Assignment
Running Head: Managerial accounting and management information system 1
Managerial accounting and management information system 4
Managerial Accounting and Management Information System
ACC-202Managerial Accounting
Name
SNHU
Date
Introduction
Management accounting can be described as a critical aspect that is applied by business entities in enhancing effectiveness of the going concern concept. Critical consideration of the applied strategic management system formulates a significant role in subsidizing the internal and external competitive aspects that might hinder the attainment of set objectives. Precisely, for sustainable effective management based on information system relays on analytical research, personal judgment and vivid scrutiny based on forecasting on making long term sustainable forecasting to make decisions based on what respective securities to purchase or sell. Consequently, performance of an investment portfolio which is diversified by respective managers in a given business entities is guided by long-term asset allocations; temporary adjustments which are based on strategic allocations relating to the current trends in the market situation and the optimal choice of a given respective set of holdings to implement the investment in the respective security allocation (Bhattacharyya, 2010).
Introduction of management information system for critical evaluation of the investment bonds portfolio of New Zanco Company will be a significant phenomenon which will enhance long term market sustainability by ascertaining the going concern concept. Application of HPR portfolio which analyzing the effectiveness of these marketing bonds will be a primary aspect applied. Holding period return will be accounting calculation for the total expected market returns of the 10 given market bonds within a specified duration of time. It will be a guiding tool which will be used by the management of New Zanco Company in determining which investment plan will be worth undertaking to enhance sustainable going concern.
Economic development/costing system
Effective and efficient economic development of this investment venture will be guided by internal factor evaluation matrix. Internal Factor evaluation matrix (IFE) will be the significant strategic plan to implement so as to enhance the going concern concept and maximize the expected returns. Internal factors evaluation is basically a mechanism which is used in comparative analyses of the internal weaknesses and capitalizing on the internal strengths which are attributed to the business leading to maximum profit yield. Further, internal factor evaluation analyses for this investment bonds entity will tend to provide an insight on the opportunities and the strengths which are important in boosting the company’s sustainability level in the current competitive market. While these factors do change with time, the growth of this organization will depend mostly on the proficiency of the firm to capitalize on its strengths.
How to implement this aspect for New Zanco Company
There are five basic steps which must be applied while introducing Internal Factor evaluation matrix for New Zanco Company based on the competitive pressure enhanced by the organizations competitors. The first basic step in establishing an effective matrix for New Zanco Company that will be imposed involve the construction of a list of significant factors which will be used as a guideline in determining the success of the business. This factors need to be well analyzed so as to distinguish between the strengths and the weakness doomed to be encountered.
The second basic step which will apply in coming up with a significant internal factor evaluation matrix for this investment bonds is determining the weight in a numerical range which will includes choice from being not important to very important. This basically represents the scale factor which determines the degree of success or failure for the enterprise within the speculated range. The third step which will be involved in coming up with an effective internal evaluation matrix for New Zanco Company is assigning the identified factors a score. For instance, the weakness for the factors might be represented by assigning numerical like 1, 2 or even 3. The important weakness could be assigned to be represented by 1 and 2, numeric while the minor weakness assigned 3. Contrary to these factors, the strengths could be assigned numerical numbers like 4, 5 and 6. The most important one could be assigned numerical 4 while the less important one could be assigned numerical 6 (Hull 2009).
The forth step involves obtaining the weight of each factor (WACC). It is the most critical step which needs to be vividly analyzed to enhance maximum profit generation. Basically, this step is a key factor in determining which type of strengths needs to be adopted so as to ascertain the smooth business operations to be sanctioned in the near future. The weight of each factor will hence be multiplied to obtain the weighted score for each factor forming a baseline for decision making for this entity.
The final step which will be used in formulating an effective IFE matrix is determining the sum of the weighted scores so as to determine the weighted scores attributed to each factors on the negative edge or on the positive edge. The weighted average score (WACC), ranges from the lowest to the highest score factor. Basically it is during this stage that decision on which factors to implement and which factors need to be scraped off will be conveyed (Bhattacharyya, 2010).
