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A STUDY ON

FINANCIAL PLANNING AND FINANCIAL FORECASTING

IN

M/S YAHOO SOFTWARE DEVELOPMENT INDIA PVT LTD,

BANGALORE

PROJECT REPORT SUBMITTED TO

SCHOOL OF MANAGEMENT STUDIES

INDIRA GANDHI NATIONAL OPEN UNIVERSITY

MAIDAN GARHI, NEW DELHI

IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE DEGREE

OF MASTER OF BUSINESS ADMINISTRATITON- FINANCE

SUBMITTED BY

ANANTH KUMAR. D (MP 072373198)

UNDER THE GUIDANCE OF

Prof.K.M. MAHADEVAPPAA, MA, MBA (FIN), MBA (HR) LL.B. Pre-PhD ACADEMIC COUNSELOR, IGNOU, BANGALORE

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CERTIFICATE OF ORIGINALITY

This is to certify that the project titled A Study on Financial

Planning and Financial Forecasting in M/s Yahoo Software

Development India Pvt Ltd, Bangalore is a bona-fide and original

work of the student and is being submitted in partial fulfillment for the

award of the Masters degree in Business Administration of Indira Gandhi

Open University. This report has not been submitted earlier either to this

University or to any other University/Institution for the fulfillment of the

requirement of a course of study.

K.M.MAHADEVAPPAAANANTHKUMAR D Signature of ProjectGuide Signature of Student

Place: Bangalore Place:Bangalore Date: 26 March 2012

26 March 2012

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ACKNOWLEDGEMENT

I sincerely feel that the credit of the project work could not be

narrowed down to only one individual, as the work is the outcome of

wholehearted cooperation from many persons. With their guidance and

support, I was able to bring out this project report.

I am thankful to the management for providing me an

opportunity to do this project.

I heartily thank the Officers and employees of M/s Yahoo

Software Development India Pvt Ltd,Bangalore, for providing me

an opportunity to do the project in their company. I earnestly thankful

to Sri K.A.Upadhyaya, Senior Finance Manager and all the Departments

of the company for their constant support and cooperation during the

course of the project and for providing me their valuable time and

information for completing my project despite their busy schedules.

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Last but not the least, I would like to express my sincere thanks to

those known and unknown people who helped me by any means.

Place: BangaloreANANTHKUMAR DDate 13 February 2012

TABLE OF CONTENTS

Chapte

r

Particulars Page

No.

1

INTRODUCTION TO FINANCE MANAGEMENT

2

CONCEPTS OF FINANCE MANAGEMENT

3

ORGANISATION PROFILE

4

DATA ANALYSIS AND INTERPRETATION

5

CONCLUSION

6

SUGGESTIONS AND RECOMMENDATIONS

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7

ANNEXURE - QUESTIONNAIRE

8BIBLIOGRAPHY / WEB SITES REFERRED

1.1 Finance A concept

It would be worthwhile to recall what Henry Ford once remarked: "Money is an arm or a

leg. You either use it or lose it". This statement though apparently simple, is quite

meaningful. It brings home the significance of money or finance. In the modern money-

oriented economy finance is one of the basic foundations of all kinds of economic

activities. It is the master key which provides access to all the sources for being employed

in manufacturing and merchandising activities. The Sanskrit saying "arthah sachivah"

which means "finance reigns supreme", speaks volumes for the significance of the finance

function of an organization. It has rightly been said that business needs money to make

more money. However, it is also true that money begets more money, only when it is

properly managed. Hence, efficient management of every business enterprise is closely

linked with efficient management of its finances. In conclusion we can say that Finance is

regarded as "The life blood of a business enterprise". "Finance is the backbone of every

business".

1.2 Meaning of Business Finance

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Business Finance is that business activity which is concerned with the acquisition and

conservation of capital funds in meeting financial needs and overall objectives of a

business enterprise.

1.3 Meaning of Financial Management

Financial management is broadly concerned with the acquisition and use of funds by a

business firm. Its scope may be defined in terms of the following questions.

How large should the firm be and how fast should it grow?

What should be the composition of the firms assets?

What should be the mix of the firms financing?

How should the firm analyze, plan and control its financial affairs?

The entire gamut of managerial efforts concerned with raising of funds at optimum cost

and their effective utilization with a view to maximize the wealth of the shareholders.

Financial management is concerned with the efficient use of an important economic

resource; namely, capital funds.

Thus, Financial management includes Anticipating Financial Needs, Acquiring Financial

Resources and Allocating Funds in Business (i.e, Three As of financial management).

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Figure 1.1: Framework of Financial Management

1.4 Importance of Financial Management

Financial Management is indeed the key to successful business operations. Without proper

administration and effective utilization of finance, no business enterprise can utilize its

potentials for growth and expansion. The importance of financial management can be

ascertained from the study of the following points:

1. Successful promotion: Successful promotion of a business concern depends upon

efficient financial management. If the plan adopted fails to provide adequate capital to meet

the requirements of fixed and working capital and particularly the latter, the firm cannot

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carry on its business successfully. Therefore, sound financial planning is quite essential for

the success of a business firm.

2. Smooth Running: Since finance is required at each stage of the business such as

promotion, incorporation, development, expansion and management of day-to-day

expenses, proper financial administration becomes necessary for the smooth running of a

business enterprise.

3. Decision making: Financial management provides scientific analysis of all facts and

figures through various financial tools such as ratio analysis, variance analysis, budgets

etc., Such an analysis helps the management to evaluate the profitability of the plan in the

given circumstances so that a proper decision can be taken to minimize the risk.

4. Solutions to Financial Problems: The efficient Financial Management helps the top

management by providing solutions to the various financial problems faced by it.

5. Measure of performance: Financial Management is considered as a yard stick to

measure the performance of the firm.

The importance of Financial Management in an enterprise may very well be realized by the

following words: Financial Management is properly viewed as an integral part of overall

management rather than as a staff speciality concerned with fund raising operation. In

addition to raising funds, financial management is directly concerned with production,

marketing and other functions within an enterprise whenever decisions are made about the

acquisition or distribution of assets.

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Thus, financial management has attained a good deal of importance in modern business.

1.5 Scope and Functions of Financial Management

The approach to the scope and functions of financial management is divided, in order to

have a better exposition, into two broad categories.

a) Traditional Approach

b) Modern Approach

Traditional Approach: The traditional approach, which was popular in the early stage,

limited the role of financial manager to raising and administering of funds needed by the

corporate enterprises to meet their financial needs. It deals with the following aspects:

i) Arrangement of funds from financial institutions

ii) Arrangement of funds through financial instruments like share, bonds etc.,

iii) Looking after the legal and accounting relationship between a corporation and itssources of funds.

Thus, the finance manager had a limited role to perform. He was expected to keep accurate

financial records, prepare reports on the corporations status and performance and manage

cash in a way that the corporation was in a position to pay its bills in times.

