financial decision making assignment

Financial Decision-Making Process

Written by True Tamplin, BSc, CEPF®

Reviewed by subject matter experts.

Updated on May 23, 2023

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Table of contents, what is a financial decision-making process.

The financial decision-making process refers to the series of steps that individuals or businesses undertake to identify, evaluate, and select among different financial alternatives or options.

It involves analyzing financial information, weighing the pros and cons of different choices, and making decisions that align with their overall financial goals and objectives.

The financial decision-making process can encompass a wide range of activities, including budgeting, investing, borrowing, and managing risk, and it can be influenced by a variety of factors such as economic conditions, regulatory environment, and personal preferences.

Effective financial decision-making requires a solid understanding of financial concepts and principles, as well as the ability to make informed choices based on relevant information and analysis.

Steps in the Financial Decision-Making Process

Identification of Financial Goals and Objectives

Personal financial goals.

The first step in the financial decision-making process is identifying financial goals and objectives. For individuals, these goals may include saving for retirement , buying a home, or funding a child's education.

Business Financial Goals

For businesses, financial goals may include increasing profitability, expanding market share, or improving cash flow.

Gathering Relevant Financial Information

Sources of financial data.

To make informed financial decisions, it's essential to gather accurate and up-to-date financial information. This data can come from a variety of sources, such as bank statements, investment account records, and financial reports.

Importance of Accurate and Up-To-Date Information

Having accurate and current financial data is crucial for making informed decisions, as it helps individuals and businesses understand their financial health and identify potential opportunities or challenges.

Analysis of Financial Data

Financial ratios and metrics.

Analyzing financial data involves calculating and interpreting financial ratios and metrics, which can provide insights into a person's or company's financial performance , liquidity, solvency, and profitability.

Cash Flow Analysis

Cash flow analysis helps to understand the inflows and outflows of cash, which is essential for managing liquidity and ensuring that financial obligations can be met.

Risk Assessment

Assessing risk involves evaluating the potential financial consequences of different decisions and understanding the likelihood of those consequences occurring.

Development of Alternative Solutions

Identifying possible strategies.

Once financial goals and objectives have been identified, and relevant financial information has been gathered and analyzed, it's time to develop alternative solutions. This may involve brainstorming various strategies to achieve the desired financial outcomes.

Evaluating the Pros and Cons of Each Strategy

Each potential strategy should be evaluated for its advantages and disadvantages, including the level of risk associated with the strategy and the potential return on investment .

Selection of the Best Financial Strategy

Criteria for choosing the best strategy.

The best financial strategy should align with the individual's or organization's financial goals and objectives, take into account their risk tolerance , and provide the highest potential return on investment.

Implementation of the Selected Strategy

Once the best strategy has been selected, it's time to put it into action. This may involve making investments , adjusting spending patterns, or seeking financing.

Monitoring and Evaluation of the Financial Decision

Performance measurement.

After implementing a financial strategy, it's essential to monitor its performance and measure its effectiveness in achieving the desired financial goals and objectives.

Adjustments and Refinements of the Strategy

Based on the performance measurement, adjustments, and refinements may be necessary to ensure the financial strategy remains effective and on track to achieve the desired outcomes.

Key Factors Influencing Financial Decision-Making

Personal factors, financial knowledge and literacy.

An individual's level of financial knowledge and literacy can significantly impact financial decision-making.

Risk Tolerance and Personal Preferences

Personal preferences and risk tolerance also play a significant role in shaping financial decisions, as individuals and businesses must choose strategies that align with their comfort level and long-term objectives.

Economic Factors

Market trends and conditions.

Economic conditions and market trends can impact the success of financial strategies and should be considered during the decision-making process.

Interest Rates and Inflation

Interest rates and inflation can also influence financial decisions, as they affect the cost of borrowing and the value of money over time.

Regulatory and Legal Factors

Taxation policies.

Taxation policies can have a significant impact on financial decision-making, as they affect the after-tax returns of various investment options and influence corporate financial decisions.

Compliance With Financial Regulations

Complying with financial regulations is crucial for individuals and businesses, as non-compliance can result in penalties, fines, and reputational damage.

Tools and Techniques for Financial Decision-Making

Financial planning software.

Financial planning software can help individuals and businesses organize their financial data, develop budgets , and forecast future financial performance.

Budgeting and Forecasting Tools

Budgeting and forecasting tools can be used to create detailed financial plans and projections, helping individuals and businesses understand their financial position and make informed decisions.

