Question

How does modern financial management differ from traditional financial management?

Answer 1

1. Meaning:

Modern approach to financial statement analysis includes Cash Flow Statement, Funds Flow Statement, Ratio Analysis, Budgetary Control etc.

2. Method of Preparation:

Preparation of these statements are not so simple.

3. Reliability:

These statement are quite informative.

4. Reliability:

These statements are proved to be quite reliable and dependable for the purpose of analysis of financial statements.

5. Information:

These statements, no doubt, exhibit the required material information for the purpose of analysis of financial statements.

6. Presentation:

Presentation of these statements is quite new and more informative than the Traditional Approach.

7. Specificity:

Modern approach to financial statement analysis is quite possible to understand any specific information from these statements, say, the liquidity position.

8. Use:

These statements are usually pre­pared by the big business houses.

9. Area of Application:

Under Modern approach to financial statement analysis, in addition to the benefits that are available under traditional approach, the other material information viz. liquidity position, solvency position, profi­tability and management efficiency position can easily be understood accurately.

10. Preparation and Presentation:

Preparation and presentation of these statements are not so simple and the preparation of these statements are not mandatory for all firms.

Answer 2

Answer:

The modern strategy uses analysis to look at the company's financial issues. This method states that the finance function includes both the acquisition of funds and their distribution to various applications.

Explanation:

The previous method failed to make sound financial judgments and ignored the problems associated with the distribution and administration of funds. The modern strategy uses analysis to look at the company's financial issues.

Modern financial management differ from traditional financial management:

• The modern strategy uses analysis to look at the company's financial issues. This method states that the finance function includes both the acquisition of funds and their distribution to various applications.
• The corporate enterprises' only need for financial management is the administration and fund-raising required to meet those needs. Businesses need money for things like mergers, the creation of new companies, reorganizations, liquidations, and other episodic events.
• The scope of the finance function is constrained to "fund procurement by corporate enterprise to meet their financial demands" in accordance with this methodology.
• The term "procurement" refers to both the external fund-raising process and its related components.
• The primary distinction between the conventional and modern approaches is that the former sees disputes as avoidable and damaging to an organization, while the latter sees them as unavoidable and beneficial.