The term Corporation Finance was used in place of the present term Financial

Management.

The traditional approach to the scope of the finance function evolved during the 1920s and

1930s dominated the academic thinking during the forties and through the early fifties. It

has now been discarded as it suffers from serious limitations. Following are the main

limitations.

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a) External Approach: The approach treated the subject of finance only from the view point

of suppliers of funds, i.e., outsiders, viz., bankers, investors etc., It followed an outsider-

looking-in approach and not the insider-looking-out approach. Since it completely ignored

the view point of those who had to take internal financing decisions.

b) Ignored routine problems: The subject of financial management was mainly confined to

the financial problems arising during the course of incorporation, mergers etc, and the

subject did not give any importance to day-to-day financial problems of business.

c) Ignored non-corporate enterprise: The approach focused mainly on the financial

problems of corporate enterprises.

d) Ignored working capital financing: The problems relating to financing short term or

working capital were ignored in the approach. The approach focused mainly on the

problems of long term financing.

e) No Emphasis on allocation of funds: The approach confined financial management only

to procurement of funds. It did not emphasis on allocation of funds.

The conceptual framework of the traditional treatment ignored what Solomon aptly

describes as the central issues of financial management. These are:

i) Should an enterprise commit capital funds to certain purposes?

ii) Do the expected returns meet financial standards of performance?

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iii) How should these standards be set and what is the cost of capital funds to the

enterprise?

iv) How does the cost vary with the mixture of financing methods used?

In the absence of the coverage of these crucial aspects, the traditional approach implied a

very narrow scope for financial management. The modern approach provides a solution to

these shortcomings.

Modern Approach: According to modern approach the term financial management

provides a conceptual and analytical framework for financial decision-making. That means,

the finance function covers both acquisition of funds as well as their allocation. The new

approach views the term financial management in a broader sense. It is viewed as an

integral part of over-all management.

The new approach is an analytical way of viewing the financial problems of a firm. The

main contents of the modern approach are as follows:

i) What is the total volume of funds an enterprise should commit?

ii) What specific assets should an enterprise acquire?

iii) How should the funds required be financed?

Thus, financial management, in the modern sense of the term, can be divided into four

major decisions as functions of finance. They are:

i) The investment decision

ii) The financing decision

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iii) The dividend policy decision

iv) The funds requirement decision.

The functions of financial management may be classified on the basis of Liquidity,

Profitability and Management.

1. Liquidity: It is ascertained on the basis of three important considerations.

a) Forecasting cash flows i.e., matching the inflows against cash outflows.

b) Raising funds i.e., financial manager will have to ascertain the sources from which

funds may be raised and the time when these funds are needed.

c) Managing the flow of internal funds

2. Profitability: While ascertaining profitability, the following factors are taken into

account.

a) Cost control

b) Pricing

c) Forecasting future profits

d) Measuring cost of capital

3. Management: Asset management has assumed an important role in financial

management. It includes: (a) The management of long term funds. (b) The management of

short term funds.

Apart from the above main functions, following subsidiary functions are also performed by

the finance.

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1.6 Functional Areas of Modern Financial Management

As Modern Financial Management performs several functions, it is difficult task to identify

the functional areas of modern financial management. However, we can list out the

following important functional areas of modern management.

Key Activities of Financial Management: The three broad activities of financial

management are: (a) financial analysis; planning and control (b) management of firms

asset structure and (c) management of the firms financial structure. Figure 1.2 shows how

these activities are related to the balance sheet of the firm.

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Figure 1.2: Key Activities of Financial Management

1.7 Organisation of the Finance Functions

Like any other functional management in a firm finance is a vital functional organ of the

firm. If finance function does not operate well, the whole organizational activity will be

ruined. So inefficient financial management paralyses the activity of the firm. That is why

every company will have a separate department to look after the financial aspects of the

company.

The finance function can be broadly classified into two parts.

Routine financial matters like custody of cash and bank accounts, collection or loans,

payment of cash etc.

Special financial functions like financial planning and budgeting, profit analysis,

investment decisions etc.

These two functions can be looked after by two executives and ultimately by the top

management.

Routine matters are looked after by the "Treasurer" and special matters are managed by the

"Controller of Finance". The following chart will give an idea about the finance

department.

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Figure 1.3: Organisation of the Finance Function

Table 1.1: Functions of the Treasurer and the Controller

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1.8 The Financial Management Process

A

Model of the financial management process is presented in Figure 1.4

1. Financial Analysis: This is the preliminary, diagnostic stage and will include: a

financial analysis and review to determine the current financial performance and condition

of the business; an identification of any particular financial problems, risks, constraints or

limitations; and an assessment of financial Strength, Weaknesses, Opportunities and

Threats (a financial SWOT analysis).

2. Financial Decision-Making: Based on the findings of the review stage, financial

decisions and choices will have to be made. These are likely to include strategic

investment decisions, such as investing in new production facilities or the acquisition of

another company and strategic financing decisions, for example, the decision to raise

additional long-term loans.

3. Financial Planning: The essence of financial planning is to ensure that the right

amount of funds is available at the right time and at the right cost for the level of risk

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involved to enable the firms objectives to be achieved. Budgeting will be a key financial

planning tool. The efficiency and effectiveness of the financial planning process will be

greatly aided by the application of computerized financial modeling.

4. Financial Control: The final stage of the process will require throughout the

organization. This is to ensure that plans are properly implemented, that progress is

continually reported to management, and that any deviations from plans are clearly

identified.

1.9 Financial Decisions

The important financial decisions to be taken by the manager are as follows:

1. Investment Decisions: This is concerned with the allocation of capital. It has to show

the funds can be invested in assets which would yield benefit in future. This is a decision

based on risk and uncertainty. Finance manager has to evaluate the investment in relation

to their expected return and risk to determine whether the investment is feasible or not.

Besides the financial manager is also entrusted with the management of existing assets. The

whole exercise is called "Capital Budgeting". This was the first technique developed in

financial management. This technique helps to know Net Present Value of assets. To

have a more profitable investment, the companies can think of amalgamations and mergers

internally and externally. That is why we have seen the emergence of multinational

companies.

2. Finance Decisions: This decision is concerned with the mobilization of finance for

investment. The finance manager has to take decisions regarding the acquisition of finance.

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Whether entire capital required should be raised in the form of equity capital, or the amount

should be borrowed totally or a balance should be struck between equity and borrowed

capital has to be decided. Even the timing of acquisition of capital should also be perfectly

made. While determining the ratio between debt and equity, the finance manager should

ascertain the risk involved in obtaining each type of capital. Thus determining the best

"Finance Mix" is another important task of the finance manager. The best capital structure

will always ensure wealth maximization.

