Strategic Finance and Management Accounting Quarterly
http://search.proquest.com.ezproxy.bellevue.edu/accounting/publication/48426/citation/140080F5B865F4 A9EA6/1? Accounting=28125
- STRATEGIC FINANCE ARTICLE SUMMARY
Based on the above article, a keen note is taken to make a consideration on the key concepts that make up the strategic finance. Regarding the item, strategic finance is based on two critical components like financial forecasting and planning. Under this particular concept, strategic finance tool is vital for any organization that needs to realize high level of success (Bayar et al., 2018). Through strategic fiancé various capability of the organization are critically analyzed. Such skills include modeling capabilities and scenario analysis. Necessary finance tools are very crucial in the determination of very profound finance models.
They also help in the evaluation of various financial scenario which are vital for the success of the organization. Strategic Finance should create a secure connection between the firms’ management tools and other databases as well as systems put in place (Bayar et al., 2018). In this regard, it should aim at creating a long-lasting finance solution and possess capabilities of solving liquidity issues that may affect the organization. Proper finance strategy can be used in setting the internal targets, carrying out financial analysis and providing financial data which are vital in the process of decision making.
There are key concepts and points that are vividly described by the above article. The first point brought under this category is the relationship between strategic finance and strategic planning. Under this particular concept, the article argues that most organization requires very sound and flexible financial tools that have the capabilities of analyzing multiples changes within the business and financial markets (Bayar et al., 2018). Such devices should be capable of conducting scenario analysis and other financial modeling which are vital for the success of the organization.
Strategic finance tools, furthermore, should be able to create business models which can establish connection between the operational plans and the strategic targets. The second point in the present article is business intelligence. Under this concept, the article argues that strategic finance model should play a vital role in the sensitivity analysis, which would create opportunity for the more profound understanding of various scenarios within the business context (Bayar et al., 2018). It is through this context, and the business will be able to develop business intelligence. The other point describes by the article is known as complete finance modeling. In this point, a description is made and more in-depth insight into the effect of strategic decision is made possible by effective finance modeling.
Instances of such strategic decisions include shareholders’ value, balance sheet, cash flow as well as a firm’s bottom line. Various models of strategic finance should create a very profound bridge between financial analysis and financial modeling. It should offer a lot of flexibility in the development of different financial models as well as measuring the impacts of financial statements (Bayar et al., 2018). The article further expounds that strategic finance modules usually possess inbuilt finance models that are vital in the designing and developing of various spreadsheet-based models. The tools availed by the strategic finance models are applied in the designing of the complex logic statements. Such statements are crucial in the preparation of the analysis tools which saves time in conducting the analysis process.
Under this situation, the tools can also be used in creating other alternative strategies as well as validation of financial data for accurate analysis of the firm’s financial performance. The fourth point brought out vividly by the article is known as strategic finance and capital management (Bayar et al., 2018). Under this concept, the article elaborate that any strategic decisions, in normal business circumstance, have a direct impact on the expected cash inflow of the company. The report further elaborates that cash flows always have direct impacts on the firms’ statement of financial position as well the financial performance.
The tools applied in the strategic finance are vital in creating a profound analysis, which in turn support decision-making process of the company. Such decisions usually involve the working capital management, taxation level, capital structure among other choices (Bayar et al., 2018). Furthermore, the tools play vital roles in studying the impacts of the overall cost of capital, thereby adding value to the organization based on the cost reduction and fiancé savings.
The core ideas that the authors were trying to convey were based on how vital strategic finance is crucial to the organization. In my perspective, the authors of the above article accomplished their goals concerning how they described various concepts that are contained within strategic finance (Bayar et al., 2018). The section includes major points such as the relationship between financial planning and forecasting, which is vital for the success of any organization. Furthermore, a vivid analysis of the relationship between strategic finance and strategic planning is created by the article. Such kind of concepts is vital for the success of any organization.
Working determination also lies in proper strategic planning and forecasting as described in the article. The authors also indicated that strategic finance help in the analysis of business intelligence, which is vital in understating of various business scenario (Bayar et al., 2018). Complete finance models have also been given priority by the authors in their analysis, sighting that the models perform a vital role in strategic decisions of the company such as shareholders’ value maximization, balance sheet, cash flow among others.
Through the concept described by the authors in the most comprehensive manner, I feel that they provided a more in-depth insight concerning the topics presented. This is based on how they offered very profound elaboration on the points contained within the strategic finance. The authors explained the meaning of the concepts in the most comprehensive manner (Bayar et al., 2018). Furthermore, they have elaborated on how the points mentioned under strategic finance have direct relationship with the firms’ financial decision. It thus creates a profound understanding of the role of strategic investment, strategic planning and even financial planning which are vital concept for any firm.
I picked this article due to the profound insight that it provides to strategic finance. The concepts contained within this article are crucial in creating understanding of financial matters of the firms. It helps in the creation of various economic models that are vital for the success of any financial forecasting and planning (Bayar et al., 2018). Finance management is incredibly essential for the success of any organization. It is through this article the liquidity management criteria are appropriately analyzed.