Risk Management Techniques

Risk management techniques, such as diversification and hedging , can help individuals and businesses mitigate the potential negative consequences of financial decisions.

Scenario Analysis and Simulation

Scenario analysis and simulation can be used to evaluate the potential outcomes of different financial strategies and assess the impact of various factors on financial performance.

Role of Financial Professionals in the Decision-Making Process

Financial advisors and consultants.

Financial advisors and consultants can provide valuable guidance and advice to individuals and businesses navigating the financial decision-making process.

Certified Financial Planners

Certified Financial Planners (CFPs) are professionals who have met rigorous education, experience, and ethical requirements, and can help clients develop comprehensive financial plans and strategies.

Benefits of Working With Financial Professionals

Working with financial professionals can help individuals and businesses make more informed financial decisions, as these experts can offer insights, guidance, and expertise based on their experience and knowledge.

Ethical Considerations in Financial Decision-Making

Ethical dilemmas in financial decision-making.

Ethical dilemmas can arise during the financial decision-making process, as individuals and businesses must balance the pursuit of financial goals with the need to adhere to ethical standards and principles .

Corporate Social Responsibility and Sustainability

Corporate Social Responsibility (CSR) and sustainability initiatives are increasingly important factors in financial decision-making, as companies must consider the Environmental, Social, and Governance (ESG) impacts of their decisions.

Importance of Ethics in Long-Term Financial Success

Adhering to ethical principles and engaging in responsible financial decision-making can contribute to long-term financial success, as it helps build trust, credibility, and positive relationships with stakeholders .

The Bottom Line

The financial decision-making process involves identifying financial goals, gathering relevant information, analyzing data, developing alternative solutions, selecting the best strategy, implementing the chosen strategy, and monitoring and evaluating the decision.

Key factors influencing financial decision-making include personal factors (financial knowledge, risk tolerance), economic factors (market trends, interest rates), and regulatory factors (taxation policies, compliance).

Tools such as financial planning software, budgeting tools, risk management techniques, and scenario analysis can aid in decision-making.

Financial professionals, such as advisors and certified planners, play a crucial role in providing guidance.

Ethical considerations, including ethical dilemmas, corporate social responsibility, and sustainability, are important aspects of financial decision-making for long-term success.

Financial Decision-Making Process FAQs

What is the financial decision-making process, and why is it important.

The financial decision-making process is a structured approach to making choices about allocating resources, managing risks, and achieving financial goals for both individuals and businesses. It is important because it helps ensure that financial decisions are well-informed, strategic, and aligned with long-term objectives.

What are the key steps involved in the financial decision-making process?

The key steps in the financial decision-making process include: identifying financial goals and objectives, gathering relevant financial information, analyzing financial data, developing alternative solutions, selecting the best financial strategy, implementing the selected strategy, and monitoring and evaluating its performance.

How do personal factors influence the financial decision-making process?

Personal factors, such as financial knowledge and literacy, risk tolerance, and personal preferences, can significantly influence the financial decision-making process. These factors shape an individual's approach to financial management, guiding their choice of strategies and their willingness to take on risk.

What tools and techniques can be used to support the financial decision-making process?

Tools and techniques that can support the financial decision-making process include financial planning software, budgeting and forecasting tools, risk management techniques, and scenario analysis and simulation. These resources can help individuals and businesses organize financial data, develop budgets, forecast future performance, and evaluate the potential outcomes of different financial strategies.

How do ethical considerations play a role in the financial decision-making process?

Ethical considerations play a crucial role in the financial decision-making process, as individuals and businesses must balance the pursuit of financial goals with adherence to ethical standards and principles. This may involve addressing ethical dilemmas, incorporating corporate social responsibility and sustainability initiatives, and considering the environmental, social, and governance (ESG) impacts of financial decisions.

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide , a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University , where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon , Nasdaq and Forbes .

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The Ultimate Guide to Excelling in Financial Management Assignments

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Define Financial Management

Discuss the importance of financial management, outline the key principles of financial management, utilize diverse sources, stay updated with current financial trends, introduction, use clear and concise language, support your arguments with evidence, proofread and edit your assignment.

