a company which impacts on their investment decisions. Existing equity investors use financial statements to monitor their investments and to evaluate the performance of management.

Lenders - Lenders are typically financial institutions that provide short term overdrafts, invoice financing for debtors, term loans for expansion plans, leasing finance for equipment purchases or mortgages for property purchases. Financial Institutions use financial statements to decide whether to grant a company with fresh working capital or extend debt securities (such as a long-term bank loan or debentures) to finance expansion and other significant expenditures.

Suppliers and customers - Suppliers use financial statements to assess the creditworthiness of the business. Customers are stakeholders that suppliers, to evaluate the financial strength and staying power of the company as a dependable resource for their business.

Government departments and agencies - They use financial statements to ascertain the propriety and accuracy of taxes and other duties declared and paid by a company.

Competitors - Competitors are stakeholder who compete for customers in the same market as the enterprise. Competitors use financial statements to benchmark their own financial results to identify variances to target for improvement or exploit as an opportunity. Key Competitors of Intel are 3Com Acer AMD Atmel Cisco Systems EDS Fujitsu Harris Corporation Hitachi IBM Integrated Device Technology Lucent 

Media - The media use financial statements to analyse and provide a commentary on the performance and position of an enterprise that they think would be of interest to their readership.

Labour unions - Labour unions are stakeholders who represent the best interest of the employees of an enterprise. They use financial statements to gauge how much of a pay increase an enterprise is able to afford in an upcoming wages negotiation.

Supporters and opponents - Other external stakeholders include people who may support or oppose the actions and activities of an enterprise. They include politicians, lobbyists, issue groups, consumer advocates, environmentalists, think tanks and foundations. They use the financial statements to provide objective evidence for their position.

2.1 PREPARATION OF BUDGET

CREATING A BUDGET

A budget doesn't have to be a restrictive plan that forces you to deprive yourself of what you want. In fact, a budget should be a guide, not a constraint. A reasonable budget allows you to do what you want. It allows you to use your resources where they're most needed, so your business will head in the right direction. Creating a financial plan lets you control your business's cash flow instead of it controlling you.

Creating a budget doesn't have to be a complicated or time-consuming task. Actually, in the beginning, it's best to keep things simple. The key is to determine how much you'll spend and earn in any given year, and then use that figure to project how you want to grow in subsequent years. The budget answer the following questions

How much can you realistically sell next year?

How much will you charge for your goods or services?

How much will it cost to produce your product?

How much are your operating expenses?

Do you need to hire employees? If so, how many, and how much will you pay them?

How much will you pay yourself?

How much payroll tax and unemployment tax will you pay?

How much money do you need to borrow, and how much will your monthly loan payments be?

In the income category, conservatively estimate how much sales revenue you'll have next year.

As far as expenses go, consider advertising, auto, insurance, rent, taxes, phone, utilities, equipment, payroll.

Once you see your projected income and expenses on paper, you'll know exactly how much you need to make every month to keep things afloat, and how much you'll have left over for extra expenses.

2.2 ANALYSIS OF BUDGET OUTCOMES

Introduction

A budget is an intelligently prepared estimate of future business conditions. In a business concern, such an estimate must include the income, probable costs, and expenses. Budgets are designed to assist management in the coordination of the selling, production, and administrative functions of the business. Budgetary control system is the term applied to a carefully worked-out plan covering the coordination of all these functions, as well as the continuous study and comparison of the actual operating figures with the budgeted figures to interpret the reasons for discrepancies.

Target Costing

Target costing is defined as a technique for profit management. It aims on ensuring that future products bring-in sufficient profits that enables the firm in achieving its long-term profits plans. This objective can only be made possible if these two conditions are met: (1) products are designed to satisfy the demands of the firm's customers; and (2) it is manufactured at a sufficiently low cost. The cost at which the product must be manufactured is first identified in the target costing systems. This is to know if it enables the achievement of the profit objective. Then a disciplined environment is created afterwards to help ensure the achievement of the target cost.

Target Costing as a Valuable Tool

Target costing is a valuable tool and philosophy in supporting the overall efforts of an organization in remaining its competitiveness with regards to cost, while being able to meet the customer's demands, all at the same time.

Accountability for results is another critical issue to the long-term success of target costing. One way to create accountability is through holding of regular meetings that discusses the progress throughout the development cycle of the new product or service.

In order to achieve target cost goals, organizations have undertaken various activities, ranging from minimal to extensive efforts. Among the less extensive efforts are the use of factual data in negotiating with suppliers and the sharing of long-term strategies to gain cooperation from suppliers.

Target costing is not only useful for components and unique raw materials. It may be also used for standard raw materials, packaging materials, services, outsourcing, tooling and capital.

Target costing is useful beyond new product or service development. There are evidences in case studies where organizations also use target costing for the improvement of their existing products or services.

Target costing can also be used effectively for the purchase of high dollar services, especially if the services can be tied back to a product or service that will be resold.

3.1 CRITERIA FOR FINANCIAL PROPOSAL

The best proposal is one you don't have to write. Tip the competitive scales in your favor and try to eliminate the proposal process altogether. A competitive field reduces the odds of landing the business, so side step that challenge, if possible.

Explain to clients why they also benefit from skipping the competitive proposal process.

Point out that the consultant selection process takes their time and attention away from their business.

Stress that you have the skills to get the job done, and that the longer the process takes, the more it costs them and delays the resolution of their problems.

3.2 PROPOSAL AND VALIDITY

Direct and Indirect Costs

One of the key objectives in applying for research funding is to obtain funding sufficient to cover all costs of the proposed research - both direct and indirect costs.