This is based on the scores retrieved from the weighted average accumulation which need to be made while determining the factors that will be scoring well in the market situation. This activity will also be made a success through incorporation of all employees, investors, government agencies and other relevant stakeholders. Further, an effective IFE matrix will contain 10 to 20 factors and the sum of weighted factors must add up to 1. The process of decision making forms a critical baseline in determining generally the growth and sustainability of an entity hence the process of determining which decisions need to be implemented and scraped requires a critical analysis.
Communication process
While developing this competitive strategy for New Zanco Company, communication process will be a significant measure to ensure appropriate application of the required guidelines. The process of communication must be continues and unique interaction which is affected by many variables. Upward, downward and laterally chain of communication will be my key mechanisms to ensure effective communication in the organization maximizing profit generation. Basically, information which will be communicated across the board will vary depending on the different departmental classifications found in the organization. Accordingly, to ensure effective communication has been enhanced, well-defined information need to be conveyed between the five basic elements of communication.
Going concern is a financial concept which is used in giving an insight of the ability of a business entity to be able to take on its operation on short run and long run perspective by utilizing the available assets to meet the financial obligations. HPR Portfolio will provide a comprehensive financial performance of a specified investment bonds with which maximization of profit yield will be enhanced through appreciation of the investment plan and distribution of dividend paid.
Financial forecasting can be described as the critical assessment of the financial performance of a business entity in terms of long term operability. In most cases, forecasting is applied to provide a clear prediction of the going concern concept. Going concern concept is the ability of a business entity to be able utilizes its available assets to meet the short term and long term financial obligations. Application of financial ratios and other significant computations is enhanced for effective financial forecasting. According to the international accounting system, effective auditing process and presentation of true and fair values is the primary determinant of the accuracy contained in forecasted financial reports.
Financial forecasting is a significant measure which will be applied by this business entity to ensure effective and efficient prediction of the going concern concept. Trend analysis helps in estimating the total expected revenue to be earned from the market with which the management is in a position to determine and predict the expected market returns. The going concern concept based on revenue returns is hence critically determined by predicting the expected revenue.
Income statement
Forecasting of the expected financial expenditure based on the income statement is a primary step which is applied to enhance effective monetary budgeting. Forecasting of the expenses to be incurred helps the management in determining whether the expected financial obligations will be mate fully by the available assets (Hull J2009).
Consequently, the financial ratio applied stipulates a significant role in analyzing the performance of business entities. It is a central goal for any organization to perform well through utilizing the available resources so as to yield maximum profits. Going concern concept is amongst the several factors which are aided by computation of financial ratios. Basically, going concern refers to the ability of an organization to be able to continue with its operations in the near future. The idea i am presenting is that financial ratios forms a significant role in estimating organizations operational efficiency, stability, the level of profits yield and relevant information regarding investment plans. Financial ratios act as a guiding tool to the investors, organizational shareholders, government and the financial lenders.
Statement of variance, selling price and target profit based on spread options
Option spreads can be described as the different market approaches that are responsible for minimizing risks or provide different market speculation on various market outcomes. According to the information provided by (Bhattacharyya, 2010) option spreads form a significant baseline with which operational business pentagram can be effectively formulated. Optional spreads can be described as common articulations that are used in providing relevant explanation on the elasticity of demand and supply.
In most cases, the demand of goods and services in the market is primary depended factor to the prices whilst supply of goods and services in the market is a primary depended factor to customer demands. Option spreads are hence critical phenomenon’s that are applied in providing relevant insight to the price elasticity of demand and supply. There are three basic option spreads; Horizontal spread, vertical spread and the diagonal spread. Horizontal spread can be described as an option or future strategy that is created with simultaneous long and short positions in the derivative on the same respective asset and the same strike price but with different limitation based on monthly returns.
