Income Statements Identify Some Financial

Income Statements

Identify some financial planning modules used within an organization. How are these modules used to make financial decisions?

In an environment of conservative financial decisions, organizations are using various modules in order to make their financial decisions. A module is a set of standardized parts or units used to construct a more comprehensive understanding. Managers and Accountants are collaborating upon these types of decisions as more and more companies are finding their financial planning generated through software independently created from external organizations.

Among the tope performers, Netsuite.com (2010), indicates "NetSuite Inc. (NYSE: N), a leading vendor of on-demand, integrated business software suites for mid-market businesses and divisions of large companies, today announced plans to offer a new Financial Planning module to complement NetSuite's leading on-demand accounting / Enterprise Resource Planning (ERP), Customer Relationship Management (CRM) and Ecommerce capabilities." Several organizations have turned to programs such as this in order to provide an exhaustive analysis of financial records, compliance measures, and ethical behavior specifically surrounding cash management. Etna, LPL., Sungard, LLC., and other like organizations are providing a personalized version of software centered on company specific objectives, goals, and measurements. These programs use the input from the modules of organizations including profit and loss statements, annualized budgets, five-year projections, asset protection estimates, taxation statements, immediate budgetary needs, future value, and more.

These programs build upon the modules to develop comprehensive data and analysis in order to provide the most accurate projections for the corporation. "That's because the budget process itself isn't the root cause of the counterproductive actions; rather, it's the use of budget targets to determine compensation," (2010). Tracking cash flow is essential in order for companies to be provided with the information needed in order to make financial decisions. McCrary states in, Mastering Corporate Finance, (2010), "Accounts realize the importance of cash; they devote an entire statement to the analysis of the sources and the uses of cash and cash balances. Accountants are interested in tracking cash flow in larger measure because a company must have adequate cash to survive and prosper." Tracking the cash flow is one module that is essential for companies to make sound financial decisions in order to protect their assets and their future value.

Question#2: If you have been given the task of deciding whether to fix or replace a fixed asset, what cost factors would influence your decision, and why?

In being given the task of deciding whether to fix or replaced a fixed asset, there are several cost factors that would influence the decisions. These long-term fixtures must be analyzed on a regular basis in order to decide their future market value for a company. Assetsystems.com (2010), states that, "One of the most common barriers in implementing an asset management system is the reconciliation of existing records to the results of the new system." Often, how assets have been inventoried or managed, is the first factor that must be considered by retrieving the most accurate information regarding each of the companies assets.

Finding the history of the managed asset will help determine the other factors that are essential to knowing if the asset should be replaced or fixed. The cost of the asset, the estimated lifespan of the asset, and the residual value of the asset also should be determined in order to influence the decision. The cost would include any amount that has been incurred to gain possession of the asset and any amount that would need to be spent in order for the asset to maintain is viability. In these costs, there could be delivery, acquisition, site installation, professional fees, and training that could need to take place. These factors would be considered and valued for replacing and asset against the same factors for fixing an asset. The final valuation would determine the most economical or profitable direction for a company to move.