3. Dividend Decision: This decision is concerned with the divisible profits of the

company.

i) How much profit is to be flown back by capitalization?

ii) How much cash dividend should be paid to the shareholders?

iii) Maintenance of stable dividend rate over the period, are some of the issues connected

with this decision.

The dividend decision involves the determination of the percentage of profit earned by the

enterprise which is to be paid to its shareholders. The dividend pay out ratio must be

evaluated in the light of the objective of maximizing shareholders wealth. Thus, the

dividend decision has become a vital aspect of financing decision.

4. Current Assets Management: The finance manager should also manage the current

assets to have liquidity in the business. Investment of funds in current assets reduces the

profitability of the firm. However the finance manager should also equally look after the

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current financial needs of the firm to maintain optimum production. While investing funds

in current assets, he must see that proper balance (trade off) is maintained between the

profitability and liquidity.

Every financial decision involves this trade off. At this level the market value of the

companys shares would be the maximum.The inter-relationship between market value,

financial decisions, risk-return and trade off is depicted in the chart.

Fig. 1.5: Decisions, Return, Risk and Trade off.

In conclusion we can say that to maximize the wealth of the owners, the finance manager

has to take carefully the decisions relating to (i) Investment (ii) Dividend (iii) Financing

and (iv) Current Assets.

1.10 Objectives of Financial Management

(Profit-Maximization V/s Wealth Maximization)

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The objectives of financial management can be broadly classified into two categories:

1. Basic Objectives 2. Other Objectives

1. Basic Objectives: Traditionally the basic objectives of financial management have been

(A) Maintenance of liquid assets and (B) Maximization of profitability of the firm.

However, these days there is a greater emphasis on (C) Shareholders wealth maximization

rather than on profit maximization.

(A) Maintenance of Liquid Assets: Financial management aims at maintenance of adequate

liquid assets with the firm to meet its obligations at all times. However investment in liquid

assets has to be adequate - neither too low nor too excessive. The finance manager has to

maintain a balance between liquidity and profitability.

(B) Maximization of Profit: "Profit maximization" is a term which denotes the maximum

profit to be earned by an organisation in a given time period. The profit -maximization goal

implies that the investment, financing and dividend policy decisions of the enterprise

should be oriented to profit maximization.

The term "Profit" can be used in two senses- one as the owner-oriented concept and the

other as the operational concept.

Profit as the owner-oriented concept, refers to the amount of net profit which goes in the

form of dividend to the shareholders. Profit as the operational concept means profitability

which is an indicator of economic efficiency of the enterprise.

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Profitability-maximization implies that the enterprise should select assets, projects and

decisions which are profitable and reject those which are not profitable. It is in this sense

that the term profit-maximization is used in financial management.

Merits of the Profit-Maximization:

1. Best Criterion of Decision-Making: The goal of profit maximization is regarded as the

best criterion of the decision making as it provides a yard-stick to judge the economic

performance of the enterprise.

2. Efficient Allocation of Resources: It leads to efficient allocation of scarce resources as

they tend to be diverted to those uses which, in terms of profitability, are the most

desirable.

3. Optimum Utilization: Optimum utilization of available resource is possible.

4. Maximum Social Welfare: It ensures maximum social welfare in the form of maximum

dividend to shareholders, timely payments to creditors, higher wages, better quality and

lower prices, more employment opportunities to the society and maximization of capital to

the owners.

However, the profit-maximization objective suffers from several drawbacks which are as

follows:

1. Time Factor Ignored: The term Profit does not speak anything about the period of

profit- whether it is short-term profit or long-term profit.

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2. It Is Vague: The term Profit is very vague. It is not clear in what exact sense the term

profit is used. Whether it is Accounting profit or Economic profit or profit after tax or

profit before tax.

3. The Term Maximum is also Ambiguous: The term maximum is also not clear. The

concept of profit is also not clear. It is therefore, not possible to maximize what cannot be

known.

4. It Ignores Time Value: The profit maximization objective fails to provide any idea

regarding the timing of expected cash earnings. The choice of a more worthy project lies in

the study of time value of future inflows of cash earnings. It ignores the fact that the rupee

earned to day is more valuable than a rupee earned later.

5. It Ignores the Risk Factor: According to economists, profit is a reward for risk and

uncertainty bearing. It is also a dynamic surplus or profit is a reward for innovation. But

when can the organization maximize profits ? Profit-maximization objective does not make

this clear.

B) Wealth Maximization: It is now widely and universally accepted that the objective of

the enterprise should be suitable and operationally feasible, precise and clear cut and

should give weightage to time value and risk factors. Owing to the various drawbacks of

the profit maximization objective, Professor Ezra Solomon rejected it as inappropriate and

unsuitable and suggested the adoption of wealth-maximization objective which removes all

the drawbacks of the profit maximization objective.

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Wealth-maximization is also called value-maximization. The wealth or net present worth

of a course of action is the difference between gross present worth and the amount of

capital investment required to achieve the benefits. Gross present-worth represents the

present value of expected cash benefits.

In simple, wealth-maximization means maximizing the present value of a course of action

(i.e. NPV= GPV of benefits -Investment). Any financial action which results in positive

NPV, creates and adds to the existing wealth of the organization and the course of action

which has a negative NPV, reduces the existing wealth and hence be given up. All positive

actions can be adopted as they add to the existing wealth and help in wealth maximization.

Significance of Wealth - Maximization:

The Company although it cares more for the economic welfare of the shareholders, it

cannot forget the others who directly or indirectly work for the overall development of the

company. Thus wealth -maximization takes care of

1. Lenders or creditors

2 Workers or Employees

3 Public or Society

4 Management or Employer

2. Other Objectives: Besides the above basic objectives, the following are the other

objectives of financial management.

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Ensuring a fair return to shareholders

Building up reserves for growth and expansion

Ensuring maximum operational efficiency by efficient and effective utilization of finance

Ensuring financial discipline in the management

1.11 Methods of Financial Management

The term Financial Method or Financial Tool refers to any logical method or technique

to be employed for the purpose of accomplishing the following two goals:

a. Measuring the effectiveness of firms action and decisions

b. Measuring the validity of the decisions regarding accepting or rejecting future projects

Following are the important financial tools or methods used by financial manager in

performance of his job:

1. Cost of Capital: Cost of capital helps the finance manager in deciding about the sources

from which the funds are to be raised. In case of different sources of finance viz, shares,

debentures, loans from financial institutions, banks, public deposits etc., the financial

manager takes into account the cost of capital and opts for that source which is the cheapest

to him. The cost of capital is also taken into account for determining the optimum capital

structure.

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2. Trading on Equity: Trading on equity is another tool which helps the finance manager

in increasing the return to equity shareholders.

3. Capital Budgeting Appraisal - method such as payback period, average rate of return,

internal rate of return, net present value, profitability index etc, help the finance manager in

selecting the best among alternative capital investment proposals.

4. Ratio Analysis-is another method for evaluating different aspects of the firm. Different

ratios serve different purposes.