Any business organization must effectively manage its finances, and assignments on the topic give students the chance to learn more about the guiding principles and ideas of efficient financial management. This guide is intended to give you useful tips on how to create an engaging assignment on financial management, whether you are a finance student looking to improve your understanding or a professional looking to improve your financial management skills. You can make sure that your assignment demonstrates a thorough understanding of financial management principles while capturing the attention of your readers by using the techniques described in this article. This guide covers the necessary steps to assist you in writing a well-structured and informative assignment, from outlining key principles to conducting efficient research to defining financial management and emphasizing its significance. The information provided here will direct you towards success in writing financial management assignment , whether your goal is academic excellence or improving your practical financial management skills.

Understanding the Basics of Financial Management

Understanding the foundational ideas of financial management is essential to writing an effective assignment on the subject. Planning, organizing, directing, and controlling financial activities within an organization are all included in financial management. These fundamental ideas will help you build a strong foundation for your assignment. You will be able to analyze and discuss financial management theories, practices, and concepts with greater accuracy once you have this understanding. Furthermore, a thorough understanding of financial management fundamentals guarantees the coherence and logical flow of your assignment. It aids in contextualizing your arguments and enabling you to reach insightful conclusions. Therefore, spend some time becoming familiar with the foundational ideas of financial management before starting the writing process. You can create a well-structured and informed assignment on financial management using this knowledge as a framework.

Start by outlining the meaning of financial management in the context of business. Describe how budgeting, financial analysis, financial forecasting, and decision-making are all included in financial management. Maximizing shareholder wealth, ensuring liquidity, managing risks, and optimizing the use of financial resources, are just a few of the key goals of financial management. Give examples of how financial management helps organizations achieve long-term sustainability, facilitate growth, and maintain financial stability.

Examine the value of financial management for businesses of all sizes and in all sectors. Describe how employing sound financial management techniques can boost revenue, improve investment performance, cash flow management, and financial stability. Highlight how important financial management is for guiding resource allocation, assisting in sustainable growth, and supporting strategic decision-making. Give concrete illustrations and case studies to show how businesses have benefited from putting effective financial management strategies into practice as well as the drawbacks of ineffective financial management techniques.

Describe and enumerate the main guiding principles of financial management. The time value of money, risk and return trade-offs, diversification, leverage, profitability, and the idea of opportunity cost are some of these concepts. Explain each principle in detail, showing how it applies to financial decision-making. Describe how these principles assist financial managers in assessing investment opportunities, controlling financial risks, and enhancing an organization's capital structure. To show the practical applications of these principles in actual financial management situations, back up your explanations with pertinent examples and case studies.

Conducting Research for Your Financial Management Assignment

Writing an informed and comprehensive financial management assignment requires extensive research. The foundation of your work is research, which gives you the facts and figures you need to back up your claims and analyses. This section will describe how to conduct efficient research, assisting you in compiling pertinent and trustworthy sources for your assignment. You can guarantee the accuracy and reliability of the information you include in your assignment by using a variety of sources, including textbooks, scholarly journals, industry reports, and financial databases. Maintaining up-to-date knowledge of current financial trends and laws is also essential to prove that you comprehend the dynamic nature of financial management. You can improve the quality and depth of your assignment by doing thorough research, which will allow you to present arguments and insights in the field of financial management that are solidly supported.

It is essential to consult a variety of sources for your financial management assignment if you want to guarantee its accuracy and dependability. You will gain a thorough understanding of the subject matter if you rely on a variety of sources, including books, scholarly journals, industry reports, reputable websites, and financial databases. To ensure the accuracy of the data and insights you present in your assignment, evaluate the credibility, relevance, and timelessness of the information you incorporate from these sources. You can improve the depth and caliber of your research by incorporating a variety of sources and providing solid evidence to back up your claims and analyses.

The field of financial management is constantly evolving and changing. It's crucial to keep up with the most recent financial trends, laws, and practices to write an informed and pertinent financial management assignment. You can demonstrate your knowledge and understanding of the dynamic nature of financial management by staying up to date with recent developments. To gather up-to-date information, turn to reliable financial news sources, business networks, and sector-specific publications. Your assignment will demonstrate your ability to analyze actual situations and apply modern financial management principles by incorporating current trends, case studies, and industry insights. Being current will help your assignment sound more credible and show that you are interested in the constantly changing field of financial management.

Structuring Your Financial Management Assignment

Your financial management assignment's structure is an important component that improves readability and makes it possible for you to communicate your ideas. The logical flow of a well-structured assignment ensures that your arguments and analysis are presented understandably and systematically. You can set the stage for what follows by giving a succinct introduction that describes the aim and goals of your assignment. The main body of your assignment can be organized into sections that each concentrate on different facets of financial management. This allows for a methodical investigation of the subject. The organization and readability of your work are further enhanced when subheadings are used within these sections. Finally, a thoughtful conclusion that summarises the main ideas and highlights their importance brings the assignment together successfully. You can effectively engage your readers and present a strong argument in your financial management assignment by following a solid structure. The fundamental components and format for your financial management assignment are described in this section.

