I need to reply to the attached essay in about 3 paragraphs.

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I need to reply to the attached essay in about 3 paragraphs. Each paragraph should be in about 150 words. I have attached the document

Sowmya Patnamshetty - Sunday, 1 July 2018, 10:31 PM Financial management is one of the most critical and important activities for the professional business manager. It is a fact that the consequences of all important management decisions are reflected in the financial performance of the business enterprise. Unfortunately, some managers and business owners have relatively little professional exposure to, and training in, strategic financial management. Unless minimum financial performance levels are achieved, it is impossible for a business enterprise to survive over time • Basic generalizations regarding the financial management had helped me in identifying the viewpoints of the managers and business owner of the company I work for. Some practices and viewpoints tend to restrict business firm profitability. They interfere with management practices that can improve firm financial performance. Therefore owners and managers need to evaluate the extent to which the following nine financial viewpoints apply to their management team. • It also helped in identifying that most managers view profits as residuals. That is, profits are viewed as being what is left over after total business expenses are subtracted from total revenue. The problem with viewing profits as a residual is that the size of the residual may be insufficient for longterm business growth and survival. It also made me question ‘Does the management team tend to view profits as a residual?’ • I work for a health care company and this course has helped in identifying that the managers often do not recognize that the Current Cost of Staying in Business (CCSB) is equivalent to the firm’s Current Cost of Capital (CCC). Therefore a positive bottom line (a positive net profit) does not necessarily mean that the firm has been truly profitable. Managers are invested with the task of making decisions which routinely affect the value and viability of firms. Thus, managers bear the heavy burden of making optimal decisions. Over the last fifty years, completely rigorous formal theories of decision making have been largely accepted as models of rational choice. One may think that managerial decision making, then, comprises nothing more than calculating the output of these normative models. While the vast majority of managers do indeed attempt to make optimal decisions, clearly, there are numerous impediments preventing them from actually doing so. The behavioral decision theory and cognitive psychology literatures have cataloged numerous deviations from perfectly rational behavior. Deviations from rational decision making have been observed in nearly every facet of economic activity. This would be but an amusing theoretical question were it not for the impact these suboptimal decisions have on the value of firms and thereby the economy. Thus, one is left with two possibilities: managers actually don’t care about making suboptimal decisions or managers aren’t aware they make suboptimal decisions. It is reasonable to believe that the second possibility is, in fact, the situation. This course has developed a model for analyzing the interaction between normative and descriptive models of decision analysis. References 1. Fishburn, P. C. Normative Theories of Decision Making Under Risk and Under Uncertainty. In D. Bell, H. Raiffa, A. Tversky, eds., Decision Making: Descriptive, Normative and Prescriptive Interactions (New York, NY: Cambridge University Press, 1988): 78-98. 2. Gorry, G. A. and M. Scott Morton. A Framework for Management Information Systems. Sloan Management Review 13 (1971): 55-70. 3. Kahneman, D. and A. Tversky. Prospect Theory: An Analysis of Decision Under Risk. Econometrica 47 (1979): 263-291.

Tutor Answer

Microtutor_Burchu
School: UCLA

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Hello Patnamshetty,
Great Post I do agree with you; As opposed to “tactical” financial management,
“strategic” financial management can be referred to as specific planning on how to use the
company’s financial resources with the aim of achieving long-term goals. Financial management
can be broken down to understanding, controlling, obtaining, and allocating all company assets
and liabilities to meet the set target. When designing the plan a few factors are considered,
which are, the financial capabilities of the company, the potential resources needed to
accomplish the specified goals, and the long-term effect of the business plan. Part of the financial...

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Anonymous
Thanks, good work

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