5. Abc Analysis, cash management models, debtors turnover ratio etc, help the finance

manager in effective management of current assets.

6. Funds Flow Analysis and Cash Flow Analysis: This technique helps the financial

manager in determining whether the funds have been procured from the best available

source and they have been utilized in the best possible way. Projected funds flow analysis

and projected cash flow analysis help the finance manager in estimating or arranging for

the future working capital or cash needs.

1.12 Financial Management and other Disciplines

The study of financial management as a totally independent subject is relatively recent, its

roots tracing back to the turn of this century. It draws heavily on related disciplines and

fields of study. The most important of these are Accounting and Economics; in the latter

discipline, macro-economics and micro-economics are of special significance. Marketing,

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Production and the study of Quantitative methods also have an impact on the financial

management field.

Accounting: Financial managers play a game of managing a firms financial and real

assets and securing the funding needed to support these assets. Financial managers often

turn to accounting data to assist them in making decisions. Financial managers are

primarily concerned with a firms cash flows, because they often determine the feasibility

of certain investment and financing decisions.

Table 1.2 - Financial Management V/s Financial

Accounting

Economics: There are two areas of economics with which the financial manager must be

familiar: micro-economics and macro-economics. Micro-economic deals with the

economic decisions of individuals and firms, whereas macro-economics looks at the

economy as a whole.

Marketing, Production & Quantitative Methods:

Figure 1.6 depicts the relationship between financial management and its primary

supportive disciplines. Marketing, Production and Quantitative methods are indirectly

related to the key day-to-day decisions made by financial managers. For example, financial

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manager should consider the impact of new product development and promotion plans

made in the marketing area, because these plans will require capital outlay and have an

impact on the firms projected cash flows. Similarly, changes in the production process

may necessitate capital expenditures, which the firms financial managers must evaluate

and then finance. And, finally, the tools of analysis developed in the quantitative methods

area frequently are helpful in analyzing complex financial management problems.

Figure 1.6: Impact of other Disciplines on Financial Management

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CHAPTER 1

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INTRODUCTION

TO FINANCE MANAGEMENT

CHAPTER 1

Introduction to FINANCIAL MANAGEMENT

FINANCIAL MANAGEMENT

Financial Management is one of the key disciplines necessary for the

successful management of business corporations and other

organizations.

Financial Management practices allow students to understand and

explain the financial behaviors of corporations and other organizations.

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An understanding of the practices of Financial Management equips

students with the knowledge and understanding necessary to apply this

knowledge to real-life business situations.

In an organization financial management is split into its two principal

roles. These are the accounting function, usually under the direction of

the financial controller, and the corporate finance function directed by

the treasurer. Accounting is concerned with the provision and

interpretation of information for economic decision making. Accounting

is itself split between management accounting - the internal facing

function - which services the information needs of the organizations

management and financial accounting - the external facing, highly

regulated, function - which provides information for investors, the

general public, regulatory bodies etc. The corporate finance function is

concerned with managing the finances of the organization and is

involved in cash management, asset allocation, capital structuring and

financial risk management in areas such as interest rates, foreign

currency exchange rates and commodity trading.

The program is structured so that students specialize through courses

within choices including advanced corporate finance, advanced finance

theory, behavioral finance and market anomalies, derivatives,

investment management, public sector financial management.

2. THEORETICAL BACKGROUND

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Financial management is that managerial activity which is concern with

the planning and controlling of the firms financial resources. It was a

branch of Economics till 1980 and then separate decline or activity it is

of recent origin. The subject of the financial management and practicing

managers. It is of great interest to academic and because the subject is

still developing and then are still certain areas where a controversy

exists for which no unanimous solutions have been reached it. Practicing

managers are interested in this subject because among the most critical

decisions of the firm are those which relate to finance, and

understanding of the theory of financial management provides them

conceptual and analytical insights to make those decisions skillfully.

Financial management concerned with those managerial decisions

which results in acquisition and financing of long term assets of firm. If

specific, liabilities are also with the trouble of size and growth of an

enterprise. An analysis of these decisions is based upon expected inflow

and outflow of fund therein.

Financial Management can be defined as:

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The management of the finances of a business / organization in

order to achieve financial objectives

Taking a commercial business as the most common organizational

structure, the key objectives of financial management would be to:

Create wealth for the business

Generate cash, and

Provide an adequate return on investment bearing in mind the risks

that the business is taking and the resources invested

There are three key elements to the process of financial management:

(1) Financial Planning

Management need to ensure that enough funding is available at the

right time to meet the needs of the business. In the short term, funding

may be needed to invest in equipment and stocks, pay employees and

fund sales made on credit.

In the medium and long term, funding may be required for significant

additions to the productive capacity of the business or to make

acquisitions.

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(2) Financial Control

Financial control is a critically important activity to help the business

ensure that the business is meeting its objectives. Financial control

addresses questions such as:

Are assets being used efficiently?

Are the businesses assets secure?

Do management act in the best interest of shareholders and in

accordance with business rules?

(3) Financial Decision-making

The key aspects of financial decision-making relate to investment,

financing and dividends:

Investments must be financed in some way however there are

always financing alternatives that can be considered. For example it is

possible to raise finance from selling new shares, borrowing from banks

or taking credit from suppliers

A key financing decision is whether profits earned by the business

should be retained rather than distributed to shareholders via dividends.

If dividends are too high, the business may be starved of funding to

reinvest in growing revenues and profits further.

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FUNCTIONAL AREA OF FINANCIAL MANAGEMENT

Determining financial needs

Determining source of funds

Financial analysis

Optimal capital structure

Cost volume profit analysis

Profit planning and control

Fixed assets management

Profit planning evaluation

Capital budgeting

Working capital management

Dividend policy

Acquisition and Mergers

Corporate taxation

Financial Planning and Forecasting

Prepared by: Matt H. Evans, CPA, CMA, CFM

Introduction

Financial planning is a continuous process of directing and allocating

financial resources to meet strategic goals and objectives. The output from

financial planning takes the form of budgets. The most widely used form of

budgets is Pro Forma or Budgeted Financial Statements. The foundation for

Budgeted Financial Statements is Detail Budgets. Detail Budgets include

sales forecasts, production forecasts, and other estimates in support of the

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Financial Plan. Collectively, all of these budgets are referred to as the

Master Budget.

We can also break financial planning down into planning for operations and

planning for financing. Operating people focus on sales and production

while financial planners are interested in how to finance the operations.

Therefore, we can have an Operating Plan and a Financial Plan. However, to

keep things simple and to make sure we integrate the process fully, we will

consider financial planning as one single process that encompasses both

operations and financing.

Financial Planning starts at the top of the organization with strategic

planning. Since strategic decisions have financial implications, we must

start our budgeting process within the strategic planning process. Failure to

link and connect budgeting with strategic planning can result in budgets

that are "dead on arrival."

