s b itte to um d

8/14/2019 S b Itte to Um d

1/26

Submitted to :

Prof K.G.MURALIDHRA


2/26

ObjectivesYou will be able to:

Define financial decision making

Describe decision making process steps

Explain the roles of computer in financial decisionmaking

Describe different types of decision making computersystems

Explain the advantages of computer in financial decision

making


3/26

Table of Contents

Financial decision making

Decision making process

Intervention of computer in the decisionmaking process

Types of decision making computer systems

Benefits of computer in a decision making

process


4/26

Financial Decision Making

Decision making is choosing between several possiblecourses of actions related to an issue.

Financial decision making involves decisions concerning

financial related issues such as:

determining the proper amount of funds to employ in afirm

selecting projects and capital expenditure analysis

raising funds on the most favourable terms possible managing working capital such as inventory and

accounts receivable.


5/26

Decision Making ProcessThe steps in decision making process are:

1) Gathering information.

2) Recalling knowledge and prior experiences.

3) Understanding the various sides of the issue.

4) Imagining the various possibilities of actions.5) Comparing, weighing and evaluating them.

6) Making a choice between those alternative solutions / actions

6b) If the course of actions is complex, preparing a planning.

7) Implementing the decision.


6/26

Decision Making Process

Work Flow


7/26

Intervention of computer in th

decision making process Gathering information

Information comes from a variety of sources through a

variety of means.Reports generated by different computer systems assist

management in making decision. Examples are salesreport, productivity and costing reports, trend analysis e.t.cfrom various application software.

The Internet is a source of on-line information and hasgrown rapidly over the years; it is the most widely usedmeans of transferring information. Examples of informationsearch engines are Google, Wikipedia, Ask.com and Yahoo.


8/26

Intervention of computer in thedecision

making processRecalling knowledge and prior

experiences

Computer systems can store information andretrieve them as long as the systems areavailable.

Several Database Management Systems (DBMS)manage data efficiently for easy access andretrieval. Examples of DBMS are MYSQL,Microsoft Access, Oracle, RDBMS e.t.c


9/26


making processUnderstanding the various sides of the issue

Advances in the area of computing have made it

possible to have systems that attempt toreproduce the performance of one or more humanexperts, most commonly in a specific problemdomain. Such systems have the capability to learnbecause it is constantly being given cause andeffect, thereby understanding various sides withinits knowledge base.


10/26

Intervention of computer in thedecisionmaking process

Understanding the various sides of the issue

Applications such as Microsoft Excel can be deployed as

an expert system to aid decision making.

It can be utilized to plot line of best fit and graphs whichare used to forecast market analysis.


11/26

Example shown in bellow fig


12/26

Intervention of computer in thedecisionmaking process

Comparing, weighing and evaluating

Computer systems aid in formatting and manipulating

data. Several tools with different capabilities can beinterfaced to provide users with a single easily usedlanguage to present data in a way that will best supportthe end-user to compare, weigh and evaluate data.

Examples are bar chart, pie chart, graphs e.t.c Dataanalysis tools such as Audit Command Language (ACL),Microsoft Access e.t.c are also useful.


13/26

Intervention of computer in thedecisionmaking processImplementing the decision.

Depending on the nature of the decision to betaken, there are computer aided tools that canfacilitate the implementation of the decision.

There are various tools available such as;

Computer aided software engineering (CASE)Computer aided recording tools (CART)

Computer aided summarisation tool (CAST)


14/26


making processImplementing the decision.

Computer aided software engineering (CASE)

This is the scientific application of a set of toolsand methods to a software which is meant to resultin high-quality, defect-free, and maintainablesoftware products. It also refers to methods for the

development of information system together withautomated tools that can be used in the softwaredevelopment.


15/26

Computer aided recording tools(CART)

CART is a tool that converts coordinate

information, obtained from any source, intoan intelligent 3D CAD (computer aideddesign) Model without having to do anymanual drafting at all.


16/26

Computer aided summarisation tool(CAST)

Computer aided summarization tool triesto help the human summariser by

selecting the important information from adocument. In this way, human effort andtime is reduced to linking the extractedsentences in a coherent way and, possibly,removing the redundant information oradding missing information


17/26

Graphical representation of a typical computer aided loan approval decision

making process in a bank.


18/26

Decision Making Computer

SystemsDecision Support Systems (DSS)

DSS are a specific class of computerized

information systems that supports businessand organizational decision-making activities.A properly-designed DSS is an interactivesoftware-based system intended to helpdecision makers compile useful informationfrom raw data, documents, personalknowledge, and/or business models to identifyand solve problems and make decisions.


19/26

Decision Making Computer

SystemTypical information that a decision support application mightgather and present would be:

an inventory of all of your current information assets

comparative sales figures between one week and the next,projected revenue figures based on new product sales

assumptions;

the consequences of different decision alternatives, givenpast experience in a context that is described.


20/26

Decision Making ComputerSystems

Executive Information System (EIS)

EIS is a type of management informationsystem intended to facilitate and support theinformation and decision-making needs ofsenior executives by providing easy access to

both internal and external informationrelevant to meeting the strategic goals of theorganisation. It is commonly considered as aspecialized form of a DSS.


21/26

Decision Making ComputerSystems EIS allows information to be collated and displayed to the user without manipulation or

further processing. The user can then quickly see the status of his chosen department orfunction, enabling them to concentrate on decision making. It offers strong reporting anddata mining capabilities which can provide all the data the executive is likely to need.

The two main aspects of an EIS system are integration and visualization. The newestmethod of visualization is the Dashboard and Scorecard. The Dashboard is one

screen that presents key data and organizational information on an almost real time andintegrated basis. The Scorecard is another one screen display with measurementmetrics which can give a percentile view of whatever criteria the executive chooses.

There are a number of ways to link decision making to organizational performance. Froma decision maker's perspective these tools provide an excellent way of viewing data.Outcomes displayed include single metrics trend analyses, demographics, market sharesand a myriad of other options. The simple interface makes it quick and easy to navigateand call the information required.


22/26

Decision Making ComputerSystems

Expert Systems (ES)

ES are computer systems which embody

some ofthe experience and specialisedknowledge of an expert and thereby mimic theexpert and act as a consultant in a particulararea. Knowledge is often represented in an

Expert System in a knowledge base, which is anetwork of interconnected rules whichrepresent the human expertise.


23/26

Benefits of computer infinancial decision

Information generated from the systems is used infinancial decision making.

Computer helps to fast track data analysis for

decision makingComputer increases accuracy and reduce errors and

time required to solve problems.

Helps automate the decision making process

Reveals new approaches to thinking about theproblem space

Generates new evidence in support of a decision


24/26

Promotes learning and training.

Information that is provided is better understood andoffers efficiency for decision makers.

It brings consistency to the decision making process.


25/26


26/26

s b itte to um d

Documents