- MANAGEMENT ACCOUNTING QUARTERLY ARTICLE SUMMARY
Management Accounting Quarterly refers to journal developed by various practitioners of financial and accounting management and availed online for academic application by students. It contains a profound analysis of the best practices of accounting as well as financial management. The article presents various concept and points that are important in understanding various aspects of management accounting (Johnstone, 2018). It highlights some of the accounting techniques which are used in performance of management accounting in an organization setup. The methods presented plays more significant roles in the improvements of finance and accounting knowledge in an education setup.
Furthermore, the articles also describes the theories that have been developed by the various scholar to help in explaining the modules present in both accounting and finance. The techniques which are critically analyzed under this article include includes Activity Based Costing, Resource consumption Accounting, Grenzlankosstenrechnung (GPK), stock option calculation techniques, theory of constraint, target costing, statistical process control among others (Johnstone, 2018). Based on the method mentioned above, the article offers numerous points that are vital in the understanding of the concepts aligned within the management accounting.
Regarding the first management accounting technique, most organization have employed Activity Based Costing to increase technology and productivity within their firms. The article explains that this technique is used to allocate the indirect cost and the overhead cot according to the level of activities (Johnstone, 2018). Under this technique, elaboration is made by the article based on the fact that the method recognizes the relationship that exists between the manufactured products, overhead activities and the general cost. The technique also assigns the indirect value of various products, thus can create a profound understanding of the expenditure incurred on production of individual unit of output.
The article also highlights some of the critical areas where this technique is applied such as the manufacturing industry. This is due to that fact that the technique rely on the available cost data, thus availing the actual cost incurred in the production process. Furthermore, it helps in the classification of total cost incurred by the company in production process (Johnstone, 2018).The other management accounting that is broadly discussed by the above article is known as the Resource consumption Accounting. Under this technique, the article vividly describe very crucial points that are applied in understanding the application of the methods. Resource consumption Accounting is one of the predominantly used management accounting technique in most of the firms.
Resources are very crucial aspects of the company. It thus calls for accountability when it comes to resource allocation since resources are generally scarce as compared the firms’ needs. Resource consumption accounting (RCA) define the firms’ capacity based on the resources and not activities undertaken by the firms. It determines the actual cost of each resource used in the production of particular units of output (Johnstone, 2018). RCA also, as highlighted by the article, make a keen analysis of the unplanned wasted resources and consider any other complaints from managers on related resources available so that corrective actions can be taken.
The article further highlights that this concept is vital in the sense that it takes into account under costing of resources during the cost planning, unreliable decisions regarding related products, shortages of various resources among other vital aspects (Johnstone, 2018). This technique also make recognition of cost as either proportional or fixed, based on the level of resources consumptions. Though this technique, the article postulate that it aid in the planned resource output demand as well as the conversion of the planed resources output demand into monetary terms.
The next technique of management accounting described by the article is known as Grenzlankosstenrechnung (GPK). This technique, as put forward by the article, is applied in firms with repetitive routines and specific cost centers. Under this particular aspect, it is vital to note that the size of the cost center should be manageable (Johnstone, 2018). The above article elaborate that in GPK technique, the variable costs are defined in the basis of the units of output of each cost Centre activity, and not with the quantity of production in place. The variable expenses are then re-allocated to other primary departments concerning the number of units used. Furthermore, the aspect of fixed is considered in calculation of the entire coast. The article elaborate that the fixed costs are allocated concerning the number of budgeted units output need in every vital cost center.
The actual variable cost incurred is often called the authorized cost or the target cost. The article also creates a vivid elaboration on the stock option calculation techniques. Under this concept, the article majorly categories stock options into two major groups known as the call options and put options. A call option gives the seller opportunity to sell his or her stock option at an agreed price known as exercise price (Johnstone, 2018). On the other hand, call option allows the buyer to purchase an agreed amount of stock option at a price known as exercise. The concept of management accounting is used in the determination of exercise price for both the call and the put options.
The author of the above article was trying to convey information on the vital role that management accounting performs within an organizational context. It further highlights more elaborately on various concepts used in management accounting in the allocation of both direct cost and the overhead (Johnstone, 2018). It also creates an analysis of each individual elaborating on the application and how it impacts of expenditure incurred by the firms in production process. Through this, in my investigations, I feel that the author of the article accomplished his or her goals by creating very profound analysis of the concepts used in Management accounting.
Based on how the author of the article has described the various techniques used in management accounting, the article created additional insight concerning the topics discussed (Johnstone, 2018). The item has brought out how the organization applies the mentioned techniques in the analysis of cost so that proper accountability can be created to track the firms’ financial performance. Through the methods, cots have been minimized by the firms, leading to higher profit margins. This has increased the working capital of the firms and has also increased their operating capabilities.
Bayar, T., Cornett, M. M., Erhemjamts, O., Leverty, T., & Tehranian, H. (2018). Strategic Finance; Montvale: An examination of the relationship between strategic Finance among industry firms and firm performance. Journal of Banking & Finance, Bellevue University Library, 87. Retrieved 31 August, from http://search.proquest.com.ezproxy.bellevue.edu/accounting/publication/48426/citation/140080F5B865F4 A9EA6/1? Accounting=28125
Johnstone, L. (2018). Management Accounting Quarterly: Theorizing and modeling social control in environmental management accounting research. Social and Environmental Accountability Journal, Bellevue University Library, 38(1). Retrieved 31 August, from https://www.imanet.org/insights-and-trends/management-accounting-quarterly/maq-index?ssopc=1
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