fn 311 financial management financial information system

FN 311 Financial ManagementFN 311 Financial Management

Financial Information Financial Information SystemSystem

EK BUNCHUAek@alpha.tu.ac.th

Room # 406Thammasat Business School

Today’s Plan Today’s Plan Financial Information System

An Overview Financial Intelligence System

Internet Workshop Financial Web Sites

Financial Decision Support System

Spreadsheet Workshop DSS Tools Financial Functions

Development of Development of Business Information SystemBusiness Information System

From local to nationalto global business

From local to nationalto global business

From buyer needsto buyer wants

From buyer needsto buyer wants

From priceto non-pricecompetition

From priceto non-pricecompetition

FNISMFISMKISHRISAISEISES

DSSMIS

ProfitMargin

Value Chain ModelValue Chain Model

CustomerServices

Marketing& Sales

OutboundLogisticsOperations

InboundLogistics

Firm Infrastructure

Human Resource Management

Technical Development

Procurement

Pri

ma

ryA

cti

viti

es

Su

pp

ort

Ac

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FINANCE

Financial Information SystemFinancial Information System

A subsystem of computer based information system that provides information to persons and groups both inside and outside the firm concerning the firm’s financial matters.

Information is provided in form of periodic reports, special reports, results of mathematical simulations, electronic communications, and the advice of expert systems.

(McLeod)

System ConceptSystem ConceptOrganizationas a System

AC HR

FN MFG

MK

Consists offunctionalSubsystems

B

C

A

D

Interact andinter-linkageamong thesubsystemsto achieveorg. goal

Each subsystemhas its dept. goal

Dir

ect A

chieve

System Boundary

Internal

External

Each subsystemcan be viewed asanother system;and consists of itsown subsystems

AIS HRISFNIS MFISMKIS

TPS

MIS

DSS

EIS

Classification of Information SystemsClassification of Information Systems

Executive Information System

Decision Support System

Management Information System

Transaction Processing System

Managerial LevelsSupport Provided

Functional Areas

Other departments and stockholders are the main customers of the FN services

FNIS must be integrated with other functional information systems, and must be linked across the organizational hierarchy to enable the free flow of information

FNIS ChallengesFNIS Challenges

Horizontal integration

Ve

rtic

al i

nte

gra

tio

n

Database

InternalRecordsSystem

InternalRecordsSystem

InternalAudit

System

InternalAudit

System

FinancialIntelligence

System

FinancialIntelligence

System

FinancialDecisionSupportSystem

FinancialDecisionSupportSystem

• Forecasting• Funds Management• Financial Control

etc.

A Model of A Model of Financial Information SystemFinancial Information System

Adapted from McLeod

A subsystem of any functional information system that gathers data describing the firm’s activities, transforms the data into information, and make the information available to users

Accounting Information System (AIS) Provides a record of everything of monetary

importance that happens in the firm

1. Internal Records System1. Internal Records System

Annual stockholder reports requires an external auditor to verify the accuracy of accounting records

Larger firms have their own staff of internal auditors who perform the same analyses as external auditors but have a broader range of responsibilities

With internal audit system, the firms can independently evaluate and influence their operations from a financial standpoint

2. Internal Audit System2. Internal Audit System

Objective: To identify the best sources of additional capital and th

e best investments of surplus funds.

Major task: To gather data and information from stockholders, fina

ncial community, and government

Sources: Journals, Newspaper, CD-ROM, On-line database, Inte

rnet, Research, etc.

3. Financial Intelligence System3. Financial Intelligence System

Internet LabInternet Lab

A decision support system should: Assist managers in making decisions

to solve semi-structured problems. Support the manager’s judgment rather t

han try to replace it. Improve the manager’s decision-making

effectiveness rather than its efficiency.

4. Financial Decision Support System4. Financial Decision Support System

4. Financial Decision Support System4. Financial Decision Support System

41. Forecasting Subsystem 41. Forecasting SubsystemBasic facts about forecasting All forecasts are projections of the past. All forecasts consists of semi-structured de

cisions. No forecasting technique is perfect.

Tool

Forecasting Models Forecasting Models

4. Financial Decision Support System4. Financial Decision Support System

42. Funds Management Subsyst 42. Funds Management Subsysteeee

Objectives To ensure that the revenue inflow is greater

than the expense outflow. To ensure that this condition remains as sta

ble as possible throughout the year.

Tool

Cash Flow Analysis Cash Flow Analysis

4. Financial Decision Support System4. Financial Decision Support System

43. Financial Control Subsystem 43. Financial Control SubsystemTools

BudgetingBudgeting Financial Ratios Analys Financial Ratios Analysisis

DSSDatabase

DSSDatabase

ModelBase

ModelBase

DSS Software SystemManage DSS Database

Manage Model BaseManage User Interface

DSS Software SystemManage DSS Database

Manage Model BaseManage User Interface

UserInterface

UserInterface

FinancialAccountingSales/MKTProduction

StatisticalForecastingOperationalPlanning

Components of DSSComponents of DSS

Electronic SpreadsheetsElectronic Spreadsheets

Tool for analysis, planning and modeling. Built-in statistical, mathematical and financ

ial functions. Formulas can be embedded using numbers

in the spreadsheet. The implication of changing numbers can i

mmediately be observed and analyzed.

Microsoft Excel LabMicrosoft Excel Lab

What-If AnalysisWhat-If Analysis

A model builder makes predications and assumptions regarding the input data

What will happen to the solution if an input variable, an assumption, or a parameter value is changed?

Goal Seeking AnalysisGoal Seeking Analysis

Goal seeking analysis checks the inputs necessary to desired level of an output (goal)

Backward solution approach

Sensitivity AnalysisSensitivity Analysis

Enables flexibility and adaptation to changing conditions and to tell requirements of different decision making situations

Provides a better understanding of the model and the world it purports to describe

Models that ask ‘what-if’ questions repeatedly to determine the impact of changes in one or more factors on outcomes

Questions?Questions?