Corporate finance

Working capital management Cash conversion cycle Return on capital Economic value added Just In Time (business) Economic order quantity Discounts and allowances Factoring (finance) Domestic credit to private sector in 2005 Corporate finance is an area of finance dealing with the financial decisions corporations make and the tools and analysis used to make these decisions. ... Image File history File links Download high resolution version (1031x740, 688 KB)Midtown Manhattan looking North from the Empire State Building, 2005. ... Corporate finance is a specific area of finance dealing with the financial decisions corporations make and the tools as well as analysis used to make these decisions. ... Cash conversion cycle or CCC, also known as the asset conversion cycle, net operating cycle, working capital cycle or just cash cycle, is used in the financial analysis of a business. ... Return on capital, also known as Return On Invested Capital (ROIC) is defined as NOPLAT / Invested Capital usually expressed as a percentage. ... Economic Value Added (EVA) is an estimate of true economic profit after making corrective adjustments to GAAP accounting, including deducting the opportunity cost of equity capital. ... Just In Time (JIT) is an inventory strategy implemented to improve the return on investment of a business by reducing in-process inventory and its associated costs. ... Economic Order Quantity (also known as the Wilson EOQ Model or simply the EOQ Model) is a model that defines the optimal quantity to order that minimizes total variable costs required to order and hold inventory. ... Discounts and allowances are modifications to the basic price. ... This article is about finance. ...

Capital budgeting Capital investment decisions The investment decision The financing decision Capital investment decisions The process of determining which potential long-term projects are worth undertaking, by comparing their expected discounted cash flows with their internal rates of return. ... Domestic credit to private sector in 2005 Corporate finance is an area of finance dealing with the financial decisions corporations make and the tools and analysis used to make these decisions. ... Domestic credit to private sector in 2005 Corporate finance is an area of finance dealing with the financial decisions corporations make and the tools and analysis used to make these decisions. ... Domestic credit to private sector in 2005 Corporate finance is an area of finance dealing with the financial decisions corporations make and the tools and analysis used to make these decisions. ... Domestic credit to private sector in 2005 Corporate finance is an area of finance dealing with the financial decisions corporations make and the tools and analysis used to make these decisions. ...

Sections Managerial finance Financial accounting Management accounting Mergers and acquisitions Balance sheet analysis Business plan Corporate action Managerial Finance is that branch of finance that provide tools for a companys financial managers. ... Financial accountancy (or financial accounting) is the branch of accountancy concerned with the preparation of financial statements for decision makers, such as stockholders, suppliers, banks, government agencies, owners, and other stakeholders. ... The phrase mergers and acquisitions (abbreviated M&A) refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling and combining of different companies that can aid, finance, or help a growing company in a given industry grow rapidly without having to create another business... This article needs additional references or sources for verification. ... A business plan is a formal statement of a largely enforced business goal, the reasons why they are believed attainable, and the plan for reaching those goals (Fiifi Essel). ... A corporate action is an event taken by a public company that has a direct financial impact on of its shareholders. ...

Finance series Financial market Financial market participants Corporate finance Personal finance Public finance Banks and Banking Financial regulation Finance studies and addresses the ways in which individuals, businesses, and organizations raise, allocate, and use monetary resources over time, taking into account the risks entailed in their projects. ... This article does not cite any references or sources. ... There are two basic financial market participant catagories, Investor vs. ... Domestic credit to private sector in 2005 Corporate finance is an area of finance dealing with the financial decisions corporations make and the tools and analysis used to make these decisions. ... Personal finance is the application of the principles of finance to the monetary decisions of an individual or family unit. ... This article does not cite any references or sources. ... For other uses, see Bank (disambiguation). ... Financial supervision is government supervision of financial institutions by regulators. ...

v d

Management accounting is concerned with the provisions and use of accounting information to managers within organizations, to provide them with the basis in making informed business decisions that would allow them to be better equipped in their management and control functions. Unlike financial accountancy information (which, for public companies, is public information), management accounting information is used within an organization (typically for decision-making) and is usually confidential and its access available only to a select few. It has been suggested that Accounting scholarship be merged into this article or section. ... Financial accountancy (or financial accounting) is the branch of accountancy concerned with the preparation of financial statements for decision makers, such as stockholders, suppliers, banks, government agencies, owners, and other stakeholders. ...

