Financial Mismanagement

Question: Case study on financial mismanagement. Answer: Introduction Financial mismanagement is the deliberately handling careless, or inefficient and reflection negatively of the financial standing of an organization or an individual. The mismanagement of the finances can be carried in various ways example; wrong distribution of the responsibility, dismissal of the payments, neglecting of the bills and the taxes responsibility, the problems associated with the financial and the economic standings. (Ang, 1991)By looking at the various financial management cases it will help to comprehend the effect that are associated at the mismanagement and how it can have a crucial to the business. In this article it will provide a detailed analysis of how to effectively manage on the business finances, more so on the retirement plan and the stock. The article further evaluates on the alternative solution to the problem and also provide a comparisons between the alternative solutions considering their strengths and weaknesses. The article has also provided some of the recommendations that need to be considered to overcome the challenges that are posed by poor management of finances in the business. Problem Identification The financial mismanagement is essential a problem that is faced by many organization, worldwide. (Ang, 1991)In the case of the mini case of the Canadian Air, they have a pension plan for the company in which the employees can opt one among the options provided. There are many financial problems that can arise if this plan, is not managed well, more so in the case where there is embezzlement of their funds that are kept in the mutual funds for the retirement purposes. If not well managed can led to the closure or legal issues to the organizations. It is imperative for the organization to manage their finances effectively in accordance to the set plans and policies in that business. A large profit for the organization is good where there is a good financial statement, where the revenues are greater than the expenses. There is need to highlight various strategies for the business that are not capitalized to ensure that the finances are well managed and they are used in regards to the b usiness needs effectively. Alternative solution A company may face the challenge of stretching their financial plans in meeting their expectations in the business. It is important to manage the customized portfolios of the alternative investments for the clients and the retirement plan for the employees. Brigham Houston, 2011) each of their portfolios can be tailored to the clients objectives and the constraint. An organization that is objective will adopt strategies to ensure that the finances are appropriately managed and used. In this article it will provide the alternative solutions that the finances of the organization are efficiently used in accordance to the budget of the organization. In below are some of the alternative that an organization may adopt to make sure the finances are managed effectively. Tracking on the expenses. It is important not to limit yourself, to get an idea of what is to be or was spent on the business. Moreover, making notes on all the receipts, versus the expenses that have been incurred. The next issue is to collect and the analysis of the data. The organization needs to collect and analyze their data to know their finances and prioritize on the important aspects. This will ensure that any single project finances like pension plan finances are used accordingly and no resource is miss managed. It is also important for the organization to provide the managers with the data they require to be able to manage the finances of the company. In this way it will ensure that there is accountability for the finances that will be mismanaged. In addition, there is issue of the task shifting is an activity that may result to the mismanagement of the funds and the lack of the accountability. This will ensure that the productivity and the satisfaction is maintained within all the activities of the organization. Financial leverage. On this component the finance manager fixes on the need of the financing. Over and low financial are harmful for the company. There is need for an optimal financial plan to effectively guide on the business needs. Moreover, there is need for selecting the best financial sources for the business. The finance manager analyzes on the different sources of the financing. They clear check the rates, the repayment terms and other conditions that are the best option. Comparison between the alternative solutions The mentioned alternative solution works very effectively. If they are closely monitored and implemented, they would work greatly for the organization and they will help to manage the finances in the organization. (Van Horne James, 2002)There is need for a collection of the performance by all in the business to ensure that each individual component would work effectively. In this way it will ensure that any component in the financial management is identified before it develop to a major problem. The finance manager, if it is in the investment should clearly know the following; the interest of the plan, the period of that particular investment and the compounded formula for the investment. In the compound investment FV=PV (1+r/100) n where we have FV for the future value, PV is the present value, this can be used for return on an investment. (Vaivio, 1999)In addition, on the other hand the provision of the data is one of the best methods to ensuring that the finances within the organi zation are managed. This method reduces the information ignorance of the financial managers ensuring they are accessing the information effectively. Information is vital and remain a key component to managing an organization. This method provide a frequent update of any information that is required by the finance manager in the management of their data in the organization. Recommendations In any organization that is doing well, there is need to have alternative methods that addresses particular problems that affects the organization on the financial management. The concept, of the financial leverage and the financial sources analysis. These methods are effective, since if the financial managers are provided with the appropriate information helps them to manage the data relating to the finances. It is significant since it ensures that the data is valid, thus the data managed for finance is correct and up to date. References Ang, J. S. (1991). Small business uniqueness and the theory of financial management. The Journal of Entrepreneurial Finance, 1(1), 1. Brigham, E., Houston, J. (2011). Fundamentals of financial management. Cengage Learning. Van Horne James, C. (2002). Financial Management Policy, 12/E. Pearson Education India. Vaivio, J. (1999). Exploring anon-financial'management accounting change. Management Accounting Research, 10(4), 409-437.