Start your financial management assignment off strong with a succinct and captivating introduction. Indicate the precise goals you hope to achieve in your assignment's purpose and objectives, which should be stated clearly. Introduce the subject of financial management by emphasizing its importance and relevance in the fast-paced business environment of today. Give the reader a glimpse of the insightful knowledge they can expect to learn from reading your work by giving a brief overview of the important topics you will be covering in your assignment. You will lay a solid foundation for the remainder of your assignment by establishing the scene and a clear direction from the outset.

The main body of your financial management assignment should be divided into logical sections, each of which should focus on a different facet of the subject. Ensure that sections flow into one another seamlessly to allow for a logical progression of ideas. Include pertinent theoretical frameworks, case studies, and empirical data to back up your claims and analysis. Use subheadings to effectively organize your content so that readers can navigate your assignment and understand the main ideas. You can show that you have a thorough understanding of financial management by putting forth arguments that are supported by a variety of sources and engaging your readers in thought-provoking debates.

Reiterate the important ideas covered in your work throughout your financial management assignment. Summarise the key conclusions and revelations from your study, focusing on their importance in the context of financial management. Restate the main goals of your assignment and demonstrate how you met them successfully in your work. To encourage readers to learn more about the subject in-depth, you should also think about making recommendations for additional research or discussing the useful implications of your findings. A strong conclusion leaves a lasting impression on your audience, reinforcing the significance of your research and giving them something to ponder.

Writing Tips for Your Financial Management Assignment

Effective communication and attention to detail are necessary when writing a financial management assignment. This section offers helpful advice to improve the caliber of your assignment. You can make sure that your readers can understand your ideas by using clear, concise language. Strengthening your analysis and giving your work credibility by supplying pertinent data and evidence to support your claims. To remove errors and increase clarity, proper editing and proofreading are also crucial. Academic integrity requires consistency in referencing and adherence to the proper citation style. Additionally, readability is improved by logically structuring your assignment and organizing your thoughts coherently. By using these writing suggestions, you can create a strong financial management assignment that shows off your knowledge and comprehension of the subject. Take into account the following writing advice to make sure your assignment is effective and clear:

It's crucial to convey your ideas concisely and clearly when writing your financial management assignment. Avoid confusing your readers with jargon and technical terms. Instead, make an effort to speak simply and clearly. To ensure comprehension and give context to your readers, define any technical terms you use. Your assignment will be easier to read and more accessible to a wider audience if you use clear, concise language.

It is crucial to support your claims and arguments with pertinent facts and figures to give your financial management assignment more credibility. When necessary, use tables, graphs, and charts to visually illustrate your points and improve comprehension. Follow the proper referencing style and make sure to consistently and accurately cite your sources. By providing evidence to back up your claims, you show that you have a thorough understanding of the subject at hand and lay the groundwork for your analysis and conclusions.

Spend some time carefully editing and proofreading your financial management assignment before turning it in. Check your assignment carefully for grammatical, spelling, and punctuation errors to make sure it is error-free. Make sure your assignment reads well and is coherent, with logical connections between ideas and paragraphs. Edit your work for readability, clarity, and logical content organization. This entails looking over your sentences for clarity, your writing for consistency, and your assignment as a whole for the overall structure. You can polish your assignment and present a polished piece of work by going through a thorough proofreading and editing process.

In conclusion, writing a financial management assignment necessitates having a firm understanding of the subject and strong research abilities. You can write an engaging essay by studying the foundations of financial management, doing extensive research, and logically arranging your assignment. It is essential to use clear and concise language, back up your claims with proof, and carefully proofread your assignment for accuracy and clarity. By putting these techniques into practice, you'll not only impress your readers but also gain a deeper understanding of this important subject. Accept the challenge, implement the advice in this manual, and let your assignment serve as a showcase for your expertise in and enthusiasm for financial management. Wishing you luck as you complete your assignment!

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5 Ways Managers Can Use Finance to Make Better Decisions

• 02 Jun 2020

Decision-making is an essential management skill that can both drive and impede financial performance. According to research by management consulting firm McKinsey, organizations with fast and efficient decision-making processes are twice as likely to report financial returns of at least 20 percent as a result of recent decisions.