Strategic planning is a formal process for establishing goals and objectives

over the long run. Strategic planning involves developing a mission

statement that captures why the organization exists and plans for how the

organization will thrive in the future. Strategic objectives and corresponding

goals are developed based on a very thorough assessment of the

organization and the external environment. Finally, strategic plans are

implemented by developing an Operating or Action Plan. Within this

Operating Plan, we will include a complete set of financial plans or budgets.

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Financial Plans (Budgets) Operating Plan Strategic Plan

CHAPTER 2

CONCEPTS OF FINANCE

MANAGEMENT

To start a business or expand the existing business. We have a great

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idea, super attitude and the entrepreneurial spirit. So you head down to

your local

bank or financial institution; you sit down in front of the credit manager

and start

to explain this brilliant idea when she interrupts us: That sounds great,

but where

is our business plan?

This scenario is played out every day in Canada people with ideas who

want

to plunge into business without having done a business plan. The

purpose of this

guide is to explain in simple terms the business plan concept and to

show you how

to put your own plan together.

A Start-Up Guide leads entrepreneurs through the business planning

process.

By describing everything from Vision and Mission to Operational

Strategies, the

Guide provides an easy to read description of your new business

concept. The

affiliated Financial Planning Template helps entrepreneurs assemble

their Starting

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Balance Sheet, Pro-Forma Income Statement and first year Cash Flow

Forecast.

The Financial Plan

Introduction

The financial plan is critical to the success of your business plan

especially if it is

for the purpose of getting a bank loan. The Cash Flow Forecast is

arguably the most

important part of the plan, but each of the other documents is important

from a

planning perspective. There are three sections in a financial plan:

The Starting Balance Sheet

The Pro-Forma (or Forecast) Income Statement

The Cash Flow Forecast (each of these sections should have notes of

explanation

for the reader).

The Financial Planning Template

To assist you in this process, we have created a template written for

MS/Excel. Click

here to access the template. This will take you through seven

worksheets, each

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asking for financial information. This information is then assembled into

the three

statements described above. Information can be changed, and the

results of the

change are immediately calculated. This will take you to a reasonable

first draft

of your financials but you will have to make some final adjustments

for your

particular situation.

If you are using a printout of this guide you can find the Excel template

under

http://www.cse.gov.bc.ca/ReportsPublications/FinancialTemplate.XLT.

It is almost impossible to get things right the first time. In all business

planning, but

especially in the financial section, it is important to try different

scenarios. What

if I purchase used equipment instead of new equipment? What if I raise

or lower

prices? What if I reduce my personal draw? By trying different scenarios,

you will

soon determine what it will take to make your business financially

viable.

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With business planning, you must keep trying until you have a result

that is

reasonable and that you are convinced is achievable.

Five Tips on your Financial Plan

1. Be persistent! Most people do not have expertise in finance so

preparing a

financial plan is a journey into the unknown. Be patient.

2. Read the entire planning guide before starting on the plan. You

will learn

what information you require to assemble the financial part of the plan.

3. Get help in assembly, but not in research.These should be your

numbers

and assumptions. You will be responsible for achieving these objectives

so you

should believe in the numbers.

4. Be consistent. Make sure that your financial plan is consistent with

the rest

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of the business plan. For example, if your pricing section mentions a

margin of

40%, this should be reflected in your Income Statement.

5. Use the simple template provided. Although it will not provide a

final plan, it will get you well on your way in the journey

Calculating The Break-even

The break-even point in your business is the point at which your sales

revenue

equals your total expenses. At that point you neither make money, nor

do you lose

any. The break-even lets you know what it is going to take in sales just

to survive. It

provides a good indication of the viability of a business project.

The break-even can also be used to evaluate a business expansion or

any other

business expenditure. You are simply asking how much additional

revenue will be

required to cover the additional cost. There are some key definitions

necessary to

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determine the break-even for the business.

They are:

Fixed Costs (Overhead) are costs that do not vary directly with sales.

Utilities,

salaries, advertising, office supplies and telephone are just a few

examples. They

do not have to be the same every month. What is important is that you

pay

them regardless of sales made.

Variable Costs (Cost of Goods) are the actual costs of making the

product

or providing the service. They can include materials, shipping and

contract

labour.

Capacity governs your output. It can be measured in units of

production,

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billable hours, or sales volume. To calculate the break-even in units we

use the

following formula:

Fixed Cost = Break-even in Units

(Unit Price Unit Cost)

This method is known as Total Absorption Costing, because dividing the

total cost by

the units sold absorbs the fixed costs. Every business plan be it for

growth or for

start-up needs to establish project and business costs before

proceeding.

Note: For planning purposes treat the entire term loan payment, both

principal

Additional Concepts in Budgeting

So far, we have emphasized simple approaches to preparing budgets, such

as looking at relationships between account balances and sales. We also

should have a clear understanding of past financial performance to help us

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predict future financial performance. Extending past trends and adjusting

for what is expected is a common approach to preparing a forecast.

However, we can improve forecasting by using several techniques. The first

step is recognize certain fundamentals about forecasting:

1. Forecasting relies on past relationships and existing historical

information. If these relationships change, forecasting becomes

increasingly inaccurate.

2. Since forecasting can be inaccurate due to uncertainty, we should

consider developing several forecast under different scenarios. We can

assign probabilities to each scenario and arrive at our expected

forecast.

3. The longer the planning period, the more inaccurate the forecast. If we

need to increase reliability in forecasting, we should consider a shorter

planning period. The planning period depends upon how often existing

plans need to be evaluated. This will depend upon stability in sales,

business risk, financial conditions, etc.

4. Forecasting of large inter-related items is more accurate than

forecasting a specific itemized amount. When a large group of items are

forecast together, errors within the group tend to cancel out. For

example, an overall economic forecast will be more accurate than an

industry specific forecast.

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Quantitative and Qualitative Techniques

You should forecast for a specific reason - to help make better decisions.

Forecasting is extremely difficult and you must pull from all relevant

sources. We previously discussed the Percent of Sales Method and Trend

Analysis as a way of forecasting. These forecasting techniques are

quantitative. Quantitative techniques of forecasting are best used when

changes are infrequent. In today's world of rapid change, quantitative

techniques tend to be of little use.

We need to add more qualitative techniques into the budgeting process.

Qualitative techniques include surveys, interviews with people who are "in

the know", market reports, articles, and other information sources that

allow us to make a better judgment. Qualitative or Judgmental Forecasting

can help improve the budgeting process, especially if we are operating in a

rapidly changing environment.

The Delphi Method is an example of a qualitative technique where a group

of experts gets together and reaches a consensus on what will happen in

the future. A questionnaire is sometimes used to facilitate the process. Two

disadvantages of the Delphi Method are low reliability with the consensus

and inability to reach a clear consensus.

