How Do Managers Evaluate Performance in Decentralized Organizations? Purpose of the Statement of Cash Flows and types of cash flo
Please prepare a ppt with the below 2 topics
total PPT should be 10 slides with out introduction and conclusion
1. How Do Managers Evaluate Performance in Decentralized Organizations? (5 slides)- with numerical examples
2. Purpose of the Statement of Cash Flows and types of cash flows (5 Slides) –with numerical examples
I need the 3 replies to other classmates (attached ppts are 3 classmates PPTs). One reply should be 150 word limit
Comparing Segmented Income for Investment Centers
Vamsi Krishna Garimella – 592312
Comparing Segmented Income for Investment Centers
The starting point for evaluating investment centers is typically with reviewing segmented income for each investment center
Investment centers are responsible for costs, revenue and investments in assets.
Review the segmented income for each investment center.
Management determines the level of profit each center generates.
The segmented income gives the information of how much profit is generated
Not all divisions are equal in segmented income while in investment centers divisions are equal.
Using Decentralized Organizations to Control Operations
Decentralized organization is responsible for decision-making and other managerial responsibilities in each segment
Each department is assigned a leader who is in charge of discipline and other malpractices.
Decentralized organization is unlimited to all particular organizations.
Most organizations have grown in size and complexity.
Have increased expertise, quick decisions and refocus on the top management responsibilities.
Limitations are associated with duplication of services, conflict of interests, and loss of control.
Maintaining Control over Decentralized Organizations
This aims at holding managers responsible for revenue, assets and cost controllable.
Managers in various companies are responsible for controlling the production costs.
Manager’s control will help determine the type of responsibility center used for each manager.
Has cost center which supervises production departments in a firm.
Production managers are evaluated based on meeting cost budgets for producing a certain level of goods.
Managers of these departments are evaluated based on providing a certain level of services for the company at a reasonable cost.
Purpose of Cash Flow
Provides cash receipts and cash payment information and reconcile the change in cash for a period of time.
Determines the cash flow statement, where cash came from and where it went to.
Keeps track of personal cash transactions for that particular year in a check register.
For example all cash statements from the paycheck are added together and shared in one line as an item.
The statement of cash flows was created due to a lack of cash flow information on the income statement, balance sheet, and statement of owner's’ equity.
Three Types of Cash Flow Activities
Operating Activities. Cash activities related incomes. Example, cash generated from sales of goods and paid to merchandise.
Investing Activities. Activities related to the noncurrent assets. Examples, long-term investments, properties and equipment.
Financial Activities. Cash activities related to noncurrent liabilities and owner’s equity. Example, principal amount of long-term debts, stock sales and repurchases.
Key Steps to Preparing the Statement of Cash Flows
Prepare the operating activities section by converting net income from an accrual basis into a cash basis.
Prepare the investing activities section by identifying all the cash activity for noncurrent assets.
Prepare the financing activities section by identifying all the cash activity for noncurrent liabilities and owners’ equity.
Reconcile the change into cash.
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The analysis of chapter 11 and chapter 12
Shruti Karambelkar
Managerial Accounting
Professor: Dr. Richard Stultz
Campbellsville University
Analysis of Chapter 11
In the chapter 11, thoroughly summarized the importance of decentralized organization structure and how it helps the business in taking effective decisions.
Decentralized organization structure mainly looks for the simplifying decision-making issues and involve all the individuals to take better decisions.
This type of structure makes sure to utilize all the resources optimally and handle the complexities which could hits the organization profitability (Zeleny, 2012).
Decentralized Organizations
Decentralization in business focus on daily operations and delegate the authorities by top-management so that individuals get better options to follow the most productive operations.
In the decentralized structure, upper management focuses on development options and look forward to classify the new opportunities in all the ways.
All the day-to-day duties are assigned to the lower-level management so that they can focus on new areas and work on productive areas of the business (Zeleny, 2012).
Decentralized Organizations
Organizations are looking forward to share authority to all the individuals and build the better business relations towards positive returns.
All the middle and low level managers take active part into the decentralized organization structure so that they can strengthen the business strategies.
By delegating the authorities, it is significant for the organizations to work on decentralized structure and helps in mangy ways towards profitable returns (Phillips & Wright, 2009).
Decentralized Organizations
The best part of the decentralized organization structure is they are self-sufficient to take better decisions and follow the emerging trends to maximize the returns.
Faster decision-making is the key when organizations are targeting the decentralized organization structure and build best ways to manage the criticalities.
It will be easy to handle all the potential issues for the decentralized structure and carry the better strategies in numerous ways towards better outcomes (Phillips & Wright, 2009).
Chapter 12 – Cash Flow Statement
Cash flow statements are important for the financial wealth of the company and helps in dealing with all the data related to the financial operations.
It is challenging for the organizations to understand the liquidity position o the company and working on developing cash flow statements helps in managing the stable returns.
As a business owner, it is significant to develop cash flow operations and lower the operating issues which may impacts the organizations financial position (Nutt, King & Phillips, 2010).
