Financial Information Systems
Financial information systems assist managers in taking financial decisions. These include providing finance to the business, allocating and controlling the financial resources within the organization, etc. Financial information systems can be categorized as cash management, investment management, capital budgeting, and financial planning information systems. The various financial information systems are described here:
Cash management
Cash management involves collection of information on all cash receipts and payments within a company on either real time or periodic basis. Once this information is available, it can help managers decide whether and where to invest or deposit the excess funds in the short term. This would result in an increase in the income generated from the funds that are invested or deposited. The daily, weekly, or monthly forecasts of cash receipts and payments are also generated in order to predict the future cash deficits or surpluses.
Investment management
Investment management is a professional way of managing securities like bonds, shares, etc., and other financial assets of the organization in order to meet the investment requirements of the company while at the same time benefiting the investors. A company's portfolio is managed by collecting all the information relating to investment and security trading. There are several portfolio management software packages available in the market like Cornerstone PowerBroker Asset Management Software, Broker's Ally, FinPoint StockHand, etc.
Capital budgeting
The process of capital budgeting involves the evaluation of profitability and the financial impact of proposed capital expenditures. Capital expenditures like investments in equipment, R&D, projects, etc., are expenditures that would produce or generate cash over a time period. These expenditures are significant and can have a considerable impact on the financial performance of the company. Therefore, it is very important to select the right investment destination or the right project. The process of capital budgeting helps doing this. The capital budgeting application involves the use of spreadsheet models. These models incorporate present value analysis of expected cash flows and probability analysis of risk in order to arrive at the optimum mix of capital projects for the business.
Financial planning
Both the present and projected financial performance of a business can be evaluated by making use of electronic spreadsheets and financial planning software. These tools can also be used for determining the financing needs and alternative methods of financing. Financial models can be built and manipulated using electronic spreadsheet packages, DSS software, and Web-based groupware.
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