Question

Consider the following statement: "If a firm's managers - whether they are in marketing, personell, production, accounting or MIS - do not understand financial statements, they will not be able to judge the effects of their actions on the overall firm." What do you think?

Answer 1

The given statement is TRUE because these managers who are working for other departments like personnel department or production department or management of information department are not properly equipped with financial management and they are not able to know with the minute information of the financial management and they do not know how to manage department's finances appropriately so they will not be able to know their actions impact on the overall firm.

There is always of financial aspect related with the decision making of each department of the organisation, and there should be proper knowledge of financial management with decision making in regards to various departments, so that the management can be sure about the consequences of their decision making on the overall financial status of the company, so these managers need to alwaysalways get educated about the impact of their decision making on the overall financial status of the company and it will help the company in maximization of the profit and the maximization of the shareholders value in the long run.