Financial Decision Making

Paper Summary:

This paper examines the newly developed management system called Balanced Scorecard to review its use in evaluating the financial and operational strategies of an organization as applied to the Tenant Management Offices (TMOs) in London, a service-oriented firm with limited resources. The author points out that a decision-making tool called Option Appraisal provides an accurate assessment of the advantages and disadvantages of the options, which may be taken to achieve a firm's objectives particularly during uncertain times with new service requirements. The paper states that, in measuring profitability to aid in decision-making, the most efficient tool is the return on capital ROC, which yields what is known as return on equity (ROE), or the percentage between the company's one-year income and the capital it utilized.

Table of Contents
Introduction
Assessment
Conceptual Models
Corporate Finance
Fixed Capital vs. Working Capital
Financial Risk Management
The Balanced Scorecard
Critical Analysis
Conclusion

From the Paper:

"The investment tools used in corporate finance derive from almost all areas of the financial world. Some of these tools specifically developed by and for corporations have broad application to entities other than corporations, such as partnerships, non-profit organizations, government agencies, mutual funds and personal wealth management. In this non-corporate exercise, however, their application is severely limited because the other entities do not deal in as much quantities of money as corporations. For this reason, corporate finance is not the same as personal or public finance."

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