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Smoothing out the Numbers

One simple approach to forecasting is to setup a model that relies on

averages from past historical data. For example, we can take an average of

the last five years. As we move forward to the next planning period, a new

moving average is calculated and used as the forecast for the next planning

period. Exponential smoothing can be used whereby we place more weight

on the most recent set of actual numbers. This can be important where

changes have occurred, making older data less reliable.

Regression Analysis

A statistical approach can be used for forecasting. We can rely on the

average relationships between a dependent variable and an independent

variable. Simple regressions look at one independent variable (such as

sales pricing or advertising expenses) whereas multiple regressions

consider two or more variables (such as sales pricing and advertising

expenses together). Regression analysis is very popular for forecasting

sales since it helps us find the right fit over a range of observations. For

example, if we plot out the following observations, we can prepare a scatter

graph and find the right fit:

Advertising Expense Sales Dollars

$ 100 $ 1,500

150 1,560

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180 1,610

220 1,655

270 1,685

Sensitivity Analysis

We can measure how sensitive our forecast is to changes in certain

variables. We can develop a range of possibilities under different

assumptions and prepare alternative plans. If Plan A fails, we can quickly

move to Plan B. Sensitivity analysis also tells us which assumptions have

the biggest impact on the forecast. Managers can concentrate most of their

resources on the biggest impact areas for improving the forecast. The main

benefit of sensitivity analysis is to measure the possibility of errors in the

forecast.

47

$1,450

$1,500

$1,550

$1,600

$1,650

$1,700

$0 $100 $200 $300

SalesDollars

Advertising Dollars

Scatter Graph for

Five Observations


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Financial Models

Budgets can be prepared with the use of formal models which take

advantage of techniques like regressions and sensitivity analysis. Models

are built around the collection of equations, logic, and data that flows

according to the relationships between operating variables and financial

outputs. Financial variables (costs, sales, investments, taxes, etc.) can be

manipulated by the user so that the user can see the outcome of a decision

before it is made. This can help facilitate strategic thinking within the

budgeting process. Two types of financial models are simulation and

optimization. Simulation attempts to duplicate the effects of a decision and

show its impact. Optimization seeks to optimize (maximize or minimize) a

forecast objective (revenues, production costs, etc.).

Financial models provide decision support services for improvements within

budgeting. Some of the benefits of financial models include:

Shows the results of planning under a variety of assumptions,

allowing the user to assess the impacts of estimates that have been

used.

Generates the Budgeted Income Statement and Budgeted Balance

Sheet as well as forecasted financials by business unit or

department.

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In order to build a financial model, we need to establish variables,

parameters, and relationships. Additionally, we can divide variables into

three types:

1. Control Variables : The inputs that the company can control, such as

the level of debt financing or the level of capital spending.

2. External Variables : Inputs that the company cannot control, such as

economic conditions, consumer spending, interest rates, etc.

3. Policy Variables : Goals and objectives of the company can impact the

expected outcomes. For example, management may set targets for

sales, profitability, and costs.

Parameters are the baselines or boundaries for the financial model. For

example, the level of debt may have a minimum and maximum value. We

also will set our beginning account balances within the financial model.

Relationships are the logic and specifications required for making things

work. For example, the Budgeted Balance Sheet will require that Assets =

Liabilities + Equity. Several equations will be used within the financial

model. Many of these equations will be relational; i.e. if we change sales

prices, total revenues will change. Equations are tested and added to the

financial model to make it complete. Equations can be expanded into

business and decision rules so that users do not have to worry about

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calculating things like return on equity. The financial model takes care of

critical rules for running the business or making decisions.

FINANCIAL MODEL FOR CASH

Relationships (Equations):

Cash(t) = Cash(t-1) + Cash Receipts(t) + Cash

Disbursements(t)

Cash Receipts(t) = (a) x Sales(t) + (b) x Sales(t-1) + (c) x

Sales(t-2) + Loan(t)

Cash Disbursements(t) = Accounts Payable(t+1) +

Interest(t) + Loan Payment(t)

Input Variables in Dollars:

Sales(t-1), Sales(t-2), Sales(t-3)

Loan(t), Loan Payment(t)

(a): Accounts Receivable Collection Pattern in current

period

(b): Accounts Receivable Collection Pattern one period

ago

(c): Accounts Receivable Collection Pattern two periods

ago

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(a) + (b) + (c) < 1.0

Parameters (Initial Values in Dollars):

Cash(t-1), Sales(t-1), Sales(t-2), Bank Loan(t-1), Accounts

Payable(t-1)

Making the Budgeting Process Work

Now that we understand what goes into financial planning, it is time to

focus on how to make the process into a value-added activity. Many

organizations are attempting to re-engineer budgeting practices since

budgeting is usually a non-value added activity; i.e. it does not add value to

the decision making process. The goal is to make the entire financial

planning process into a decision support service within the organization

whereby the benefits of the process exceed the costs.

In order to fully comprehend the problems associated with budgeting, let's

quickly list the top ten problems with budgeting according to Controller

Magazine:

1. Takes too long to prepare.

2. Doesn't help us run our business.

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3. Budgets are out-of-date by the time we get them.

4. Too much playing with the numbers.

5. Too many iterations / repetitive tasks within the process.

6. Budgets are cast in stone in a constantly changing business

environment.

7. Too many people are involved in the budgeting process.

8. Unable to control budget allocations.

9. By the time budgets are complete, I don't recognize the numbers.

10. Budgets do not match the strategic goals and objectives of the

organization.

We will now discuss several ways of making budgeting into a value-added

activity within the organization.

Automate the Process

In order for budgeting to be value-added, it must accept revisions quickly

and easily. A highly automated budgeting process can help streamline the

process for quick and easy updating. As a minimum, budgets should be

maintained on spreadsheets. A spreadsheet (such as Excel, Lotus 1-2-3,

etc.) can have an input panel for entering variables and automatic

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generation of budgets within a fully integrated set of spreadsheets. For

example, we can use a formula to calculate interest expense as:

Interest Rate x (Beginning Long Term Debt + Current Portion of Long Term

Debt + External Financing Using Long Term Debt)

Spreadsheets also allow us to perform sensitivity analysis. We can simply

enter new variables into the input panel and review the impact on our

budgets.

We can also use more formal software programs for budgeting. The best

software programs will give us the option of controlling the level of detail.

For example, do we want a cash budget by customer or do we want cash

budgets by account or can we simply enter the cash flow data ourselves? It

is very important that we have control over the detail since commercial

programs sometimes over-analyze transactions and provide way too much

detail. This is why many financial planners prefer spreadsheets over

commercial programs.

Ten Best Practices in Budgeting

Finally, here are some best practices that can transform budgeting into a

value-added activity:

1. Budgeting must be linked to strategic planning since strategic

decisions usually have financial implications.

