FINANCE FOR MANAGERS

Finance for Managers



Finance for Managers

Introduction

This work has been performed in order to meet the guidelines that will make and evaluate decisions often take the business daily. On all areas that are based on the fact that these decisions depend on the success or failure of the organization or department where the taking is discussed. Knowing that the current situation of the country lies in uncertainty in projections of the company that are unpredictable by economic, political, social world is affecting the economies of countries. Decision making is not an issue which can be exercised with less knowledge, so it is very important that any manager or person holding similar position is necessary before making a decision to make an analysis of external and internal variables can affect the normal development of the activities of a company or business. For this reason it is necessary to the proper study of the issues presented as are the objectives, importance, characteristic of decision making are an important part in its effect it may have.

Financial Ratios (Technique)

The techniques that is being identified is the calculation and interpretation of financial ratios that will help financial managers in better assessing the financial performance of the company. Keeping in mind these ratios, the fiance managers can make efficient and productive decision which would be benefitial for the company.

Liquidity ratios

Evaluate the company's ability to meet its short-term commitments. The overall liquidity ratio obtained by dividing the current assets from current liabilities. Current assets include primarily cash accounts, banks, accounts receivable and letters, values ??of easy negotiation and inventory. This ratio is the main measure of liquidity; shows what proportion of short-term debts are covered by assets, whose conversion into money corresponds roughly to the maturity of debt. When it comes to evaluation of any business, it is necessary to review the performance of the company from view of suppliers and other sources of short term finances which required liquidity analysis of the business. Even the company is making substantial profits; it still gets insolvent if it does not have appropriate liquidity management. So it is necessary for suppliers to analyze the capability of the company to meet all its debt.

Acid Test Ratio

Is one indicator that the current rule of the asset accounts that are not easily achievable provides a more demanding measure of ability to pay a company in the short term. Is more severe than the previous one and is calculated by subtracting inventory from current assets and dividing the difference between current liabilities. Inventories are excluded from the analysis because they are less liquid assets and more subject to losses due to bankruptcy

Working Capital Ratio

As is frequently used, we will define it as a link between current assets and current liabilities, not a reason defined in terms of an item divided by another. The Working Capital is what is left to the firm after paying their debts immediately, is the difference between current assets less current liabilities, something like ...