Financial Evaluation and Decision Making:

The final major element of financial management is the evaluation of the information provided through the accounting and budget process.

Financial evaluation assesses the overall performance of the business, and the performance of the business in certain areas.

The main area on which evaluation focuses is with financial ratios.

Similarly, financial evaluation may include benchmarking, where an established set of financial figures gained through the assessment of a number of similar organisations is used as a comparison with the particular organisation in question.  Where discrepancies exist between a benchmark figure, and that achieved by the organisation, the organisation can make decisions based on improving the businesses performance in that particular area. Again, without the benefit of accurate accounting and budgeting, the value of benchmarking exercises would be limited.