Definition

According to the Chartered Institute of Management Accountants (CIMA), Management Accounting is "the process of identification, measurement, accumulation, analysis, preparation, interpretation and communication of information used by management to plan, evaluate and control within an entity and to assure appropriate use of and accountability for its resources. Management accounting also comprises the preparation of financial reports for non management groups such as shareholders, creditors, regulatory agencies and tax authorities" (CIMA Official Terminology)

The American Institute of Certified Public Accountants(AICPA) states that management accounting practice extends to the following three areas:
*Strategic Management—Advancing the role of the management accountant as a strategic partner in the organization.
*Performance Management—Developing the practice of business decision-making and managing the performance of the organization.
*Risk Management—Contributing to frameworks and practices for identifying, measuring, managing and reporting risks to the achievement of the objectives of the organization. The Chartered Institute of Management Accountants (CIMA) is a United Kingdom professional body that offers a qualification in management accountancy, focusing on accounting for business. ... Classical economics distinguishes between three factors of production which are used in the production of goods: Land or natural resources - naturally-occurring goods such as soil and minerals. ... Financial statements (or financial reports) are a record of a business financial flows and levels. ... A shareholder or stockholder is an individual or company (including a corporation) that legally owns one or more shares of stock in a joint stock company. ... A creditor is a party (e. ... “Taxes” redirects here. ... With over 330,525 CPA members (in August 2006), the American Institute of Certified Public Accountants (AICPA) is the largest professional organization of Certified Public Accountants (CPAs) in the United States of America. ...

The Institute of Certified Management Accountants (ICMA), state "A management accountant applies his or her professional knowledge and skill in the preparation and presentation of financial and other decision oriented information in such a way as to assist management in the formulation of policies and in the planning and control of the operation of the undertaking. Management Accountants therefore are seen as the "value-creators" amongst the accountants. They are much more interested in forward looking and taking decisions that will affect the future of the organization, than in the historical recording and compliance (scorekeeping) aspects of the profession. Management accounting knowledge and experience can therefore be obtained from varied fields and functions within an organization, such as information management, treasury, efficiency auditing, marketing, valuation, pricing, logistics, etc." The Institute of Certified Management Accountants (ICMA) is an Australian organisation focused on management accounting, it differs from other Australian Accounting societies; CPA Australia, Institute of Chartered Accountants of Australia, National Institute of Accountants due to this focus. ...

Aims

1. Formulating strategies;
2. Planning and constructing business activities;
3. Helps in making decision;
4. Optimal use of resources;
5. Supporting financial reports preparation; and
6. Safeguarding asset

A strategy is a long term plan of action designed to achieve a particular goal, most often winning. Strategy is differentiated from tactics or immediate actions with resources at hand by its nature of being extensively premeditated, and often practically rehearsed. ... Classical economics distinguishes between three factors of production which are used in the production of goods: Land or natural resources - naturally-occurring goods such as soil and minerals. ... Financial statements (or financial reports) are a record of a business financial flows and levels. ... This article is about the business definition. ...

Traditional vs. innovative management accounting practices

In the late 1980s, accounting practitioners and educators were heavily criticized on the grounds that management accounting practices (and, even more so, the curriculum taught to accounting students) had changed little over the preceding 60 years, despite radical changes in the business environment. Professional accounting institutes, perhaps fearing that management accountants would increasingly be seen as superfluous in business organizations, subsequently devoted considerable resources to the development of a more innovative skills set for management accountants.

The distinction between ‘traditional’ and ‘innovative’ management accounting practices can be illustrated by reference to cost control techniques. Traditionally, management accountants’ principal technique was variance analysis, which is a systematic approach to the comparison of the actual and budgeted costs of the raw materials and labor used during a production period. In budgeting or (management accounting in general) variance analysis is a tool of budgetary control by evaluation of performance by means of variances between budgeted, planned or standard amount and the actual amount incurred/sold. ...

While some form of variance analysis is still used by most manufacturing firms, it nowadays tends to be used in conjunction with innovative techniques such as life cycle cost analysis and activity-based costing, which are designed with specific aspects of the modern business environment in mind. Lifecycle costing recognizes that managers’ ability to influence the cost of manufacturing a product is at its greatest when the product is still at the design stage of its product lifecycle (i.e., before the design has been finalised and production commenced), since small changes to the product design may lead to significant savings in the cost of manufacturing the product. Activity-based costing (ABC) recognizes that, in modern factories, most manufacturing costs are determined by the amount of ‘activities’ (e.g., the number of production runs per month, and the amount of production equipment idle time) and that the key to effective cost control is therefore optimizing the efficiency of these activities. Activity-based accounting is also known as Cause and Effect accounting. It has been suggested that this article or section be merged into Total cost of ownership. ... It has been suggested that Activity-based management be merged into this article or section. ...