Chapter 12 – Cash Flow Statement
Companies are categorizing the cash flow operations are into different sections so that it helps to get detailed picture and work on most important areas to be manage in the first instance (Nutt, King & Phillips, 2010).
In the organizations, cash flow statements are categorized into the three sections which are as follows:
Operating Activities
Investing Activities
Financing Activities
Chapter 12 – Cash Flow Statement
Companies involves all the operating activities into the cash flow statements so that it will be easy in delivering the better outcomes and follow the most strategic operations.
Organizations are easily handling all the transactional data and making the better decisions towards the financial summary of the business.
It is essential for the business to keep the track of all the inflows and outflows when it comes to the managing financial operations of the business and develop the solid approach (Platts, Tobias & Andersen, 2014).
Chapter 12 – Cash Flow Statement
Positive cash flow operations help the organizations in dealing with all the productive operations and manage the challenges which may lower the outcomes.
With the help of cash flow operations, companies can translate the profits and make sure to achieve the financial objectives of the business.
All the cash flow operations are helpful to take right decisions and make sure to handle the operating functions of the business towards the profitable returns (Platts, Tobias & Andersen, 2014).
References
Melnyk, S. A., Bititci, U., Platts, K., Tobias, J., & Andersen, B. (2014). Is performance measurement and management fit for the future?. Management Accounting Research, 25(2), 173-186.
Nutt, D. J., King, L. A., & Phillips, L. D. (2010). Drug harms in the UK: a multicriteria decision analysis. The Lancet, 376(9752), 1558-1565.
Phillips, P. A., & Wright, C. (2009). E-business's impact on organizational flexibility. Journal of Business Research, 62(11), 1071-1080.
Zeleny, M. (2012). Multiple criteria decision making Kyoto 1975 (Vol. 123). Springer Science & Business Media.
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Week 11 Discussion
Submitted
By
Niharika Dontineni
Chapter 11: Using Return on Investment (ROI) to Evaluate Performance
Since all possessions at Game Products, Inc., are working resources, general resource sums are utilized in this computation. The estimation of normal working resources for every office is (Beginning solidness of general resources + Ending security of complete resources) ÷ 2. Normal working resources for the Sporting Goods division is $ 29,350 (= [$ 30,500 + $ 28,200] ÷ 2).
Example of ROi
An organization spends $ 5,000 on an advertising and marketing campaign and discovers that it elevated revenue with the aid of $ 10,000. In this situation, the return on funding could be:
Disadvantages of ROI
Variance – The popular ROI method is income / value, however the definition of these inputs can vary, depending on a corporation’s accounting guidelines. Factors like interest, tax, and net income vs. Gross earnings can have an impact on the final results, making it difficult to appropriately evaluate corporations. (Peter, C. (2011)
Potential Bias – ROI is a superb indicator of earnings, however it usually doesn’t forget the total photograph. Investments with lower ROIs (however which enhance the business as a whole) could not be noted if the employer most effectively makes a specialty of increasing their ROI.
Chapter 12: Free Cash Flow
Cash is top priority in every business to run and make speculations inside the future-detached coins float can show significant experiences into the wellness of any association.
The basic free cash flow formula is :- operating cash flow – capital expense.
Unlevered free cashflow is a theoretical degree showing how parts loosened cash the business venture could produce assuming it had no obligation. It very well might be utilized to gauge a business' association cost.
Free cash flow = Cash provided by operating activities − Capital expenditures
Importance
In business, cash is important. Organizations need cash to pay their running charges and different momentary monetary obligations. In any case, they likewise need money to widen new product, extend tasks and make acquisitions — the games via which organizations live and kick the bucket throughout the lengthy timespan. That is the reason FCF is this kind of indispensable proportion of a business' success.
Business chiefs use FCF to uncover execution and illuminate plans for development. Organizations that don't have an incredible arrangement cash left over after every one of the bills are paid as often as possible find it challenging to get or allure financial backers.
Examples of Free Cash Flow
To represent estimates of the 3 detached coins drift recipes, we've introduced worked on passages of genuine life coins stream and benefits articulations from a run of the mill little creation organization.(Scott, B. (2019)
Note that running money float-marked "Net money given via running exercises" in Michigan Widget's money float statement begins with overall gain, then, at that point, adds deterioration and amortization costs as well as changes in obligations receivable, stock and obligations payable. Capital expense is seen at the "Increments to resources, plant and framework" line.
Example
FCF = $2,552,000 – $1,374,000, or $1,178,000
FCFE = $1,178,000 – $2,367,000, or ($1,189,000)
Free cash flow is inflated by debt issuance
References
Corporatefinanceinstitute.com. Return on Investment. Retrieved from
https://corporatefinanceinstitute.com/resources/knowledge/finance/what-is-return-on-investment-roi/
Madhuri, T. (2017) Free Cashflow. Retrieved from
Scott, B. (2019) Free Cash Flow. Retrieved from
https://www.netsuite.com/portal/resource/articles/financial-management/free-cash-flow.shtml
Peter, C. (2011) Return on Investment. Retrieved from
https://investinganswers.com/dictionary/r/return-investment-roi
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