Finance and accounting strategy
Finance and accounting strategy
- At the top level, managers use financial data and budgets to choose between strategies.
- Before a big decision they ask:
- can we afford it?
- how will it affect profit, cash flow and gearing?
- what is the likely return?
Practice
Before a big spending decision, managers should ask:
Finance strategy weighs affordability, the effect on profit/cash flow/gearing, and the likely return.
Practice
Finance and accounting strategy relies mainly on:
Managers use financial data and budgets to compare strategies.
Numbers are only part of it
- Financial information turns a risky guess into a reasoned choice.
- But numbers must be weighed with the market, the staff and the firm's objectives.
Practice
Financial information should be weighed alongside the market, staff and the firm's objectives.
Numbers turn a guess into a reasoned choice, but they are only part of the picture.
You've got it
Key idea
- finance strategy uses data + budgets to choose between options
- key questions: affordable? effect on profit/cash flow/gearing? likely return?
- numbers are only part of the picture — weigh them with market, staff and objectives