Both lifecycle costing and activity-based costing recognize that, in the typical modern factory, the avoidance of disruptive events (such as machine breakdowns and quality control failures) is of far greater importance than (for example) reducing the costs of raw materials. Activity-based costing also deemphasizes direct labor as a cost driver and concentrates instead on activities that drive costs, such as the provision of a service or the production of a product component.

Role of Management Accountants within the Corporation

Consistent with other roles in today's corporation, management accountants have a dual reporting relationship. As a strategic partner and provider of decision based financial information, management accountants are responsible to the business management team while at the same time also have reporting relationships and responsibilities to the corporation's finance organization. The activities management accountants provide inclusive of forecasting and planning, performing variance analysis, reviewing and monitoring costs inherent in the business are ones that have dual accountability to both finance and the business team. Examples of tasks where accountability may be more meaningful to the business management team vs. the corporate finance department are the development of business driver metrics, sales management scorecarding, and client profitability analysis. Conversely, the preparation of certain financial reports, reconciliations of the financial data to source systems, risk and regulatory reporting will be more useful to the corporate finance team as they are charged with aggregating certain financial information from all segments of the corporation. One widely held view of the progression of the accounting and finance career path is that financial accounting is a stepping stone to management accounting. Consistent with the notion of value creation, management accountants help drive the success of the business while strict financial accounting is more of a compliance and historical endeavor.

Development of throughput accounting

The most significant recent direction in managerial accounting is throughput accounting, which recognises the interdependencies of modern production processes and provide managers with a tool that will allow them to measure the contribution per unit of constrained resource for any given product, customer or supplier. (For a detailed description of Throughput Accounting, see cost accounting)shabbir lashari Accounts Officer. Throughput accounting (TA) is an alternative to cost accounting proposed by Eliyahu M. Goldratt. ... This article does not cite any references or sources. ...

An alternative view of management accounting

A seldom expressed alternative view of management accounting is that it is neither a neutral or benign influence in organizations, rather a mechanism for management control through surveillance. This view locates management accounting specifically in the context of management control theory.

Lean accounting (accounting for lean)

In the mid to late 1990s several books were written about accounting in the lean enterprise (companies implementing elements of the Toyota Production System). The term lean accounting was coined during that period. These books contest that traditional accounting methods are better suited for mass production and do not support or measure good business practices in just in time manufacturing and services. The movement reached a tipping point during the 2005 Lean Accounting Summit in Dearborn, MI. 320 individuals attended and discussed the merits of a new approach to accounting in the lean enterprise. 520 individuals attended the 2nd annual conference in 2006. The Toyota Production System (TPS) (トヨタ生産方式) is the philosophy which organizes manufacturing and logistics at Toyota, including the interaction with suppliers and customers. ... Lean accounting is accounting for the lean enterprise. ...

Management Accounting in Banking

Management accounting is an applied discipline used in various industries. The specific functions and principles followed can vary based on the industry. Management accounting principles in Banking are specialized but do have some common fundamental concepts used whether the industry is manufacturing based or service oriented. For example, transfer pricing is a concept used in manufacturing but is also applied in banking. It is a fundamental principle used in assigning value and revenue attribution to the various business units. Essentially, transfer pricing in banking is the method of assigning the interest rate risk of the bank to the various funding sources and uses of the enterprise. Thus, the bank's corporate treasury department will assign funding charges to the business units for their use of the bank's resources when they make loans to clients. The treasury department will also assign funding credit or business units who bring in deposits (resources) to the bank. Although the funds transfer pricing process is primarily applicable to the loans and deposits of the various banking units, this proactive is applied to all assets and liabilities of the business segment. Once transfer pricing is applied and any other management accounting entries or adjustments are posted to the ledger (which are usually memo accounts and are not included in the legal entity results), the business units are able to produce segment financial results which are used by both internal and external users to evaluate performance. Transfer pricing refers to the pricing of goods and services within a multi-divisional organization, particularly in regard to cross-border transactions. ...

Funds Transfering

Image File history File links Size of this preview: 800 × 522 pixelsFull resolution‎ (925 × 604 pixels, file size: 67 KB, MIME type: image/jpeg)Transfer Pricing Diagram in Banking File historyClick on a date/time to view the file as it appeared at that time. ... Image File history File links Size of this preview: 800 × 522 pixelsFull resolution‎ (925 × 604 pixels, file size: 67 KB, MIME type: image/jpeg)Transfer Pricing Diagram in Banking File historyClick on a date/time to view the file as it appeared at that time. ...

