Business Report Finance - Term Paper Example

However, some small organizations have only a small finance department that handles all the financial operations of the company. Nonetheless, some organizations have a finance department as the general overseer of the financial matters of the company, and under this umbrella, are a number of specialized functions such as accounting, bookkeeping and taxation (Boros, 2012). The finance department has three main divisions, which oversee the proper execution of its goals and objectives. These three corporate divisions of fiance include capital budgeting, business finance and corporate governance.

Capital budgeting relates to the way a company budgets and plans for its long-term projects. These long-term projects are usually investment projects that deal with the investment of a company, targeted at generating sustainable income and profits for the company. A company uses capital budgeting in choosing the right projects to undertake in order to maximize its profits. In addition, corporate governance refers to the executive administration of the business activities of the company. This means that the operations of the company have to adhere to the rules and regulations set up by the relevant bodies, such as the GAAP and the IFRS, as well as incorporation of SAP and other quality management standards.

Business finance, on the other hand, specializes in the daily operations of the business and the activities that generate income to the company (Brickley, Smith & Zimmerman, 2007). Capital budgeting is the essential area in business development and project administration. Capital budgeting is the process of firms making decisions on which long-term investments to undertake. Projects under capital budgeting have a high expectation to generate constant cash flows over a period of years, i.e. potential long-term investments.

The decision to either reject or accept a Capital Budgeting Project solely depends on the analysis of cash flows generated by the project over the years and the cost of setting up the project. This analysis considers the following three decision rules in capital budgeting, i.e. payback period, internal return on investment, and net present value. It is mandatory for a capital budgeting decision to satisfy the following criteria, i.e. should consider all the cash flows in the project, it should consider the time value of money, and it should lead to correct decisions when selecting among mutually exclusive projects (Cleverly, Cleverly & Song, 2011).

Statement of Purpose The purpose of this report is to inform me, as well as those following a similar career path in finance, and especially specializing in project management under business finance, with an in-depth study of our professional community. The study will enable students in this area to understand better (Hitt, Hoskisson & Ireland, 2006). Statement of Problem Although academically well prepared, finance students are not quite familiar with their professional community, especially understanding the way they have to deal with certain aspects of financial management and business finance.

This is because what these students learn is majorly theory and they lack enough opportunities to put it into practice, especially for the capital budgeting projects that they have to undertake. The decision-making on these capital budgeting