Short Articles (PDF) - Excellence in Financial Management

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7. External Importing of Data: The budgeting system should be able to import data from external systems. This can streamline the process and make budgeting more of a value-added activity. Good budgeting programs should include features like "what if" analysis and customization options at each budget control point. The real power of automating the budgeting process can be found in consolidating large volumes of data and integrating all budget control points into a single, unified budgeting system. One alternative to budgeting software is the use of Application Service Providers (ASP's) for the overall budgeting process. This so-called e-planning alternative offers some big advantages over formal installation of enterprise software: - Rapid deployment throughout the entire organization. - Bypasses the costly life cycle of designing and implementing formal programs. - Ensures consistent integration throughout the entire organization - Instantly transforms budgeting into a dynamic, real time process where on-line templates are used to update budget information. Whichever option you choose, budgeting software or ASP's, you will need to have a process that is flexible and responsive to constant change. The single biggest problem in budgeting often boils down to failure to integrate the process. This should be a key concern in whichever option you choose. 14
Project Evaluations Basic Economics for Capital Budgeting Analysis Planning for capital assets involves a process of calculating the Net Present Value of the investment. Net Present Value is calculated by discounting the future changes in cash inflows and cash outflows using the weighted average cost of capital. The resulting present value of cash flows is compared to the Net Investment for the Capital Asset. The result is called Net Present Value. It should be noted that Net Investment includes all costs to place the capital asset into service plus any working capital requirements. If the capital asset has above average risks, than we would increase the weighted average cost of capital. If the Net Present Value is positive, this indicates that value is added by making the investment. If the Net Present Value is negative, this indicates value destroyed. The objective is to have a total asset portfolio where the total Net Present Values are above zero. Besides Net Present Value, we can use Internal Rate of Return and Discounted Payback Period to evaluate capital projects. Internal Rate of Return is the rate of return that the project earns. It is calculated by finding the discount rate whereby the total present value of cash inflows equals the total present value of cash outflows. Modified Internal Rate of Return can be used to remove the assumption that funds are reinvested each year at the Internal Rate of Return. We can also calculate the number of years it takes to recoup our Net Investment. Simply calculate a running total of the discounted cash inflows to determine the Discounted Payback Period. Net Present Value, Internal Rate of Return, and Discounted Payback Period are three popular economic criteria for evaluating whether or not to invest in a capital asset. All three concepts give consideration to the time value of money. Estimating incremental cash flows is one of the most difficult steps in the overall evaluation process. What is Internal Rate of Return The actual rate of return earned on a project is called Internal Rate of Return (IRR). The Internal Rate of Return is the discount rate where the total present value of cash outflows equals the total present value of cash inflows. For projects with equal cash flows, a payback calculation can be used to find the IRR. If projects have varying cash flows over the life of the project, a trial and error approach must be used. However, most spreadsheet programs include an IRR formula which makes the calculation very simple. 15
Page 1 and 2: Excellence in Financial Management
Page 3 and 4: Cash Flow Management Basic Cash Flo
Page 5 and 6: Basic Accounts Receivable Managemen
Page 7 and 8: Financing What are Effective Intere
Page 9 and 10: Companies like GE (General Electric
Page 11 and 12: Budgeting & Forecasting Financial F
Page 13: Customer C owes $ 30,000, there is
Page 17 and 18: Using Decision Trees Too often Fina
Page 19 and 20: 1. Determine Market Values for Capi
Page 21 and 22: Finally, how do you measure IC Well
Page 23 and 24: Ratio Analysis Cash Flow Ratios Alt
Page 25 and 26: Another ratio that can be used in m
Page 27 and 28: Measuring Sustainable Growth Is the
Page 29 and 30: Value Based Management Valuations o
Page 31 and 32: Lease Valuations A lease is an agre
Page 33 and 34: categories. Keep in mind that we ar
Page 35 and 36: Lessons from the Entrepreneur Lesso
Page 37 and 38: this new knowledge. Therefore, "int
Page 39 and 40: Intangibles over Tangibles In today
Page 41 and 42: known as the Value Dynamics Framewo
Page 43 and 44: competencies. - Business success is
Page 45 and 46: Understand the Customer: You must u
Page 47 and 48: “For vision and strategy to be mo
Page 49 and 50: involves risk and the acceptance of
Page 51 and 52: (government, interest groups, and t
Page 53 and 54: Value through Marketing For any org
Page 55 and 56: • Accuracy - Some sources of info
Page 57 and 58: Four Steps to Calculating EVA EVA o
Page 59 and 60: Risk Management Step 1 in Risk Mana
Page 61 and 62: Managing Foreign Exchange Rate Risk
Page 63 and 64: Why Implement Activity Based Costin
Page 65 and 66:
Design Steps in Building a Performa
Page 67 and 68:
Examples of Key Performance Indicat
Page 69 and 70:
The Power of the Scorecard The Bala
Page 71 and 72:
their scorecards to meet the needs
Page 73 and 74:
Typically a set of performance meas
Page 75 and 76:
Financial measurements will often d
Page 77 and 78:
4. Review the allocation and distri
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- Sets a good personal example - Ac
Page 81 and 82:
Secondary sources of intelligence a
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analysis of differences can be diff
Page 85 and 86:
A final point on leveraging competi
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Reaching for the Six Sigma One of t
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several links, manufacturer to agen
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Another common attribute of process
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then we invariably lower our costs.
Page 95 and 96:
Human Resource Management Metrics f
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Cross Functional Teams Financial ma
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What is Matrix Management As Tom Pe
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Cost => Time => Quantity => Error =
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Control over surveys is low Control
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The role of management is to find w
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Since emotional intelligence is som
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Few, if any educational programs (i
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emphasize the most effective applic
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- Competitive forces - Organization
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to do with recruiting and retaining
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In order for HR to be successful wi
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Coaches are very engaged with their
Page 121 and 122:
The Lombardi Rules - The Winning Mo
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poor position to understand what wo
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6. People can Change - People have
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• Team Building - Encourages and
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Strategic Planning: Your First Step
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5. Create: Provide a strong learnin
Page 133 and 134:
your analysis for more detail audit
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Without name recognition in the mar
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Although game theory has been aroun
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as people share with each other wha
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Is Knowledge Really Power We all re
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almost like wiping the slate clean
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will need a diverse group of people
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There are several approaches to bui
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Even simple task, such as distribut
Page 151 and 152:
Comprehending the IT Challenge For
Page 153 and 154:
Leveraging Knowledge Management It
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when viewing it over the internet;
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materials, products, and systems (a
Page 159 and 160:
interdependencies, you will have to
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Key Elements to Effective Decision
Page 163 and 164:
How to Brainstorm All people and al
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analysis - all pre-occupied with tr
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