Financial Analysis

Decision making is the primary criterion to be considered in the organization. Irrespective of whether it is managerial or operational decision making, the process should particularly include various considerations and financial related factors. The current discussion is to involve the role of capital budgeting and financial analysis in managerial decisions. Both these concepts are related to the accounting concept and should have a concern on the management while making decisions. Capital budgeting is defined as the process of preparing the estimated cost required by the company to complete the assigned task within boundaries fixed by the authority. Capital budgeting should be considerably made by involving the process cost, the current cost of the material, and all other variable costs incurred during the manufacturing process of the product. The estimation or the budget prepared should be approximately equal to the actual cost during the process such that it benefits the company and the stakeholders associated with the process. If there is a huge difference between these costs, then it may create an impact on the insufficiency of required resources to complete the activity (Balwicki et al., 2020).Financial analysis is another concept in accounting. The financial status of the company defines how successful the company is. Every employee of the organization must be aware of the various financial decisions or investment decisions to be made. This analysis will help the business managers to be aware of whether the investment can be carried out at the particular instance or not. Managerial decision making plays an important role in the activities to decide whether the company should involve in investing operations. If these decisions are made effectively, then it benefits the organization in resulting profits. To manage various processes in the organization, financial awareness is very important because the cash inflow and outflow should be analyzed to determine the net financial income of the company. Analyzing these activities before proceeding to make a managerial decision is vital to be in the workplace (Crossman 2021). for more information on Financial Analysis check on this:

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