McKinsey’s research also shows that inefficient decision-making can lead to more than 530,000 days of lost working time and $250 million of wasted labor costs per year.

To help position your organization for success and avoid these pitfalls, it’s critical to develop your financial literacy and knowledge to understand and overcome business challenges.

Here are five ways you can use finance to improve your decision-making and become a better manager .

Access your free e-book today.

Strategies to Make Better Financial Decisions

1. perform financial statement analysis.

Financial statements are among the most important resources at your disposal when it comes to decision-making. You should not only know how to read them, but interpret and analyze the data they present.

Understanding the numbers on your organization’s balance sheet can indicate its current financial position, and show whether it’s on a trajectory for success or failure. By examining its cash flow statement , you can gain insight into how cash is being generated and used. Through reviewing its income statement , you can gauge how your business is doing in relation to its expected performance.

When viewed in the context of an annual report, these statements can reveal valuable information about your company, such as its profits and losses year over year and the factors that have contributed to—or hindered—its growth.

Equipped with this information, you can make more informed decisions about how to allocate your company’s resources and work toward its goals.

Related: Balance Sheets 101: What Goes on a Balance Sheet?

2. Estimate the Financial Impact of Projects and Initiatives

To effectively manage your team and department, you need to decide which projects and initiatives are worth pursuing—and which are not.

Calculating the anticipated return on investment (ROI) of a project can help support your pitch with numbers and show how much profit it’s likely to generate and the resources needed to make it a success.

The ROI of completed initiatives can also reveal critical details about how your organization allocated funds and accomplished tasks, providing valuable lessons you can apply to future endeavors.

Conducting a cost-benefit analysis is another way you can use finance to make better decisions. This method of data-driven decision-making provides a framework for performing an evidence-based evaluation of an initiative, allowing you to assess how its projected benefits compare to its costs. With this approach, you can break down complex business decisions and elect to pursue projects expected to yield the best outcomes.

3. Learn How to Budget

Budgeting is a basic finance skill all managers and decision-makers should have. At its core, your team’s budget is a vital tool that ensures your organization has the resources necessary to reach its goals.

By breaking down your team’s work into a detailed set of deliverables during the budgeting process, you can track your spending against estimated expenses and, when necessary, pivot your project management strategy to ensure tasks are completed on time and on budget.

Knowing how to manage a budget can also allow you to better communicate progress and performance to stakeholders within your organization, which can inform how company-wide initiatives are planned and executed.

4. Involve Your Team in Decision-Making

Soliciting and considering a range of alternatives is an essential step in the decision-making process . By involving your team in important business decisions, you can facilitate an in-depth evaluation of the issues at hand and stimulate more creative problem-solving. According to research by software company Cloverpop, teams make better decisions than individuals 66 percent of the time.

When addressing a financial decision, you can lean on your team members’ expertise to answer key questions and chart a path forward. One of your employees may be more versed in financial terminology , while another may have a greater understanding of the difference between GAAP and IFRS accounting standards.

By soliciting input from your colleagues and encouraging discussion and debate, you can fill in your knowledge gaps and formulate an array of potential solutions to business problems.

Related: 5 Key Decision-Making Techniques for Managers

5. Track Financial Performance

Knowledge of your organization’s past and present financial performance is crucial to sound decision-making. Monitoring financial KPIs , or key performance indicators, such as gross profit margin, working capital, and return on equity can equip you with an understanding of your company’s financial health and your team’s contributions to its strategic objectives.

Metrics like cash flow and profit are also useful for tracking how your firm is managing money and growing, which can inform how you decide to appropriate people and resources to pursue its goals.

Improving Your Financial Decision-Making

Bolstering your decision-making with an intuitive understanding of finance can equip you to thrive in your role and boost the performance of your team and organization.

Even if you don’t have a background in finance, learning financial principles and concepts can go a long way in helping you improve your management skills and excel professionally .

Do you want to develop a financial intuition that will give you the confidence to make better decisions in your career and life? Explore our six-week online course Leading with Finance and other finance and accounting courses , and download our free course flowchart to determine which best aligns with your goals.

About the Author

• Kreyòl Ayisyen

Financial knowledge and decision-making skills

Financial knowledge and decision-making skills help people make informed financial decisions through problem-solving, critical thinking, and an understanding of key financial facts and concepts.

Building financial knowledge and decision-making skills

How do we learn to make good financial choices? Learn more about the financial knowledge and decision-making skills building block and how it can help young people make the right decisions for their situation.

