Financial Analysis Flashcards
(31 cards)
Financial objectives and business strategy
Organisations must consider a number of key fianncial factors in assessing their strategy
Financial Risk
Financial Return
Funding
Financial Risk
Financial Return
Funding
Impact of tech on finance and professionals
There are three types of decision relevant to the financial requirements of the business
Sensitivity Analysis
Calculating the effect of changes in certain variables such as demand or inflation on a forecast
Leading and lagging
Raising cash by delaying payments to suppliers and accellerating receipts from customers.
Sources of Finance - SAF Model
Investment Appraisal
Risk
Uncertainty
Expected Value
Evaluating decisions by using expected values has limitations
A Decision Tree
Shows the choices and possible outcomes of decisions along with the probability and the value of the expected outcome
Evaluating decisions using a decision tree has a number of limitations
Strategic cost manegement - What is full cost
The total amount sacrificed to achieve a particular objective, including all related costs
Forecasting
Can help with planning and decision making by making predictions about the future. Can be QUALITATIVE and base don judgement.
Linear Regression - The Coefficient of determination
Is calculated as r-squared. and explains the proportion of variation in one variable that is explained by variation in the other. So r-squared = the percentage
Time Series Analysis
Aims to seperate seasonal and cyclical fluctuations from long term underlying trends. A form of regressiona analysis where one variable represents time.
Linear Regression
The Coefficient of determination
Time Series Analysis
A budget
A business plan for the short term,usually a year.
Benefits and limitations of budgets
Traits of successful budgeting
Limitations of control through variances and standards
When an organisation is trying to decide between two or more possible courses of action, only costs that
vary with the decision should be included, relevant costs.
