Managerial finance is the branch of finance that concerns itself with the managerial significance of finance techniques. It is focused on assessment rather than technique.
The difference between a managerial and a technical approach can be seen in the questions one might ask of annual reports. One concerned with technique would be primarily interested in measurement. They would ask: are moneys being assigned to the right categories? Were generally accepted accounting principles GAAPfollowed?
One concerned with management though would want to know what the figures mean.
- They might compare the returns to other businesses in their industry and ask: are we performing better or worse than our peers? If so, what is the source of the problem? Do we have the same profit margins? If not why? Do we have the same expenses? Are we paying more for something than our peers?
- They may look at changes in asset balances looking for red flags that indicate problems with bill collection or bad debt.
- They will analyze working capital to anticipate future cash flow problems.............More details Click Here
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