Research Project: Durango Manufacturing Company

Durango Manufacturing Company
Name of Student
Institutional Affiliation
Durango Manufacturing Company is presented as a medium-sized manufacturing business enterprise which is located in Colorado. The company is specialized in the production of customized cabinets for the residential and commercial market extensive use. Since the company stands at a higher stance in the market, it is well established. A professional Chief Executive Officer has all the necessary knowledge and experience in the construction sector. In addition, his extensive skills in supply chain management enhance the stability of the company operations. However, in as much as the Chief Executive officer has all the vast knowledge in chain management and the construction sector, he has a lesser experience when it comes to financial management matters. In addition, forming the value for stakeholder groups is still some areas where his experience is deficient. The company SWOT analysis is quite healthy considering that its strength is that it has a well-experienced and vanished Chief Executive Officer. When it comes to the weakness of the company, the Chief executive officer has limited knowledge when it comes to financial management and forming the values of the stakeholders. The financial aspect is very crucial in a company since it measures the growth of the company. When it comes to the opportunities of the company, Durango is a midsized company; thus, it has an extensive option of growing in the future to the next level, thus expanding its operations. The threats of the company are that it is more deficient, especially in the technology used in the management of most operations. This is in regards to the Information systems since it exposes the company to financial fraud risks which may lead to massive losses.
Question one
There is a need to understand the financial management basics and skills since it will ensure that the company is progressive and all the expenses are documented and accounted for by the company. Therefore, in accounting and financial management, some of the basic knowledge and skills include understanding the basic information about general accounting, accepting the general accounting principles, and understanding the common tax principles. Furthermore, there is a need to have extensive knowledge about cost accounting along with financial methods, including the discounted cash flows. Management accountants who always work within the company ought to have a good grounding reputation in the field of economics. In addition, they have to have excellent communication and presentation skills. Their interpersonal relations abilities need to be magnificent since they often deal with clients; thus, there is a need to practice high standards of enthusiasm. 
These are some of the skills which the Chief Executive Officer has lesser information; thus, accounting and financial management are curtailing his good reputation in the company. These skills are very vital in every business enterprise since it determines the progress of the company. Therefore, understanding this core knowledge would help the Chief Executive Officer in accessing the company's progress s of the company, especially in the field of financial management and accounting, thus providing a comprehensive review of the company's growth. For instance, the accounting information office has provided reports about some financial ratio analysis in addition to other crucial calculations such as the profitability and the liquidity ratios (Top 10 accounting and finance skills. 2014). Therefore, if the Chief Executive Officer could know these financial terms, it would be easier to check the company's financial performance, especially in its internal aspect. It would also provide a privilege in comparing the position of the company with other companies performing similar operations. 
Proper accounting auditing is also an important aspect since it ensures that the company is able to formulate a comprehensive operating budget that relates to the organization's objective. This would enhance the company revenues to 10% within the first five years. If the Chief Executive Officer were conversant with these sectors, all these auditings would be a minor issue. It can be said that the Chief Executive Officer is the manager in the company, but his accountability when it comes to financial matters is a diminishing matter (Top 10 accounting and finance skills. 2014). However, the Chief Executive Officer can ensure he engages in other financial aspects and techniques such as applying effective cost accounting systems, thus assisting in detecting fraud activities that might pose the company at risk.
Appropriate financial management would require the Chief Executive Officer to construct a good budgeting model, which would enhance proper evaluation of the company's financial data, thus predicting then present and the future trend of the company, especially by studying the flow of the revenues and cost while accessing the risk involved (Top 10 accounting and finance skills. 2014). It will be able to provide ten present and ten future trends and enhance optimal decision-making, which would impact the stakeholders at a minimal rate, thus apprehending their stipulated goals. For instance, balancing the debt and equity in financing would ensure accurate and comprehensive earnings per share. Moreover, most organizations base their financial analysis on cash flows since it upholds the stakeholders within their limits.
Question two
The use of financial statements has a variety of purposes since it creates more understanding and enhances ten evaluation plans of the financial statements, thus assisting the company in achieving success. Sustainable business requires effective planning strategies as well as reliable financial management (FOMC, 2013). One of the ten best management techniques is ratio analysis which boosts our understanding of the financial outcomes and trends over a certain time. Ratio analysis also provides a good indicator of the company's performance. Most managers use this ratio analyzing technique, thus highlighting the company's strengths and weaknesses, thus making it more cohesive in formulating new strategies to counter some of the weaknesses. Investors always use this ratio analysis to evaluate the risk to be involved during investing and make a judgment on the company's performance. Investors are always critical when it comes to financial matters since a loss in the company would affect their funding. Therefore, a good manager ought to ensure that financial information is intact. For example, since managers understand that the financial statements always makes the difference between the income from operations and the cash flow from various operations always raises issues from investors, they tend to communicate with the investors in the form of notes in the financial statements, reports, press release, and other related articles. They may also prevent any of the transactions that would enhance such difference.
The company's stakeholder involves the investors, lenders, and employees just to mention a few. Investors always make a comparative analysis of the company's financial statements with other companies so that they make the right decisions in choosing their investment plans. They always tend to look at the profitability of the organization, while lenders tend to focus on the solvency ratio of the company (Anastas, 1997). Both might also shift their focus to check the liquidity of the company in both long terms and short-term engagement. The gearing ratio might also be a point of consideration. Employees also tend to analyze the financial statement in evaluating the company's performance since it will be an attribution towards themselves. It is fair to say that stakeholders always view the financial statement as very important in making their decisions in regards to different intentions to the company. Durango Manufacturing Company is a medium-based company. Thus, the employees are their main stakeholders. The employees are too obsessed with the financial statement since it associates with their retirement plan and income. The management always utilizes the financial statements to monitor the company's financial inclination to be the use the short- and long-term solvency of the company (Anastas, 1997). In this case, the lender consults banks that facilitate the loans to the business and outlining the interest within the financial statement to make sure that the interest is repaid. Therefore, the earnings of the lenders are hugely dependent on the interest as a way of checking the viability of the company's performance.
Question three
The Net Present Value (NPV) is dependent on the time of the monetary value, which evaluates the company's capital investment. When it comes to investment projects, it has both cash outflows and cash inflows. Therefore, the NPV is the difference between the cash inflows and the. The NPV is very vital for long-term projects of the company since it effectively determines any form of shortfalls and excess cashflows within the current terms (FOMC, 2013). In addition, the NPV always helps the company in the decision-making process. After calculation, the NPV indicates that investments always enhance the company's value; ...