Question

How will you use Financial Decision Making tools and concepts in your professional, Discuss a specific career occupation.

tools: Financial Statements, Financial Ratios, Forecasting, Investment Analysis and Management Accounting

Answer 1

While one of the best and most traditional places to use all of these tools i definifelty equity research. But let's touch on smoething that might not be widely covered which is Corporate Strategy.

Use of Financial Tools is extremely important in the field of Coprorate Stratey. While the role of Corporate strategy is new but slowly it has ievolved and combined corporate finance and business strategy. Hence few of the leading things that come under coprorate strategy are:

1. Asset and Capital Allocation : This uses investment analysis in a widespread manner. Further, for capital allocation between 2 competing projects, one needs ot use forecasting and project metrics like IRR and NPVs to select the best project for capital allocation.

2. Budgeting: Increasingly, Budgeting and specfically capital and prpject budgeting is coming into the domain of Strategy and moving out of traditional finance. Hence Corporate finance proffessionals use Financial statement analysis and ratio analysis to understand the current state and predict the future state of a firm or project

3. Competitor Analysis and Benchmarking: This is one of the core functions of Strategy and without understanding the financial depth of a competitor, it becomes difficult to understand their propositions and the threats we can get from them.

4. M&A evaluation: M&As are moving into corporate strategy- M&A functions usually include very aspect of finacnials tools, including screening of target, Financial statement analysis of target, ratio analysis and valuation metrics analysis in order to determine the right price to pay for any acquisition.

Hope this helps to give a better understanding of Coprorate Strategy and how Financial tools help in that