Strategic Financial Management Essay Example | Topics and Well Written Essays - 1500 words

strategical Financial Management - Essay ExampleHence, finance can be interpreted as lifeblood of melody (Emmanuel, 2010, p.32). Finance also helps the forethought in the process of controlling, planning, decision making, evaluation and performance approximation and so on Therefore, management mustiness control and plan its financial activities to develop a growth oriented organisational (Collier, 2003, p.42). In order to execute operational activities, companies needs to investment for various purposes like capital investments and operational investments, and in this process it is genuinely necessary to evaluate performance of investments. There argon some financial techniques which are very helpful in evaluating the performance of investments like capital budgeting and ratio psychoanalysis (Williamson, Cooke and Jenkins, 2003, p123). This paper pull up stakes attempt to present various techniques of capital investments and project appraisal for a business organisation. At first, richness and understanding of capital appraisal techniques will be explained. The next section will present draft descriptions of various project and capital investment techniques. Finally, the conclusion will sum up the entire sermon and analysis. Capital investment and Project Appraisal Since last two decades, there have been significant changes in the field of finance and its various techniques. The modern organisations are using multiple financial theories, models, and tools for enhancing the financial activities. The main(prenominal) reason behind this development is the increasing academic concern. Constant innovation in financial management techniques has facilitated the financial related activities. Besides, managers have to take decisions for allocation of resources in capital investments (Chadwick, 1993, p.143). Hence, the quantitative performance appraisal techniques have also been modified and these techniques have become more accurate and efficient to measure the authorization of capital investments. Management or the decision makers have to understand the important of decision theories to realize the indispensableness of decision making theories. According to Rapoport (1989), decision theory deals with situations in which one or more actors must make choices among given alternatives (Serfas, 2010, p.16). Before explaining various techniques for capital investment appraisal, it is very necessary to understand the magnificence of capital investment appraisal for a business organisation. The decision making process for investment is very necessary as it help management to determine the future profitability of any project or capital investments. Michael Pogue defined investment decision as involving the company making cash outlay with the grow of receiving future cash inflows (Pogue, 2010, p.10). Therefore, the process of investment decision making should go through a proper stages for enhancing its effectiveness. The Institute of Char ted Accountants has defined four vital stages in this process. These are origination of proposals, project screening, and analysis and acceptance and monitoring and review (Institute of Charted Accountants, 2008, p.278). While making an investment decision of project appraisal, it is necessary to attend various aspects of finance to generate relevant and accurate decisions. There are certain macro and little economic factors that must be considered in