Strategic Management Accounting Term Paper Example | Topics and Well Written Essays - 3000 words

Strategic Management Accounting - Term Paper ExampleIt does not in truth help the managers to assess what is best for the company (Bonaccorsi and Daraio, 2009). For example, the m maventary counselling of the company is able to indicate if it is set aside to take more debt by considering the present liquid status of the company. The last may not fork up any link with the short termination or long term strategic objective of the company. Thus, fiscal management is not able to see beyond the limitations of the monetary data. Strategic management on the new(prenominal) hand is equipped to see beyond and the cover the limitations of the basic financial management. The conclusion derived from the basic financial management techniques can be further modified if the same decision is taken in the light-headed of the strategic objectives of the company. For example, the financial management indicates that the recourse to further debt financing is going to increase the debt burden f the company (Chrol, 2011). If the company considers going for a strategic alliance with another company then the financial condition of the company can improve. The revenue generation capacity will improve from the synergy gained from such strategic alliance. Strategic financial management considers these kinds of variables and factors to obtain the most optimal decision. Thus, though normal financial management analysis may conclude that the company should not use debt for financing the capital needs, though strategic management may recommend the use debt financing. The research paper discusses some of the uses of strategic management accounting like use of Return on Investment (ROI) and Economic Value Added (EVA), for long term decision purposes and different types of transfer pricing techniques. Part A Critical evaluation of the statement twain Return on Investment (ROI) and Economic Value Added (EVA), when use as performance measures in an organisation, upgrade managers to b e short-term in their focus and decision making The managers have a tendency of victimization both ROI and EVA for performance evaluation for short term purposes. Although when it comes to using the two techniques for long term decision purposes the managers face difficulties in doing the same. The two types of techniques are different from each other in various prise and thus both of them need to be discussed separately to indicate the way they can be used for long term decision purposes. ROI is actually a combination of two different accounting heads, one is the asset disturbance and the other one is the return on gross revenue (Clark and Mathur, 2011). Return on the sales is indicative of the fact of (that) how efficient are managers in generating revenue for every dollar and the ability of the managers to discover the expenses and the increase in revenue generating capacity. While asset turnover indicates the ability of the company to generate proceeds for every dollar inves ted. In between the two accounting heads asset turnover and return on sales, the focus will be on asset turnover. If the managers are able to modify the asset turnover value then ROI can be used for long term decision purposes. In come in to control the asset turnover value the managers need to re-evaluate the policies regarding the capitalization and depreciation. Both aspects like investments and income are touched by the choice of the asset life and the type of depreciation method