Accordingly, in preparing the budget which accompanies the award application, it is important to:

identify all direct costs

include an appropriate provision for indirect costs.

This provision is generally expressed as an overhead rate applied to all direct costs or to a specific category of direct costs.

The practice is to request an overhead provision of 40% of total direct costs on research contracts, 15% of total direct costs on corporate/industrial consortia research grants, and 10% of total direct costs on research grants from foundations, unless the sponsoring agency has a prescribed rate(s).

The Indirect Costs (Overhead) section is devoted to this important topic in order to promote a clear understanding of those costs which are expected to be covered indirectly, i.e. by the provision for indirect costs, and those which are to be covered directly, i.e. direct costs.

The distinction is particularly relevant to applications to funding agencies which restrict support to the direct costs of research. A faulty understanding of what constitutes a direct cost may lead to understating these costs.

Specific Costs

Salaries - Salaries must be within the range for the appropriate University position classification.

Salary increases

Allowance must be made for upcoming salary increases effective July 1st of each year.

A salary increase may include an across-the-board (economic) increase, and an appropriate merit/step increase in accordance with company guidelines.

If upcoming increases have not been established at the time of proposal preparation, consult with the Human Resources Department with respect to appropriate estimates.

Vacation pay - add vacation pay of 4% for casual and term employees

Benefits - A standard benefit rate representing the full employer cost of benefits will be charged to the award. The current rate as a percentage of salary for appointed staff and non-appointed staff can be found on the Standard Benefits Rates page of Financial Services website.

Computing costs - Ensure that the cost of computing services is considered. Consult Computing Services for advice.

Travel costs - The sponsoring agency may have guidelines or limits with respect to travel costs. Refer to Travel and Other Reimbursable Expenses for company regulations with respect to eligible and ineligible travel costs.

Supplies and Equipment - Specific supply and equipment requirements should be identified and costed using the best available information, e.g. supplier's price lists. In the case of significant and specialized items, consult with Procurement Services.

3.3 STRENGTHS AND WEAKNESSES OF PROPOSAL

Planning your finances has many benefits. Whether you do it yourself or you hire a professional, the important thing is to know that a good plan can help you turn around your financial outlook and can take care of many problems created by bad debts or past mistakes. To make the most of financial planning, it's important to do it properly and take full control of your situation.

Benefit From Financial Planning

Make a list of your short- and long-term goals. Include anything that requires a significant investment, such as travel, buying a new house, going back to school or getting a new car. List as many reasons as you can think of as to why and how planning and saving will benefit you. The clearer you are of your direction and goals, the easier it will be to pursue them.

Protect yourself and your loved ones in case of accidents, loss of a job or a major catastrophe. Having a financial plan in place will allow you to take the pressure off and enjoy everyday life without worrying so much about what will happen if a crisis hits. Protective financial planning can include anything from buying life insurance to having an emergency savings account.

Take charge of your debt. One--if not the main--benefit of financial planning is the ability to take control of what you owe. If you want to pay off your debt as soon as possible, you will need a good plan to help you decide how to allocate your money directly to where it is most needed.

Use financial planning to get a new business off the ground. Not only will you need a good business plan in order to get a business loan in the first place, but you will also need a budget in order to spend your money wisely once it's available. Knowing what to invest in and what to avoid when starting a new business can benefit you, especially during the first year.

Review your plans regularly. As you move toward your goals, it is likely your plans will change or need revising. Don't be afraid to start anew. As long as you are still working toward your goal, taking a different route is entirely acceptable.

3.4 PROPOSAL AND ORGANIZATIONAL OBJECTIVES

So we have some planning and good plans, goals and targets are. Goals and objectives set correctly and provide the necessary support and help in the investigation there. How smart of you to go about identifying targets before the dive, it is important to understand that there is a vast difference between the goals and objectives.

Goals relate to our aspirations and vision. For example, I kind of have the goal of becoming financially independent.

May is a target or targets to meet this goal will need to be many. For example, to become financially independent and I to 1) the need to get out of debt, (2) to improve my defense and 3) start a business.

Method most well known for developing the objectives of non-smart way is, and smart approach is well understood among managers, but he practiced in a bad way. A shortcut is the worthwhile goal, the specific (concrete, detailed and well defined), to describe key features of measurable smart points (number, quantity, comparison), (is possible to implement) obtain realistic (resources and time bound (consider a specific time line) frame.'s look at these features in more detail. SMART goals are our goal to cross.

Specific

This is clear and straightforward goals, and work stress and the result is required. The objective must communicate what you want to see the need. Specific objectives it helps to ask the following questions to help set

Can be obtained

Require additional targets to be achieved if the target is too far in the future, you make it hard to keep motivated and strive towards achieving it will get. Objectives, unlike your aspirations and visions, it must be to keep you motivated. However, to obtain and objectives still need you constantly, but so far that you are frustrated and lose motivation.

Realistic

Goals that can be achieved is not realistic. However, realistic does not mean easy. Realistic means that you have the resources necessary to accomplish this. Aimed at acquiring the skills and equipment, money and other support necessary to achieve tasks such resources are needed. Most of the goals are achieved, but need to change your priorities to make it be.

Medial

If the goal is measurable, which means that the source recognized measure we are following up the results of our business, we have made progress towards achieving the goal. Used to measure than the standard. For example, financial freedom means to me, is quite different compared with what you meant to be. In many cases, as reported, if you can not measure, you can not deal with it! More importantly, analogies help us to know when we have achieved our goal.

Time

Timed to achieve this goal means to set time limit. The deadline for each task is to create a sense of urgency. If you do not set a deadline and needed to work to encourage and speed will be reduced. Deadline is to make the necessary urgency and urge action.

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