PERSONAL DEVELOPMENT PLAN
Week 6 – Personal development plan
Regarding the previous personal development plan for week four, it focused on reflecting on the impact of the module to the experience and knowledge attained during the module, a reflection on the accounting profession and other perceptions that in regard how managers should execute their accounting tasks in their accounting capacity. The plan also provided a discussion on various accounting information which is vital in the operation of any organization which include external and internal. Internal users are those that are confined within the company’s operation and these include the manager, employees, and any other party whose operations are within the company. On the other hand, the external users include; the investors, tax collection agents or the government, suppliers, customers, and lenders.
The reflection also based on the usefulness of various accounting information and these include; how useful the cash flow statements are in the health of any business, balance sheets and income statements of which is consider to be at the heart of any profitable business. Besides, the plan entailed some of the particular areas of interest in my initial personal development plan was the issues related the ethics in the account profession and how the global accounting institutions and other players shave failed in terms of enforcing ethics in management of accounting and most important, implementation of laws that would seal the existing gaps in the accounting profession (Enofe, Nakpodia & Moruku, 2014), hence, many companies have failed to account for huge sums of capital that belongs to investors.
Lastly, the plan provided my potential areas for my personal development and strategies that included, carrying out research and providing possible suggestion on various laws that can be implemented to seal the gaps existing in the accounting profession that ultimately lead to violation of the accounting laws. The second one is the upholding of integrity in the provisions of accounting information in every business that I will be involved in and lastly, establishing a concerted effort with other industry key players to ensure that all organization come together to establish laws that will govern how managerial accounting shall be carried out to revive trust in the information that is provided to the users.
About areas of my ongoing personal development related to this Module, I could not only learn but also internalize several topics that provided me with clear understanding of the following areas. Relevant costs and cash flows in capital budgeting; in this case, this area is confined on the identification, evaluation, and ranking of investment projects that adds to the value of an organization. For instance, relevant cost is not considered the same as figures prepared for financial accounting. In this case, relevant costs refer to cash flows used for capital budgeting to establish how an organization can make best use of its limited resources. Understanding the use of relevant costs and cash flows in capital budgeting provides a clear information on how various investment projects can be undertaken bearing in mind that at different times, the resources in any given organization that are always fluctuating. These two concepts help the managers to make proper arrangements that are meant to utilize the available and limited resources to maximize profitability.
Another important area of focus is cost of capital. In this case, understanding the cost of capital is essential in that it provides the ability to discount cash flows by knowing the interest rates to be used. This interest I pivotal since it represents the opportunity cost to any given organization of making use of its limited resources or funds through the investment in the projects under consideration instead of alternative projects. Furthermore, the managers would be able to establish appropriate cost of capital to use in any given project for discounting calculations that is affected by factors that every financial manager should be conversant with and these include; financing mix of a firm, predicted future inflation, market interest rates and the risks associated with implementation of a new capital project.
Another important area that I found more important in this module is the calculation of the net present value which is the disparity between the present value of cash flows and the present value of cash outflows. This technique is pivotal in capital budgeting that helps to provide analyses of a projected investment. With the net present value, the managers can project for the future values. Furthermore, the net present value is used in the preparation of financial information especially in calculating accounting rate of return and payback period. In this case, the IRR is the amount of profit an individual or organization can expect based on an investment made.
On the other hand, the payback period is the time take for an investment to generate revenues that can cover up the cost used in the investments. Besides, the NPV is used in the establishments the Internal rate of Return which is considered the discount rate at which the net present value of any given project will have zero value. These techniques form an important component in the management of investment resources by managers to establish how profitable a given project is and the duration that can be taken for the project to payback the amount used in the investment (Woodruff, n.d). The lower the payback the more desirable and profitable the project is and conversely. On the other hand, the higher the IRR the more profitable and desirable the project in term of investment while those projects that have low IRR, are considered less desirable for investment and less profitable.
These concepts are useful in the entire management of the company and as a finance manager, I will have the obligation to analyze various projects to establish the most preferred and profitable ones. For both my profession and in my personal investments, having and understanding of these concepts provides information on how various projects are undertaken under different circumstance. For example, large projects that require higher investments might have low IRR meaning the that profitability of such projects is low than small projects that at times might have low investments but with higher IRR and lower payback period which means that the project is more profitable. Therefore, in such a case, selecting the best project should be pre-determined by the IRR and payback period regardless the size of investments.
In conclusion, some of the steps I might take to aid my transition of applying the coursework to my workplace include; familiarizing with how various organizations operate especially the financial department to establish if various financial concepts are implemented effectively. With the understanding of how other organizations operate, I will be able gauge my skills and expertise in relation to how other financial managers in other organizations execute their functions. Another step is that I will consider seeking information from other financial managers to help me know how to execute my mandates effectively as a financial and accounting manager at different organizational levels.
-Atrill, P. & McLaney, E. (2014) Finance and accounting for managers. Laureate Online
Education custom ed. Harlow, UK: Pearson Custom Publishing.
-Adagye, I., Azagaku, B & Umbugadu, S. (2015). Threats and Challenges to Accounting
-Blessing, A & Onoja, E. (2015). The role of financial statements on investment decision
-Woodruff, W. (n.d). Advantages & Disadvantages of Payback Capital Budgeting Method.