question archive Competency In this project, you will demonstrate your mastery of the following competency: Describe the purpose and function of financial management in an organization Scenario You have been an entry-level financial analyst for six months
Competency In this project, you will demonstrate your mastery of the following competency: Describe the purpose and function of financial management in an organization Scenario You have been an entry-level financial analyst for six months
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Competency
In this project, you will demonstrate your mastery of the following competency:
- Describe the purpose and function of financial management in an organization
Scenario
You have been an entry-level financial analyst for six months. Your supervisor, who is about to fill another entry-level financial analyst position on your team, has asked you to forma job aid about the financial analyst role to help the new hire transition smoothly. The job aid needs to describe the responsibilities of a financial analyst, the essential elements of the role, and the impact the role has on a business.
Directions
Write a job aid for a new hire to an entry-level financial analyst position. Your job aid should be thorough yet easy for someone new to the field of finance to understand. You are encouraged to use the Project One Financial Analyst Job Aid template in the Supporting Materials section to explain this assignment.
Specifically, you must address the following:
- Financial Analyst Job Aid: In this job aid, you will give a general overview of financial management and its importance to a business.
- Financial Responsibilities: Describe the responsibilities of a financial analyst.
- In this section, outline the responsibilities a financial analyst has in terms of financial management. Add 5 to 7 specific bullet points outlining these responsibilities, and use complete sentences so that expectations are clear.
- Financial Management Decisions: Discuss the importance of using financial management for business decisions, and provide examples to support your claims.
- Consider the bullet points you outlined above. How do those responsibilities help to inform management decisions, and what would happen if management didn't have this information? This should be a brief paragraph with examples.
- Accounting Principles: Explain how accounting principles are used to analyze a business's financial health, and provide examples to support your claims. a brief paragraph that explains accounting principles and how they are used within financial management in relation to analyzing financial health. What accounting information and approaches do financial analysts rely on, and how do they use it? What would happen if that information was not available or was not accurate?
- Financial Statements: Describe how financial statements are used to help businesses make finance-related decisions, and provide examples to support your claims.
- Consider identifying the information contained in financial statements and what financial analysts would need in order to do their job. What types of finance-related business decisions would this information help to inform? Provide real or fictional examples to help show this.
- Financial Terminology: Explain how a financial analyst would use the financial terms in their day-to-day responsibilities in a clear, easy-to-understand way.
- Define each term listed below and provide a short explanation of how a financial analyst might use the term, especially when communicating information to management or clients, or when relaying information to inform important decisions:
- Financial statement
- Liquidity
- Working capital
- Diversification
- Time value of money
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Answer:
• The main categories of assets are usually listed first, and normally, in order of liquidity. On a balance sheet, assets will typically be classified into current assets and non-current (long-term) assets.
• Current assets are those assets which can either be converted to cash or used to pay current liabilities within 12 months. Current assets include cash and cash equivalents, short-term investments, accounts receivable, inventories and the portion of prepaid liabilities paid within a year.
Further explanation
A non-current asset cannot easily be converted into cash. Non-current assets include property, plant and equipment (PPE), investment property, intangible assets, long-term financial assets, investments accounted for using the equity method, and biological assets.
• A current asset on the balance sheet is an asset which can either be converted to cash or used to pay current liabilities within 12 months. Typical current assets include cash and cash equivalents, short-term investments, accounts receivable, inventories and the portion of prepaid liabilities which will be paid within a year.
• Cash and cash equivalents are the most liquid assets found within the asset portion of a company's balance sheet. Cash equivalents are assets that are readily convertible into cash, such as money market holdings, short-term government bonds or treasury bills, marketable securities and commercial papers. Cash equivalents are distinguished from other investments through their short-term existence; they mature within 3 months whereas short-term investments are 12 months or less, and long-term investments are any investments that mature in excess of 12 months.