Resources and Continuous Learning

There are a variety of ways to keep current and continue to build the knowledge base in the field of management accounting. Certified Management Accountants are required to achieve continuing education hours every year, similar to a Certified Public Accountant. A company may also have research and training materials available for use in a corporate owned library. This is more common in larger "Fortune 500" companies who have the resources to fund this type of training medium. There are also numerous publications and on-line articles and blogs available. The Institute of Management Accounting (IMA) site http://www.imanet.org/publications_maq.asp is one such source which includes the Management Accounting Quarterly publication.

Management Accounting Tasks/ Services Provided

Listed below are the primary tasks/ services performed by management accountants. The degree of complexity relative to these activities are dependant on the experience level and abilities of any one individual.

• Variance Analysis
• Rate & Volume Analysis
• Business Metrics Development
• Price Modeling
• Product Profitability
• Geographic vs. Industry or Client Segment Reporting
• Sales Management Scorecards
• Cost Analysis
• Cost Benefit Analysis
• Client Profitability Analysis
• Capital Budgeting
• Buy vs. Lease Analysis
• Strategic Planning
• Strategic Management Advise
• Internal Financial Presentation and Communication
• Sales and Financial Forecasting
• Annual Budgeting
• Cost Allocation
• Resource Allocation and Utilization

Related qualifications

• There are several related professional qualifications in the field of accountancy including:
  • Management Accountancy Qualifications
    • CIMA
    • ICMA
    • CMA
    • Institute of Cost and Works Accountants of India
    • AAFM

• • Other Professional Accountancy Qualifications
    • Chartered Certified Accountant, (ACCA)
    • Chartered Accountant, (CA)
    • Certified Public Accountant, (CPA)
      
      • American Institute of Certified Public Accountants
    • Certified Practicing Accountant (CPA Australia)

The Chartered Institute of Management Accountants (CIMA) is a United Kingdom professional body that offers a qualification in management accountancy, focusing on accounting for business. ... The Institute of Certified Management Accountants (ICMA) is an Australian organisation focused on management accounting, it differs from other Australian Accounting societies; CPA Australia, Institute of Chartered Accountants of Australia, National Institute of Accountants due to this focus. ... The title Certified Management Accountant is a professional designation awarded by various professional bodies around the world. ... The Institute of Cost and Works Accountants of India (ICWAI) is the only recognised statutory professional organisation and licensing body in India specialising exclusively in Cost and Management Accountancy. ... The American Academy of Financial Management, or AAFM as it is known, is a professional association dedicated to the finance sector and finance professionals. ... Chartered Certified Accountant (Designatory letters ACCA or FCCA) is a United Kingdom chartered accounting designation awarded by the Association of Chartered Certified Accountants (ACCA) The term Chartered Certified Accountant was introduced in 1996. ... The Association of Chartered Certified Accountants (ACCA) is a British chartered accountancy body with a global presence that offers the Chartered Certified Accountant (Designatory letters ACCA or FCCA) qualification worldwide. ... Chartered Accountant (CA) is the title used by members of certain professional accountancy associations in the British Commonwealth countries and Ireland. ... Chartered Accountant (CA) is the title used by members of certain professional accountancy associations in the British Commonwealth countries and Ireland. ... Certified Accountant redirects here. ... For other meanings of CPA see CPA (disambiguation) Certified Public Accountants (CPAs) are accounting professionals of the United States who have passed the Uniform CPA exam, which was developed and is maintained by the American Institute of Certified Public Accountants (AICPA), and have subsequently met additional state requirements for licensure... With over 330,525 CPA members (in August 2006), the American Institute of Certified Public Accountants (AICPA) is the largest professional organization of Certified Public Accountants (CPAs) in the United States of America. ... CPA Australia is one of two professional accounting societies in Australia, the other being the Institute of Chartered Accountants. ...

See also

• Lean accounting
• Budgetary control
• Cost accounting
• Standard costing
• Inventory control
• Investment appraisal
• Pricing decision
• Transfer pricing
• Newsoul Lapaix

Lean accounting is accounting for the lean enterprise. ... This article does not cite any references or sources. ... Inventory control can refer to several concepts: In economics, the inventory control problem, which aims to reduce overhead without hurting sales. ... This article does not cite any references or sources. ... Transfer pricing refers to the pricing of goods and services within a multi-divisional organization, particularly in regard to cross-border transactions. ...

External links

• AICPA Financial Management Center - Resources for CPAs working in business, industry and government.
• Institute of Management Accountants - Managment accounting industry resource