Importance of financial knowledge and decision-making skills

Strong financial knowledge and decision-making skills help people weigh options and make informed choices for their financial situations, such as deciding how and when to save and spend, comparing costs before a big purchase, and planning for retirement or other long-term savings.

Development of this building block

Financial knowledge and decision-making skills typically don’t develop until adolescence and young adulthood. During these years, they become more relevant, especially for youth who start to earn money, buy things on their own, manage a bank account, or borrow for education.

The tables that follow show what this building block looks like at three stages of development and how the skills and abilities relate to adult behavior associated with financial well-being.

Early childhood (ages 3–5)

Middle childhood (ages 6–12)

Adolescence and early adulthood (ages 13–21)

Teaching this building block

Schools can provide opportunities for youth to practice financial behaviors, make financial decisions, and reflect on the outcomes and consequences of those decisions. Across the curriculum, teachers can provide opportunities for students to learn how to find and recognize reliable financial information, compare financial products, and do purposeful financial research in order to analyze options and make decisions.

Instructional strategies

Research shows that the following strategies can be effective to help people develop financial knowledge and decision-making skills.

• Competency-based learning: Student-centered learning that encourages students to progress toward well-defined benchmarks to give them a sense of mastery and ownership over the skills and knowledge they are learning
• Direct instruction: A structured, straightforward, teacher-directed approach that focuses on an explicit skill and typically includes a lecture, demonstration, or discussion
• Personalized instruction: Teacher assesses each student’s needs, then tailors instruction to the individual student, including focusing and differentiating resources, strategies, supports, and pacing on that student’s needs to individualize learning
• Project-based learning: A hands-on strategy in which students actively explore real-world challenges, answer meaningful questions, and accomplish relevant tasks and, in doing so, are encouraged to make their own decisions, perform their own research, overcome obstacles, and present their work to others
• Simulation: Hands-on learning activities that use real-world scenarios to promote critical thinking and application of learning

Learning activities

Learning activities that nurture financial knowledge and decision making should support young people’s acquisition of factual knowledge, research and analysis skills, and deliberate financial decision-making. The types of activities that support these skills include the following.

• Financial coaching and mentoring: Adults engage and encourage students (individually and in small groups) to develop financial capability and work toward financial goals
• Financial simulations: Educational tools or activities that replicate real-world financial management situations and allow students to develop skills such as budgeting, comparison shopping, and investing by making mock decisions that result in realistic consequences
• Real-world case studies: Stories that present realistic situations involving a dilemma, conflict, or problem to be negotiated or resolved by analyzing and evaluating a range of information and weighing the consequences of different decisions

Resources for teaching financial knowledge and decision-making skills

• Search for classroom activities to nurture the development of financial knowledge and decision-making skills
• Explore all strategies and learning activities for nurturing the building blocks

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Financial analysis and decision making

Drawing upon realistic examples and scenarios, this module will help you to understand effective financial decision making within organisations. You'll learn how financial capital can be raised and allocated, how to evaluate investment projects, as well as how to value stocks, bonds and real estate. You'll also explore the advantages and disadvantages of the most commonly used derivative instruments. If you have, or plan to pursue, a managerial position either in a private or public organisation or simply want to understand more about how to plan your personal finances and invest wisely, this module will provide a solid foundation for the decision-making challenges you may face.

Modules count towards OU qualifications

OU qualifications are modular in structure; the credits from this undergraduate module could count towards a certificate of higher education, diploma of higher education, foundation degree or honours degree.

Browse qualifications in related subjects

Module code.

• Credits measure the student workload required for the successful completion of a module or qualification.
• One credit represents about 10 hours of study over the duration of the course.
• You are awarded credits after you have successfully completed a module.
• For example, if you study a 60-credit module and successfully pass it, you will be awarded 60 credits.

Study level

Study method

Module cost, entry requirements, request your prospectus, explore our subjects and courses, what you will study.

The module consists of the following six units, each of which lasts between two and three weeks:

Unit 1 – Organisational goals and financial decision making In this introductory unit, you'll be provided with a broad overview of the various types of organisations that feature in today’s economy. You'll appreciate how they differ in terms of their overall purpose and, therefore, in some aspects of their operations. In exploring the financial management environment, you will learn about the role financial managers play in helping organisational strategies succeed. Finally, you'll consider the responsibilities of financial managers and the major decision areas that confront them. 

