Accounting and Financial Decision Making

Starting August 1, 2024


Every business should consider its business environment and competitive strategy in its decision-making. Strategic thinking is important to avoid decisions that might be best only in the short term. So, managers should be capable of analyzing quantitative and qualitative information using relevant techniques. The course provides decision-making skills in operational, financial, and strategic planning and implementation.

Learning Outcome:

Apply the cost concepts and cost allocation in service costing for decision-making

Apply techniques of revenue forecasting, and cost estimation

Make decisions related to operations management with strategic emphasis

 Analyze the balance sheet and income statement

Analyze the statement of shareholders’ equity

Discuss how common-size and comparative financial statements can be used to evaluate a firm’s financial position and results of operations over several years.

Analyze the cash flow statement

Generalize how operating statistics using physical or nonfinancial data can help management evaluate the results of the firm’s activities

Examine the working capital management and analyze capital budgeting decisions

Understand and apply pricing decisions

Understand the enterprise risk management

Ethical considerations in accounting and financial decision-making


Week 1 Financial Statement Analysis

Vertical Common-Size Statements

Horizontal Common-Size Statements

Liquidity Analysis     Working Capital Analysis

Current Ratio     Quick ratio     Cash Ratio   Cash Flow Ratio

Sensitivity analysis on liquidity Ratios

Capital Structure Analysis     Leverage Ratios

Total debt to total capital      Debt to Equity

Debt to Total Assets      Interest Coverage

Off- Balance sheetFinancing    Operating Activity Analysis

Receivable Turnover     Inventory Turnover   Fixed Assets Turnover

Measuring the ability to pay accounts payable

Week 2: Financial Statement Analysis- Contd

Profitability Analysis       EPS       Diluted EPS

Dividend Payout       Sustainable Equity Growth

Return on Capital Invested  DuPont Model for ROA

revenue Analysis    Income Measurement Analysis

Limitations of Ratio Analysis

Week 3: Cost Analysis, Revenue Analysis, Short-Term Decision-Making and Pricing

Cost Analysis       Cost Classifications

Direct and Indirect expenses

Fixed and Variable expenses

Cost/Volume/Profit Analysis      Marginal Analysis

Accepting or rejecting Special Orders

Make Vs Buy          Sell or Process further

Add or drop a segment    Limiting factor analysis

Income Taxes and Marginal Analysis

Pricing Decisions        Short-Run costing and Pricing

Long-Run Costing and Pricing

Market-Based Pricing        Cost- Based Pricing

Target Pricing       Target Costing Process

Life-Cycle Costing

Week 4: Capital structure decisions & Risk and Return

Risk and return    Long-term financial decisions

Working capital management

Corporate restructuring

Week 5: Enterprize Risk Analysis

Enterprize Risk         Value at risk, types of risk

Risk identification and assessment

Risk response, Risk management

Week 6: Enterprize Risk Analysis

Expected ethical behavior, Applying ethics in the corporate setting

Fraud Triangle

Practical ethical scenario

Masuring and improving ethical complianceCorporate Responsibility for Ethical conduct

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