How to Write a Paper on Financial Management
For those who need to get better at essay writing and learn to write good essay on financial management in particular, here’s a sample of a good paper on “Investment Decisions”:
Investments decisions are the kind of risk decisions which are aimed at generating financial returns in the future. Returns can be anticipated in the short-term perspective, mid-term perspective or in the long run, depending on the type of investment. It’s crucial to balance out investment and consumption alternatives in order to increase the probability of monetary returns. There are a number of similarities between the long-term and short-term decision making. In particular it’s the significance of incremental changes in revenues and costs, necessity to consider future costs and choice between alternatives. However, requirements to the long-term decision making in the sphere of investments are rather high, because the value of money is a dynamic factor which should always be considered and calculated, especially on a large time scale. Time scale should also consider inflation and uncertainty, because these factors have a staggering influence on the long-term investment decisions. On the contrary, requirements to short-term decisions are not that high.
Methods which are utilized to evaluate capital investments are a hot topic among financial experts and one of the most popular subjects of research studies during the last 15-25 years. Considering the dynamics of financial markets, the interest in this subject can be called longlasting and consistent. The main reason why this topic is so popular is that researches wanted to find out whether there are superior methods that work better than others. The challenge was to support claims by factual data, which would prove the superiority of one group of methods above the other. As a result of the lasting research two methods were labeled “traditional techniques”, which identified the high level of their trustworthiness. These methods are Return and Payback and Accounting Rate. Let’s take a closer look at Return and Payback method.
Payback is a widely used method for assessing projects on its own or in combination with other methods. This technique has its pros and cons which should be considered by all financial managers who are planning to utilize it in their work.
The list of pros includes:
- simple to understand and easy to calculate;
- objective because it uses cash flows instead of accounting;
- great for quick return projects that enhance liquidity of the company and yield faster growth.
As for the cons, they are the following:
- it doesn’t take into consideration cash flows after the payback period which makes it impossible to measure the overall worth of the project;
- it can only provide a crude measure of project cash flows’ timing.
In any case, each method should be evaluated attentively in terms of how well it fits the exact situation where it will be exploited.