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2. Make budgeting procedures part of strategic planning. For example,

strategic assessments should include historical trends, competitive

analysis, and other procedures that might otherwise take place

within the budgeting process.

3. The Budgeting Process should minimize the time spent collecting and

gathering data and spend more time generating information for

strategic decision making.

4. Get agreement on summary budgets before you spend time

preparing detail budgets.

5. Automate the collection and consolidation of budgets within the

entire organization. Users should have access to budgeting systems

for easy updating.

6. Budgets need to accept changes quickly and easily. Budgeting

should be a continuous process that encourages alternative thinking.

7. Line item detail in budgets should be based on material thresholds

and not rely on a system of general ledger accounts.

8. Budgets should give lower level managers some form of fiscal control

over what is going on.

9. Leverage your financial systems by establishing a data warehouse

that can be used for both financial reporting and budgeting.

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10. Multi-National Companies should have a budgeting system

that can handle inter-company elimination's and foreign currency

conversions.

Summary

Financial Planning is a continuous process that flows with strategic decision

making. The Operating Plan and the Financial Plan will both support the

Strategic Plan. The best place to start in preparing a budget is with sales

since this is a driving force behind much of our financial activity. However,

we have to take into account numerous factors before we can finalize our

budgets.

Budgeting should be flexible, allowing modification when something

changes. For example, the following will impact budgeting:

Life cycle of the business

Financial conditions of the business

General economic conditions

Competitive situation

Technology trends

Availability of resources

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Budgeting should be both top down and bottom up; i.e. upper level

management and middle level management will both work to finalize a

budget. We can streamline the budgeting process by developing a financial

model. Financial models can facilitate "what if" analysis so we can assess

decisions before they are made. This can dramatically improve the

budgeting process.

One of the biggest challenges within financial planning and budgeting is

how do we make it value-added. Budgeting requires clear channels of

communication, support from upper-level management, participation from

various personnel, and predictive characteristics. Budgeting should not

strive for accuracy, but should strive to support the decision making

process. If we focus too much on accuracy, we will end-up with a budgeting

process that incurs time and costs in excess of the benefits derived. The

challenge is to make financial planning a value-added activity that helps

the organization achieve its strategic goals and objectives.

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CHAPTER 3

ORGANISATION PROFILE

Chapter 3 : Organization Profile

The Beginning

Yahoo! began in 1994 as a hobby for Stanford Ph.D. students Jerry Yang

and David Filo. As David says, "The Internet was a great place to waste

time." David and Jerry spent hours upon hours surfing the web and

quickly became Internet aficionados. Their passion for locating,

identifying and editing material stored on the Internet resulted in "David

and Jerry's Guide to the World Wide Web". The categories they created

as part of their Guide proved useful not only to Jerry, David and their

friends, but thousands of others as well. It didn't take long for word of

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the Guide to get out and soon thousands of people were accessing their

Stanford trailer workstations.

Without really meaning to, David and Jerry had created an audience

and attracted the attention of corporations and financiers. Yahoo!

ultimately became an incorporated business in March 1995 and received

funding from Sequoia Capital, a venture capital firm, the following

month. At this point in the Company's explosive growth, David and Jerry

took a leave of absence from Stanford to work on Yahoo! full time. In

1995, Yahoo! hired 24 full-time employees and in April 1996, the

Company's stock was first sold publicly on the NASDAQ.

Yahoo! Profiles

Yahoo! Inc. (NASDAQ: YHOO) is an American multinational internet

corporation headquartered in Sunnyvale, California, United States. The

company is perhaps best known for its web portal, search engine

( Yahoo! Search), Yahoo! Directory, Yahoo! Mail, Yahoo! News,

advertising, online mapping ( Yahoo! Maps), video sharing (Yahoo!

Video), and social mediawebsites and services. It is one of the largest

websites in the United States.[2]

Yahoo! inclusive was founded byJerry Yang and David Filo in January

1994 and was incorporated on March 1, 1995. On January 13, 2009,

Yahoo! appointed Carol Bartz, former executive chairman ofAutodesk,

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as its new chief executive officer and a member of the board of

directors.[3] On September 6, 2011, Bartz was removed from her position

at Yahoo! by chairman Roy Bostock, over the phone; and CFOTim Morse

was named as Interim CEO of the company.[4][5]

Roughly 700 million people visit Yahoo websites every month.[6]

Contents

1 History and growth

2 Products and services

o 2.1 Storing personal information and tracking

usage

o 2.2 Communication

o 2.3 Content

o 2.4 Co-branded Internet services

o 2.5 Mobile Services

o 2.6 Commerce

o 2.7 Small business

o 2.8 Advertising

o 2.9 Yahoo! Next

o 2.10 Yahoo! BOSS

o 2.11 Yahoo! Meme

o 2.12 Yahoo! Koprol

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o 2.13 Y!Connect

o 2.14 Closed down services

2.14.1 Twitter slide leak on upcoming

changes to Yahoo

3 Revenue model

4 Criticism

5 Yahoo subject of cyber attacks originating in China

6 Financial data

o 6.1 Advertising Revenue

7 Yahoo! International

8 Logos and themes

9 See also

10 Notes and references

11 External links

Your profile on Yahoo! represents who you are and serves as a hub for

your identity on Yahoo!. From it, you can connect to friends, post

information about yourself, and manage your Updates.

Information Collection and Use Practices

To create a profile, you will need to create a display name. This is

a public name you will be known as on Yahoo! services.

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o By default, we suggest you use your first name and first

initial of your last name as your display name. You may use

any display name you like, within reason. You may change

your display name at any time.

You have the ability to post personal information about yourself on

your profile.

o Except for your display name, first name, and last name, all

of this information is optional. By default, your first and last

names are only shown to your connections.

Applications

o You can grant applications made by third-party developers

access to information within your profile.

When you do, you are granting the application and its

developer complete access to all of the information

within your profile. This means that the application

and its developer will be able to see and store who

you are and who you are connected to through

profiles.

Applications installed by your connections will have

access to the information about you that you have

permitted those connections to see.

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You may turn off the ability for your connections to

share your information with applications in your

profile settings.

o More information about applications, developers, and the

permissions you grant are available from a link that is

provided when you install an application, or inYahoo! Help

Pages.

Connection Suggestions

o Yahoo! uses different sources of information to determine

connection suggestions based on who you communicate

with frequently:

Yahoo! Messenger: contacts on your friend list

Yahoo! Contacts: contacts in your address book

Yahoo! Mail: email header information that identifies

who you send and receive emails from frequently.

o Yahoo! does not look at the content of the instant messages

or emails you send or receive in order to suggest

connections.

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Updates

o When you take certain actions, such as when you connect to

a friend, comment on a guestbook, add information to your

profile, or change your photo, those actions are shared as

updates that your connections and others can see,

depending on your Updates settings. Manage your Updates

settings.

