These tools are valuable at the departmental and campus level. Each department and campus equals a piece of the entire business unit. If all of the departments and campuses within the organization were able to manage their budgets, profits and expenses and understand how it fits in to the whole the company would benefit immensely. I believe some aspects of the for-profit understand their financial impact but others don't. It seems to me that the academics department really does not have a grasp on their financial impact other than their attrition numbers.
Hi Alicia! Thanks for your reply!
To your point, these financial tools do provide information such as asset value, debt and equity structure, cash liquidity, return-on-investment, etc. This is company-wide and, in some cases, by department as well. Such tools help a functional manager not only control costs, but aid in decision-making on things such as budgeting, asset allocation, lease vs. buy, and debt vs. equity financing.
Perhaps most importantly from the department standpoint is cost control and short -term liquidity. If an organization's current ratio is such that it cannot pay its short-term obligations, that is an immediate red flag.
Thanks again for your observations, hope you are enjoying the course.
Jay Hollowell
ML141 Facilitator
I think these tools would help management make better decisions regarding their departments. While all managers need to attempt to control costs in their departments, with our without these statement, it would help if they were aware of what is going on in the company.
Budgeting at my school has always been top-down. I am not privy to any budgetary constraints or availability even though I am a department head in charge of purchasing for my department as well as for several other business needs. Its usually a shot in the dark if anything is going to be approved with litte explanation.
Access to school's balance sheet and cashflow statement would definitely assist me in determining the lifecycle of certain equipment and aid me in building a case for internal re-investment.
