FN 311 Financial Management Financial Information System

1. FN 311 Financial ManagementFinancial Information System EK BUNCHUA ek@alpha.tu.ac.th Room # 406 Thammasat Business School

2. 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

3. Development of Business Information System Fromlocaltonational toglobal business FNIS MFIS MKIS HRIS AIS EIS ES DSS MIS Fromprice tonon-price competition Frombuyer needs tobuyer wants

4. Firm Infrastructure Human Resource Management Technical Development Profit Margin Procurement Inbound Logistics Outbound Logistics Marketing & Sales Customer Services Operations Value Chain Model FINANCE Support Activities Primary Activities

5. Financial Information System • A subsystem of computer based information systemthat provides informationto 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)

6. System Boundary Organizationas a System AC HR Interact and inter-linkage among the subsystems to achieve org. goal FN MFG A B MK Direct Achieve D C System Concept External Internal Consists of functional Subsystems Each subsystem can be viewed as another system; and consists of its own subsystems Each subsystem has its dept. goal

7. Classification of Information Systems EIS Executive Information System DSS Decision Support System MIS Management Information System TPS Transaction Processing System Managerial Levels Support Provided AIS FNIS MKIS HRIS MFIS Functional Areas

8. FNIS Challenges • 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 Vertical integration Horizontal integration

9. Financial Decision Support System Internal Records System Data base Internal Audit System • Forecasting • Funds Management • Financial Control • etc. Financial Intelligence System A Model of Financial Information System Adapted from McLeod

10. 1. Internal Records System • A subsystem of any functional information systemthat gathers datadescribing the firm’s activities, transforms the data into information, and make the information availableto users • Accounting Information System (AIS) • Provides a record of everything of monetary importance that happens in the firm

11. 2. Internal Audit 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

12. 3. Financial Intelligence System Objective: • To identify the best sources of additional capital and the best investments of surplus funds. Major task: • To gather data and information from stockholders, financial community, and government Sources: • Journals, Newspaper, CD-ROM, On-line database, Internet, Research, etc.

13. Internet Lab

14. 4. Financial Decision Support System • A decision support system should: • Assistmanagers in making decisions to solvesemi-structured problems. • Supportthe manager’s judgment rather than try to replace it. • Improvethe manager’s decision-making effectiveness rather than its efficiency.

15. 4. Financial Decision Support System4.1 Forecasting Subsystem Basic facts about forecasting • All forecasts are projections of the past. • All forecasts consists of semi-structured decisions. • No forecasting technique is perfect. Tool • Forecasting Models

16. 4. Financial Decision Support System4.2 Funds Management Subsystem Objectives • To ensure that the revenue inflow is greater than the expense outflow. • To ensure that this condition remains as stable as possible throughout the year. Tool • Cash Flow Analysis

17. 4. Financial Decision Support System4.3 Financial Control Subsystem Tools • Budgeting • Financial Ratios Analysis

18. Financial Accounting Sales/MKT Production Statistical Forecasting Operational Planning DSS Database Model Base DSS Software System Manage DSS Database Manage Model Base Manage User Interface User Interface Components of DSS

19. Electronic Spreadsheets • Tool for analysis, planning and modeling. • Built-in statistical, mathematical and financial functions. • Formulas can be embedded using numbers in the spreadsheet. • The implication of changing numbers can immediately be observed and analyzed.

20. Microsoft Excel Lab

21. What-If Analysis • A model builder makes predications and assumptions regarding the input data • What will happen to the solution ifan input variable, an assumption, or a parameter value is changed?

22. Goal Seeking Analysis • Goal seeking analysis checks the inputs necessary to desired level of an output (goal) • Backward solution approach

23. Sensitivity 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

24. Questions?