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Consider the role of the finance department at Strident Marks. The finance department has a couple of new hires, and the CFO has asked that you spend a short amount of time with them, catching them up on some areas that are very important to the company at this time. These also happen to be areas for which Strident Marks does not yet have any training material. Write what you feel should be included in their training manual about the components of financial systems, focusing on valuation. What role does a financial department play in valuing business opportunities and what are some of the key financial concepts that valuation work must consider?
You are a financial analyst in the finance division of Strident Marks, a manufacturing company that has recently gone through the initial public offering (IPO) process and has become a public company. Strident Marks has annual sales revenue of approximately $50 million and makes seven unique and distinct products (which serve seven different markets). Each product is represented by its own division within the company and has its own group of sales, marketing, and manufacturing personnel. Some departments, including human resources and the finance division, support the entire organization. Operations consist of a single headquarters and production (manufacturing) center.
In your role as financial analyst you are responsible for compiling and reporting on budget / forecast data, for assisting your investor relations department, and for assessing and valuing new business opportunities (which will ultimately be presented to upper management). You report directly to the Chief Financial Officer (CFO) and have the use of the accounting department's staff accountants to assist you with your budget / forecast responsibilities.
You have been informed by the CFO that Strident Marks will be aggressively pursuing new business opportunities, which may include expansion through acquisition and the development and implementation of new products. As a publicly traded company, Strident Marks is scrutinized by bankers and investors as never before. In fulfilling your responsibilities you must keep this in mind, and you must instill a new sense of financial discipline in the organization.
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The solution presents a template which can be used to customize a training program for any organization. The template covers a seven day period with details of subjects to be covered including on site portions of the program also. This solution is 1622 words.
You are required to prepare a manual for the initial training of a new employee in the financial department. This person should be exposed to all the departments of your company, the corporate culture as well as his job related issues like the valuation of business opportunities.
There are some assumptions which the question makes. First, it assumes that the company is willing to disclose its valuation policies to a new employee who is almost an outsider. This is not supported by evidence. Only time tested employees know exactly how important investment decisions are taken. Second, the question presupposes that you spend a short time with the new hires but prepare a manual for them. Why? Are these hires going to work with you? The evidence points in the opposite direction; the training program is supposed to train these in evaluation of business opportunities rather than in budgeting and forecasting which is your domain. Thirdly, the question never addresses the issue of how you are going to instill a new sense of financial discipline when your responsibility is budgeting and forecasting, usually the V.P. Finance who is the head of the finance department does the disciplining. You are simply supposed to prepare budgets and forecasts!
Given below is a template to help you make a training manual.
This training will be conducted over a period of seven working days.
9.00 am to 12.00 am You are required to go through the last three years annual reports, the organizational charts of the company, study the mission statement of the company, go through the sales brochures of the company and study the organization of the finance department of the company.
12 noon to 12.30 pm Shared lunch with senior executives of the human resource department and the finance department.
12.30 pm to 5.00 pm Visit to the production center where you will be required to visit the facility of the BOPP tape manufacturing unit, BOPP packing machine unit and the nailing consumables department. At the end of the visit you will be required to write a report on the accounting system being used in each of these units, identifying by name the persons responsible for financial accounting and ascertaining the other responsibilities these personnel are required to carry out apart from their role in the financial department.
9 00 am to 12 00 visit to the ...
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