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Tag Archives: 8.Financial & Commercial Awareness



No matter if your budget it £100.00 or £100,000.00, you need to ensure you have effective and efficient systems in place to control how the budget is being spent.

This resource includes a checklist which will help you establish or review process you have in place to keep you and your budget on track.

 Controlling Budgets Checklist

 


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The Chartered Institute of Management Accountants (CIMA) produce a range of 'Topic Gateways' which are intended as a refresher or introduction to topics of interest to their members and others involved in the practical application of finance within organisations.

Budgeting practices are heavily influenced by the organisation's management style and can vary considerably, but the theory is common to all.

This Topic Gateway explains and comments on the usefulness of budgeting, the explains the different types of budgets businesses produce.

To download this resource, click on the following link: Budgeting Explained


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All organisations require a level of commercial awareness from their employees because it is an important skill for making good long-term decisions.

The more commercially aware you are, the more likely you will take into consideration all the important factors when selecting one option over another.

Use this self-assessment to gauge your current level of commercial awareness and help highlight the areas where you can improve.

The activity can also be used within a team learning environment.

To download this self-assessment click on the following link: Commercial Awareness Self-Assessment


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The Chartered Institute of Management Accountants (CIMA) produce a range of 'Topic Gateways' which are intended as a refresher or introduction to topics of interest to their members and others involved in the practical application of finance within organisations.

Shareholder value is defined as: ‘Total return to the shareholders in terms of both dividends and share price growth.’

 

This Topic Gateway explains and comments on the usefulness of the following shareholder value metrics:

Shareholder Value Analysis (SVA)

Economic Profit and Economic Value Added (EVA™)

Cash Flow Return on Investment (CFROI)

Total Shareholder Return (TSR)

Real Options.

To download this Topic Gateway: Click Here  


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We cannot all accountants but as a leader in an organisation, it can be useful to have a basic understanding of some of the key financial terms and processes used to manage the organisation's finances. 

So, how does accrual accounting differ from cash basis accounting?

In simple terms, the main difference between accrual and cash basis accounting lies in the timing of when revenue and expenses are recognised.

The cash method is mostly used by small businesses and for personal finances. The cash method accounts for revenue only when the money is received and for expenses only when the money is paid out.

On the other hand, the accrual method accounts for revenue when it is earned and expenses goods and services when they are incurred. The revenue is recorded even if cash has not been received or if expenses have been incurred but no cash has been paid. Accrual accounting is the most common method used by businesses.

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The simple answer is microeconomics is generally the study of individuals and business decisions and microeconomics is generally the study of individuals and business decisions.

Macroeconomics looks at higher up country and government decisions.

Macroeconomics and microeconomics, and their wide array of underlying concepts have been the subject of a great deal of writings. The field of study is vast; here is a brief summary of what each covers:

Microeconomics is the study of decisions that people and businesses make regarding the allocation of resources and prices of goods and services. This means also taking into account taxes and regulations created by governments. Microeconomics focuses on supply and demand and other forces that determine the price levels seen in the economy.

For example, microeconomics would look at how a specific company could maximize its production and capacity so it could lower prices and better compete in its industry.

Microeconomics' rules flow from a set of compatible laws and theorems, rather than beginning with empirical study.

Macroeconomics, on the other hand, is the field of economics that studies the (more…)


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The Ladder of Inference is a model that was first developed by organisational psychologist Chris Argyris in 1992 and later used by Peter Senge in his book, The Fifth Discipline Fieldbook.

The ladder depicts the unconscious thought process that we all go through to get from facts to a decision for action. It attempts to explain how we tend to behave or "jump to conclusions" when faced with a "situation".

  1. We select 'facts' (although not necessarily consciously) from our data bank of experience, facts, beliefs and
  2. Once we have selected data, we begin to add meaning to it. We interpret, that is, make assumptions about what we see, hear, read, feel and we impose our own interpretations on the data.
  3. Then draw our conclusions from We lose sight of how we do this because we do not think about our thinking. The conclusions feel so obvious to us that we see no need to retrace the steps we took from the data we selected to the conclusions we reached.
  4. Our conclusions become part of our data bank - whether 'true' or distorted, they will influence future thinking.

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