Unit 2 – Organisations and the financial system In this unit, you'll be introduced to the main sources of finance available to organisations, such as bank finance, crowdfunding and venture capital. You'll also consider the related specific opportunities and constraints in an accessible and contextualized manner. The key features of the ‘financing mix’ available to the various types of organisations will be elucidated, along with the relationships that can be built with capital markets. Finally, you'll discover the different ways in which organisations can allocate the financial resources raised, such as capital expenditure, share repurchase and mergers and acquisitions (M&As).

Unit 3 – Time value of money and cost of capital In this unit, you'll be introduced to the concepts of risk, time value of money and cost of capital. Although it is impossible to exactly calculate the effects of uncertainty on investment projects, tools for quantifying risk are available. You'll cover the quantitative techniques that are the building blocks of the financial literature on risk and discount rate estimations. The unit will also discuss the Weighted Average Cost of Capital (WACC), which gives the base discount rate that a company should use for investment appraisal. 

Unit 4 – Investment appraisal  In this unit, you'll focus on making financial decisions for long-term investments using investment appraisal techniques and will build on the concept of time value of money. In particular, you will be introduced to the four most commonly used investment appraisal techniques, namely: Payback, Accounting Rate of Return (ARR), Net Present Value (NPV) and Internal Rate of Return (IRR). The advantages and limitations of each of these methods will be discussed, as well as their relevance to analyse the economic viability of long-term projects. Upon completion of the unit, you will be able to answer questions such as: should the business launch a new project or invest in a new machine? You will also look at some practical examples and touch on other issues in investment appraisal, such as non-financial factors. 

Unit 5 – Asset valuation techniques In this unit, you'll consider the most popular approaches to equity valuation, such as net asset value, dividend- and cash flow-related techniques, as well as relative valuation approaches. Understanding the forces that drive the price of equity is of great practical importance since it allows stock market investors to determine whether a particular company is a good buy. Furthermore, it informs managers on how best to follow strategies that maximise shareholder value. As will be illustrated, the valuation techniques covered here could also be successfully employed in the context of bonds and real estate. 

Unit 6 – Risk management In this unit, you'll be introduced to the most commonly used derivative instruments, their contractual characteristics and payoff structure. When used correctly, these instruments can provide cheap insurance for companies and investors alike. The design of hedging methods, which are intended to mitigate or eliminate risk, will be elucidated. Even if derivatives are an invaluable tool in risk management, they can be dangerous when used for speculation purposes. This unit will illustrate these dangers and provide examples of massive losses that have been made by some imprudent market participants. 

Vocational relevance

This module will cover the key financial skills that are vital for driving success in organisations. Regardless of the role or function that you may perform, being able to understand the key features of financing and investing processes, as well as assess the value and the risks associated with organisational activities, is crucial to effective financial decision-making.

Teaching and assessment

Support from your tutor.

Throughout your module studies, you’ll get help and support from your assigned module tutor. They’ll help you by:

• marking your assignments (TMAs) and providing detailed feedback for you to improve
• guiding you to additional learning resources
• providing individual guidance, whether that’s for general study skills or specific module content
• facilitating online discussions between your fellow students in the dedicated module and tutor group forums.

Module tutors also run online tutorials throughout the module. Where possible, recordings of online tutorials will be made available to students. While these tutorials won’t be compulsory for you to complete the module, you’re strongly encouraged to take part. If you want to participate, you’ll likely need a headset with a microphone.

The assessment details for this module can be found in the facts box.

Future availability

Financial analysis and decision making starts once a year – in April. This page describes the module that will start in April 2025. We expect it to start for the last time in April 2027.

Regulations

Course work includes:.

There are no formal entry requirements to study this module, but as it requires an aptitude for analytical and quantitative methods to engage with theories of finance and their applications, it’s very important that you are comfortable with:

• basic mathematical operations, such as addition, subtraction, multiplication and division;
• powers of numbers, including square roots;
• using your scientific calculator effectively for the above;
• simple mathematical equations;
• negative numbers and fractions;
• drawing and interpreting simple charts and graphs;
• use of Excel to perform basic calculations.

This  self-assessment quiz  can help you check your understanding of the numerical skills required to study this module. Your final score will indicate whether you would benefit from any further preparation before tackling the numerical parts of the module.

If you have any doubt about the suitability of the module, please speak to an  adviser .

Additional Costs

Study costs.

There may be extra costs on top of the tuition fee, such as set books, a computer and internet access.

If your income is not more than £25,000 or you receive a qualifying benefit, you might be eligible for help with some of these costs after your module has started.