Vertical spread
This can be described as the market phenomenon where an individual simultaneously purchases a respective item and sells another respective item at a relatively higher strike price by applying either calls or both the puts. According to the information provided by (Charifzadeh, Taschner, & Wiley-VCH 2017) a bull vertical spread can be described as the market phenomenal that occurs when the profits underlying prices rises whilst the bear vertical can be described as the market phenomenal that involves fall of profits in a proportional manner.
Horizontal spread
A horizontal spread can be described as the market phenomenal that involves creation of simultaneous long and short market positions that are applied in the derivation of same underlying assets and the same strike prices though have different expiration based on time interest. The primary aspect that is entailed in this horizontal phenomenal is based on capitalizing on profit returns based on changes in the volatility or basically to enhance capital returns based on fluctuation in pricing from short-term market scenarios the information presented by (Bhattacharyya, 2010) arguably presents the idea that horizontal spread can be used by traders, investors, innovators and other respective market users in formulating short and long term plans because this phenomenal put into consideration price fluctuation enhancing financial forecasting.
Financial forecasting can be described as the critical assessment of the financial performance of a business entity in terms of long term operability. In most cases, forecasting is applied to provide a clear prediction of the going concern concept. Horizontal spread will hence formulate primary bases for trend analysis that will help in estimating the total expected revenue to be earned from the market regardless of the risks and other setbacks that are expected to be encountered from the market scenario. Prediction of the expected market returns is another critical aspect that is entailed in a horizontal spread. The going concern concept based on revenue returns is hence critically determined by predicting the expected revenue by applying the horizontal criteria which ascertains that a de-facto leverage position is created as a result of the underlying contracts in this respective market scenario.
Diagonal spread
This can be described as the application of marketing scenario that incorporates different strike prices. According to the information presented by (Chance and Brook 2013), they arguably present the idea that diagonal spread is a critical market consideration that involves the call options that have different strike prices and different expiration dates. Further, diagonal spread can also be described as the strategic marketing phenomenal which involves purchasing a respective call option at a respective strike price and selling of a respective second call option at a different strike price. In most cases, diagonal spread is applied by market analyst, traders, investors and other respective stakeholders in construction of trading scenario that minimizes the effects of time while also factoring in the possibility of risk occurrence. Diagonal spread is considered to be amongst the significant marketing scenario that takes into account both horizontal spread features and vertical spread features though in an inverse proportionate.
Contribution margin
Relevant contribution margin will be a significant aspect in enhancing long term sustainability of New Zanco Company. Cost estimation by use of spread options will have a comparative advantage in formulation of relevant sells price with which long term sustainability is made certain. The statement of variance has relevant significant aspects to this business entity in forming baseline with which formulation of ideas is primarily structured. Consequently, variance plays a significant role in enhancing effective financial forecasting and enhancing relevant long term guidelines that enhance the attainment of long term goals.
Conclusion
In summary, Managerial accounting and management information systems will be significant aspects for New Zanco Company attainment of the set objectives ascertainment of effective short and long term goals. In most cases, managerial accounting has a significant role in ensuring true and fair representation of the entities books of account whilst management information system will help the management of New Zanco Company in integrating the respective guidelines to ensure long term sustainability of the business enterprise through enhanced amalgamation of the spread options.
Reference List
Bhattacharyya, D. (2010). Management Accounting. Place of publication not identified: Pearson India.
Chance, D. M. and R. Brooks (2013) An Introduction to Derivatives and Risk Management, International Edition, 9th ed. or course special ed., South-Western CENGAGE Learning. www.cengagebrain.com.
Charifzadeh, M., Taschner, A., & Wiley-VCH. (2017). Management accounting and control: Tools and concepts in a central European context.
Hull J. C. (2009) Options, Futures, and Other Derivatives, 7th ed., Pearson, Prentice Hall