What elements should be included in a short-term financial policy?

The policy that a firm adopts for short-term finance will be composed of at least two elements: a)       The size of the firm’s investment in current assets. This is usually measured relative to the firm’s level of total operating revenues. A flexible or accommodative short-term financial policy would maintain a high ratio of current assets […]

What is the framework of audit in China?

What are the main contents of budgeting?

Cash budgeting: it records estimates of cash receipts and disbursements. It is the way of identifying the cash-flow gap on the cash-flow time. Estimated income statement: breakdown of estimated total profit. It reflects all operational transactions and the financial results during the planning period through currency. Estimated balance sheet: it reflects the financial status on […]

What is budgeting?

The definition of budgeting: the process of translating planning and programming decisions into specific projected financial plans for relatively short periods of time. Budgets are short-range segments of action programs adopted that set out planned accomplishments and estimate the resources to be applied for the budget periods in order to attain those accomplishments.

challenges of internal control if internal control

What are the common elements in a financial plan?

Just as companies differ in size and products, financial plans are not the same for all companies. However, there are some common elements: a)Sales forecast b)Pro forma statements. c)Asset requirements. d)Financial requirements. e)Personnel requirements f) Economic assumptions.

What is the planning process?

Because the company is likely to spend a lot of time preparing proposals on different scenarios that will become the basis for the company’s financial plan, it seems reasonable to ask what the planning process will accomplish: a)       Interactions. The financial plan must make explicit the linkages between investment proposals for the different operating activities […]

challenges of internal control if internal control

What are the assumptions of financial planning?

Financial plans always entail alternative sets of assumptions. The financial-planning process might require each division to prepare alternative business plans. a)       A worst case. This plan would require making the worst possible assumptions about the company’s products and the state of the economy. It could mean divestiture and liquidation. b)       A normal case. This plan […]

What is corporate financial planning?

Financial planning formulates the method by which financial goals are to be achieved. It has two dimensions: a time frame and a level of aggregation. A financial plan is a statement of what is to be done in a future time. Most decisions have long lead times, which means they take a long time to […]