Information Sharing and Disclosure Practices

o The display name, display photo, gender, location, and age

information you provide for your profile on Yahoo! are

always public. If you prefer not to disclose this information,

you may edit your profile information at any time and leave

those fields blank.

o By default, the remainder of the information on your profile

is shared only with your connections; however, you may

make some profile information public for anyone to view.

o Applications

You can grant applications developed by third-party

developers access to information within your profile.

When you do, you are granting the application and its

developer complete access to all of the information

within your profile. This means that the application

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and its developer will be able to see and store who

you are and who you are connected to through

profiles.

Applications installed by your connections will have

access to the information about you that you have

permitted those connections to see.

You may turn off the ability for your connections

to share your information with applications in

your Profile settings.

More information about applications, developers, and

the permissions you grant are available from a link

that is provided when you install an application.

o People Search

Your profile may be found by others who search for

you by your first name, last name, display name, or

email address.

You may opt out from being found in People

Search.

When you choose not to make an an email

address or Yahoo! ID searchable through People

Search, it will continue to be attached to your

Yahoo! Account. Other Yahoo! services may

identify those email addresses with your profile.

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If your profile is searchable by an email address, your

email address will act as a URL for your profile. For

example, if you make [email protected] a

searchable email address, others who know your

email address can find your profile by going directly

to:

http://profiles.yahoo.com/[email protected].

o Updates

Certain actions you take from your profile on Yahoo!

are shared as updates that your connections and

others can see, depending on your Updates settings.

These actions include when you connect to a

friend, comment on a guestbook, add

information to your profile, or change your

photo,

You can manage your Updates settings and

control which updates you want to share with

others.

Your Ability to Update or Delete Information

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o Edit Your Profile

You can edit the content of your profile, and you can

set permissions regarding who can see which

information on your profile.

You may hide your profile. By hiding your profile,

people will not be able to search for you, contact you,

or invite you to connect. Your profile will not be shown

to others and only your display name and status

message will be visible.

o Applications

If you no longer want to allow your connections to

share your information with third-party applications

and developers, you may opt-out at any time from the

Permissions Settings within your profile on Yahoo!.

You may revoke permissions you granted to an

application at any time. For the Yahoo! Application

Platform, remove the application by choosing

"Remove" from the application's Settings menu. For

applications on third-party websites and other

applications, visit your Yahoo! Account Info.

o People Search

Although you may choose not make an email address

or Yahoo! ID searchable through People Search, it will

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continue to be attached to your Yahoo! Account. Other

Yahoo! services may identify those email addresses

with your profile.

o Notifications

Email notifications are sent to you when actions

related to your profile occur.

You may turn off these notifications at any time.

Manage which email address your notifications are

sent to.

Other

o When you use Yahoo!, you are subject to the Yahoo! Terms

of Service.

o Please see Profiles Help if you have questions about this

service.

This page describes current Yahoo! practices with respect to this

particular service. This information may change as Yahoo! revises this

service by adding or removing features or using different service

providers. To find out how Yahoo! treats your personal information,

please visit our Privacy Policy.

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CHAPTER 4

DATA ANALYSIS ANDINTERPRETATION

Job Title: Data Analysis and Interpretation of Financial Planning &

Forecasting in Yahoo Software & Development India Pvt Ltd.

Interest Category: Finance & Corporate Controlling

Description: The Manager will provide financial leadership to the

Budgeting & Forecasting department of Corporate Finance. Primary

responsibilities will include:

1. Process management of budgeting, forecasting tools, reporting, roles,

issue resolution, communications.

2. Interpretation of business requirements for projects, forecasts,

budgets.

3. Lead process improvement initiatives managing resources,

implementing change, communicating effectively.

4. Effectively work with MEDRAD and Bayer financial leadership teams.

5. Effective issue resolution, problem solving, and providing

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recommendations.

6. Significant data analysis.

7. Evaluating, validating requirements for, prioritizing and auctioning a

large number of requests.

8. Support of internal business partners located in multiple geographic

locations.

Technical & Behavioral Requirements:

1. Bachelors Degree (Accounting or Finance preferred) and Masters

Degree (MBA or Finance) required

2. Overall experience of 6+ years in finance/accounting/business

management is required.

3. Solid business sense to analyze budgets and forecasts as well as long

range planning.

4. Supervisory experience preferred.

5. Ability to lead projects managing resources effectively.

6. Proficient and knowledgeable about financial accounting policies and

procedures.

7. Demonstrated business acumen with a drive for results and sound

business judgment.

8. Strength in dealing with ambiguity and effective problem solving

skills.

9. The ability to determine root causes of complex issues that involve

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multiple internal contact points and IT systems.

10. The ability to recognize, develop and implement process

improvements to enable effectiveness or efficiency.

11.. Excellent oral, written, listening, persuasion and consensus building

and presentation skills.

3. DATA ANALYSIS AND TNTERPRETATION

RATIO ANALYSIS:-Ratio Analysis in relation to Working Capital

Ratio analysis is widely used tool of financial analysis. It is defined as,

the systematic uses of ratios to interpret the financial statements so

that the strength and weakness of firm as well as its historical

performance and financial position be determine. The term Ratio

refers to the numerical or quantities relation between two variables. The

ratio analysis of Working Capital can be used the management as a

means of checking a firm is improving or deteriorating over the years.

Over the years the significant trend analysis of ratios lies in the fact that

the analysis can know the direction of movement. For example, there

may be low as compared to the norms standard but trend may be

upward.

THE MOST IMPORTANT RATIO OF WORKING CAPITALMANAGEMENT:-

1. Current Ratio

2. Quick Ratio

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3. Cash Position Ratio

4. Working Capital Turnover Ratio

5. Inventory Turnover Ratio

6. Debtors Turnover Ratio

7. Average Collection Period

8. Fixed Asset Turnover Ratio

9. Capital Turnover Ratio

10. Inventory Turnover Period

11. Expense Ratio

12. Return on Investment

13. Gross profit Ratio

Budget 2011

Expenses

A. BLR HQ related

1. Headcount:

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Actual Head count at Q3 is $2511 & in Q4 expected net

addition is $165 with this expected Headcount at the end of the

year **

For 2011 the gross addition expected to be 10 & with the

average attrition of 9% the net addition expected to be $164.

The net addition in the product group is expected to be $251,

GBS 25, & SE&O 31.

2. Salaries:

At present Blr HQ has 24 employees in Bangalore, 1 at

Sunnyvale & 2 TBH. The TBH are positioned at M4 & M5. For

the plan purpose an increment of 10% is considered effective

from Q2 2011.

The retirement plan calculated 10.66%.

Bonus is calculated at 3% of the salary.

Retention bonus is calculated on the existing employees as per

the HR advice.

The cost per/head/month is expected to be 40 & with the

increase in the total Headcount expected to come down to 30

Documents

Final Final Draft Ananth Kmm Project Report Folder