Relationship between Organizational Performance and Financial Management Practices
The essay should demonstrate a student's ability to integrate and synthesize course concepts with selected readings to communicate his/her understanding of financial management concepts and their application in organizations. The essay should also demonstrate a student's ability to communicate as a manager. This includes proper writing style, organization, grammar, and spelling, as well as integration of course-related material. The writing style must follow the Publication Manual of the American Psychological Association , 6th edition. Citations for online sources should include the online address (URL) and access date as well as the citation for the specific reference.
Research for the paper may be conducted online using the UMUC online library as the primary source. Do not use abstracts, use full-text articles. Publications that may be relevant for the topics listed below include: Strategic Finance, The Journal of Business Finance and Accounting, CFO Magazine, Nonprofit World, Harvard Business Review, or other accounting and financial journals.
The paper should:
- Be based on your reading and research relevant to the topic.
- Be 5 to 6 double-spaced pages, not including the title page, executive summary, appendices, exhibits, and references.
- Include a one-page Executive Summary immediately following the title page that includes a statement of the major issue(s) and your conclusions and specific recommendations. The content of an Executive Summary is similar to an abstract.
- Properly cite reference sources: these may include course material, information from magazines, journals, and online sources. All reference sources must have a publication date within the last fifteen years. Students who wish to use an older source publication should contact the instructor with the request and reason.
3. Financial Management Practices and Their Impact on Organizational Performance:
Your essay should critically asses the relationship between organizational performance and financial management practices. These include capital structure decision, investment appraisal techniques, dividend policy, working capital management and financial performance assessment.
Please see attached instructions and follow specific instructions.
APA Headers must include
Executive Summary
Introduction
Organizational Performance and Financial Management Analysis
Capital Structure Decision
Investment Appraisal Techniques
Dividend Policy
Working Capital Management
Financial Performance Assessment
Discussion
Conclusion
References
Relationship between Organizational Performance and Financial Management Practices
Student’s Name
Institutional Affiliation
Relationship between Organizational Performance and Financial Management Practices
Executive Summary
There is a close relationship between good organization performance and proper financial management practices. Investment appraisal technique, financial performance assessment, capital structure, investment appraisal, working capital management and dividend policy have proven to be effective in companies’ success. However, researches have indicated that financial performance assessment, working capital structure, and dividend policies are considered more valuable for organizational performance than other parameters.
Introduction
The business environment plays a significant role in determining an economic outlook and position of a company. According to the financial literature, handling of a firm’s capital structure decision, investment appraisal techniques, dividend policy, working capital management and financial performance assessment presents a greater impact that determines level of an organization performance. For instance, a firm financial manager have a duty to propose an ideal capital structure that will boost their liquidity operations. Also, through financing mix, an organization is able make decisions on investment opportunities. Also, dividend policy if very critical for company to maneuverer in the volatile capital market. In addition, working capital helps an organization to balance both short terms liabilities as well as examining outflows and inflows to manage its surplus and interest. Lastly, the financial performance assessment is an essential tool for measuring the progress of an organization. Therefore, effective financial management practice guarantees a good organization performance because its helps in risk assessment, project analysis and general company decision making.
Capital Structure Decision
Capital structure refers to the composition of a firm’s debts and equity finance, whereby, the debt is earmarked to meet the obligations and the equity component represents the shareholders’ worth. The capital company structure decision plays an important role for a company in a number of ways. First, the ratio of the capital structure presents an important outlook that explains how various stakeholders are on the business (IFAC, 2017). For example, the creditor have huge amount of cash in lump sum and interest payment owed to them by the business. The shareholders also hold to the claim that they are entitled to the percentage of a firms’ profit earned. Second, this helps potential investors to gain a picture about the nature of the business for them to make decision on whether to invest in the business or not. For this reason a company has to set an effective capital structure that attracts the capita providers (Sharan, 2012). For example, if a company posts a higher proportion of debts in the capital structure suggests that fixed obligations has increased, and this leads to a low operating buffer thus posing a company to a greater risk and the difficulty in compensating lenders (Sharan, 2012). For these reasons, an organization has to set a capital structure that falls within the industry debt and equity ratio norm.
Investment Appraisal Techniques
Investment appraisal techniques refers to the financial approaches that are used to analyze possible investment options using models internal rate of return, net present values and average rate of return. Investment appraisal is of importance for the following reason. First, it helps to reveal a projects general feasibility by examining its projected cash flows and profit generation with the aid of NPV analysis before making any investment decision. Second, it helps to determine the possible alternative option (Hope, 2014). From all the existing possible investment ranking is made to after a review of similar investment proposal before settling on the most feasible one. Lastly, investment appraisal is also important in determining the certainty of events by assigning probabilities to various outcomes to make an investment decision.
Dividend Policy
Dividend policy refers to the set of procedures that guides a company on the distribution of profits as dividends. Dividend policy poses a significant impact on organizational performance as it helps on the important role of decision making (IFAC, 2017). Financial managers have the duty to ensure that dividend policies are not erroneous that can plunge the company capital structure and financial strength than can trigger a financial instability. In addition, poor decision is likely to derail the progress due to ineffectiveness of resources that may lead to a decrease in earnings per share (Akhtar & Ghulam Shabbir Khan Niazi, 2013). For this reason, when an organization adopts an effective decision will help the company perform well in the stock market with an improved earnings per share which will boost the stock prices thus increasing the total value of the firm. When a company’s ea...