Ways to pay for this module

Open university student budget account.

The Open University Student Budget Accounts Ltd (OUSBA) offers a convenient 'pay as you go' option to pay your OU fees, which is a secure, quick and easy way to pay. Please note that The Open University works exclusively with OUSBA and is not able to offer you credit facilities from any other provider. All credit is subject to status and proof that you can afford the repayments.

You pay the OU through OUSBA in one of the following ways:

• Register now, pay later – OUSBA pays your module fee direct to the OU. You then repay OUSBA interest-free and in full just before your module starts. 0% APR representative. This option could give you the extra time you may need to secure the funding to repay OUSBA.
• Pay by instalments – OUSBA calculates your monthly fee and number of instalments based on the cost of the module you are studying. APR 5.1% representative.

Joint loan applications

If you feel you would be unable to obtain an OUSBA loan on your own due to credit history or affordability issues, OUSBA offers the option to apply for a joint loan application with a third party. For example, your husband, wife, partner, parent, sibling or friend. In such cases, OUSBA will be required to carry out additional affordability checks separately and/or collectively for both joint applicants who will be jointly and severally liable for loan repayments.

As additional affordability checks are required when processing joint loan applications, unfortunately, an instant decision cannot be given. On average the processing time for a joint loan application is five working days from receipt of the required documentation.

Read more about  Open University Student Budget Accounts (OUSBA) .

Studying with The Open University can boost your employability. OU courses are recognised and respected by employers for their excellence and the commitment they take to complete. They also value the skills that students learn and can apply in the workplace.

More than one in ten OU students are sponsored by their employer, and over 30,000 employers have used the OU to develop staff so far. If the module you’ve chosen is geared towards your job or developing your career, you could approach your employer to see if they will sponsor you by paying some or all of the fees. 

• Your employer just needs to complete a simple form to confirm how much they will be paying and we will invoice them.
• You won’t need to get your employer to complete the form until after you’ve chosen your module.  

Credit/debit card

You can pay part or all of your tuition fees upfront with a debit or credit card when you register for each module. 

We accept American Express, Mastercard, Visa and Visa Electron. 

We know that sometimes you may want to combine payment options. For example, you may wish to pay part of your tuition fee with a debit card and pay the remainder in instalments through an Open University Student Budget Account (OUSBA) .

For more information about combining payment options, speak to an  adviser  or book a  call back at a time convenient to you.

Can you study an Access module for free?

Depending on eligibility and availability of places, you could apply to study your Access module for free.

To qualify, you must:

• be resident in England
• have a household income of not more than £25,000 (or be in receipt of a qualifying benefit)
• have not completed one year or more on any full-time undergraduate programme at FHEQ level 4 or above or successfully completed 30 credits or more of OU study within the last 10 years

How to apply to study an Access module for free

Once you've started the registration process , either online or over the phone, we'll contact you about your payment options. This will include instructions on how you can apply to study for free if you are eligible and funded places are still available.

If you're unsure if you meet the criteria to study for free, you can check with one of our friendly advisers on +44 (0)300 303 0069 , or you can request a call back .

Not eligible to study for free?

Don't worry! We offer a choice of flexible ways to help spread the cost of your Access module. The most popular options include:

• monthly payments through OUSBA
• part-time tuition fee loan (you'll need to be registered on a qualification for this option)

To explore all the options available to you, visit Fees and Funding .

What's included

All materials and tuition are available via the module website.

Computing requirements

You’ll need broadband internet access and a desktop or laptop computer with an up-to-date version of Windows (10 or 11) or macOS Ventura or higher.

Any additional software will be provided or is generally freely available.

To join in spoken conversations in tutorials, we recommend a wired headset (headphones/earphones with a built-in microphone).

Our module websites comply with web standards, and any modern browser is suitable for most activities.

Our OU Study mobile app will operate on all current, supported versions of Android and iOS. It’s not available on Kindle.

It’s also possible to access some module materials on a mobile phone, tablet device or Chromebook. However, as you may be asked to install additional software or use certain applications, you’ll also require a desktop or laptop, as described above.

If you have a disability

The OU strives to make all aspects of study accessible to everyone and this  Accessibility Statement  outlines what studying B294 involves. You should use this information to inform your study preparations and any discussions with us about how we can meet your needs.

To find out more about what kind of support and adjustments might be available, contact us or visit our disability support pages .

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Financial Decision Making - Assignment

Added on   2021-02-20

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