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1. How do accountants and financial managers differ in their use of financial information? Why is cash flow more significant to a financial manager than it is to an accountant?
To a large extent, accountants make use of financial information to report financial transactions that have happened in the past. On the other hand, financial managers use financial information to make plans about future undertakings of relevance to the organization. Cash flow happens to be more relevant to a financial manager owing to the fact that as Moyer, McGuigan and Rao (2012) indicate, a cash flow statement could come in handy in budgeting efforts as it is instrumental in the prediction of future cash flow. As the authors further indicate, a cash flow statement is avaluable measureof strength, profitability, and the long-term future outlook of a company (Moyer, McGuigan and Rao, 2012, p. 216).
2. Explain how financial planning is used to determine a firms external financing requirements.
Financial planning is instrumental in the establishment of the optimal capital structure of a company. Considerations relating to risk and return as well as cost of capital happen to be in the purview of financial planning. Thus, for instance,...…to the break-even point if the contribution margin rises (falls)?
Knowledge about break-even point is crucial in long-term planning efforts. This is more so the case given that it helps in the establishment of that point at which an enterprise or new venture will turn a profit i.e. the point at which the total cost of production will be covered by total revenue from sales (Brigham and Houston, 2012). A rise in the contribution margin would result in a decrease in the break-even point. On the other hand, a fall in the contribution margin would result in an increase in the…
References
Brigham, E.F. & Houston, J.F. (2012). Fundamentals of Financial Management (7th ed.). Mason, OH: Cengage Learning.
Moyer, R.C., McGuigan, J.R. & Rao, R.P. (2012). Contemporary Financial Management (12th ed.). Mason, OH: Cengage Learning.
Financial Planning in Health Care Organizations [1: Please note that all sources and facts utilized in this paper are from the customer provided reading material.] Healthcare is on everybody's mind today. From the insurance debate in Congress to our own personal worries about dental or medical insurance and how we can obtain it at a low price, healthcare is not only widely discussed in our society, but it is necessary to
The first advantage is that it is easy. The math associated with the percentage of sales method is very simple to execute. The underlying premise of this method is that most of the items on the income statement and on the balance sheet will vary with sales. In addition to direct variable costs, such as cost of goods sold, indirect costs will also vary roughly in line with sales.
Goal setting works well for simple jobs -- clerks, typists, loggers, and technicians -- but not for complete jobs. Goal setting with jobs in which goals are not easily measured (e.g., teaching, nursing, engineering, accounting) has posed some problems. Goal setting encourages game playing. Setting low goals to look good later is one game played by subordinates who do not want to be caught short. Managers play the game of setting
Finally, one may sell their home to free assets for retirement finances. If one sells the home and moves to a less-expensive residence, one can invest any after-tax sales profits for future retirement needs. Another home option is the reverse mortgage. With a reverse mortgage, one receives regular, nontaxable payments from the lender instead of paying these payments. The principal and interest are repaid at a later date, either
financial planning is something that they do not take seriously until later on life. Evidence of this can be seen with a survey conducted by Lawyers.com. They found that only 35% of Americans have a will and 21% have a trust established. This is problematic, as the lack of planning can hurt the trustee's ability to reduce taxes and other liabilities for beneficiaries. (Sarji, 2011) To avoid these challenges, requires
The consideration of after tax returns is also important, because different investments offer different tax rates and these differences can be significant. Interestingly, the author here also does not touch upon diversification or indeed any other key tenets of modern portfolio theory. Risk aversion is not mentioned either, even though this is a key element in people's satisfaction with their investment performance. Another interesting and overlooked element is that