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Due to the soaring or not-for-profit organizations, there has been the need for the implementation of financial management mechanisms to ensure that grants of funds from donors are used for their intended purposes. To ensure this, these organizations ought to create a budget indicating all the activities they intend to do and how much these activities would cost. Subsequently, rules and regulations should be set to govern how funds are used. There are regulatory bodies in every country whose main objective is to assess whether not-for-profit organizations comply with legal and ethical standards related to management. Not-for-profit organizations get their funds from individual donors, institutional donors, and even governments. For-profit organizations, on the other hand, get their funds from investors. In performance evaluation, a tool referred to a balanced scorecard is used to evaluate performance based on clients perspectives, financial perspectives, learning perspective, and also on the basis of internal processes or procedures. One of the recommendations is the adoption of this tool in financial evaluating performance and implement strategies to ensure compliance. Subsequently, it is also important to have a clear vision for the organization in order to ensure funds are used for their intended purposes. .
To effectively understand and comprehend these issues, it is of significance to define a nonprofit organization as well as a for-profit organization. A for-profit organization can be referred to as a commercial entity of organization. In other words, this main objective is to generate revenue. A nonprofit organization, on the other hand, is an organization established with the main objective of helping the society in general rather than for commercial purposes. In addition, a nonprofit organization is excused from paying levies as opposed to a for-profit organization where all services and commodities
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Non-governmental Organizations are set up to offer services or goods to people with the aim of assisting them though capacity building. Financial management practices in NGO’s are different from the operations of For-Profit organizations. For instance, NGO’s source their funds through donations, sponsors or charitable sources.
Unlike the equity shares, the preference shareholders are entitled to special privileges with regard to payment of capital and profit sharing. The businesses deploy a mix of debt and equity in their capital base. The firms have a finance department that looks after the funding needs.
The main objective of the financial management is to provide funds for the business. This is the backbone of the business because no firm or company can run without funds. There are many options for availing funds from different quarters. Although the
As understood financial management is a mode of right administration of the financial assets of a company. In the case of large companies the amounts of monies spent on the assets is very high. This requires highly effective financial management. The main
The company has a policy of not accepting projects with a payback period of over 3 years and this project will recover its initial investment in less than 3 years. (Puxty, Dodds, & Wilson, 1988)
Here, Cost of capital the rate of return in which firms earn on its investment to maintain or improve value and also attract fund and capital (Brigham & Houston 2009). It is used as a yardstick in evaluating the desirability of an investment proposal. In
The company offers home and clothing products in addition foods sourced from more than 2000 suppliers from all over the world. Two years ago, the products of the company were also sold through 730 United Kingdom branches and 390 internationally. The
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