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Proper Analysis Tools

The importance of proper analysis tools for managerial and accounting purposes is evident: these instruments allow to reach greater accuracy and speed, provide enhanced business performance, various data for decision-making and can even give advise regarding decision-making. Professional expert systems can assemble all factors and variables relating to accounting or management and recommend a certain strategy (Ramachadran, 2007). Thus, on one hand, proper analysis tools improve managerial performance, reduce the number of errors and allow to measure standardized factors correctly.

However, computerized tools follow a given set of instructions and cannot automatically adapt to changes of environment or to new situation in the economy. In addition to this, there are many factors associated with finance and accounting, which cannot be automated. These are the strategic decisions, competitive advantages of the company, allocation of finances aimed at reaching long-term goals etc (Ramachadran, 2007). In these cases, inexperienced managers will not be able to compensate lack of skill by any analysis tools, because such neat decision-making issues require professional competence and deep knowledge.

Moreover, computers cannot eliminate mistakes in data entry or incorrect construction of financial reports appearing due to human factor. The use of analysis tools requires understanding of the scope of application of these tools; inexperienced managers might not be able to determine when and what tools should be applied. Complex decision-making systems also need various data sets for analysis, and to be able to provide the correct information, one would also need experience and understanding of the situation. Finally, automated analysis tools focus on transactions mainly (Ramachadran, 2007), and to perform an in-depth analysis, managers will have to consider the roots of decision-making, competitive position and other external factors.

In general, it is possible to state that for the low-level routine tasks or standard tasks analysis tools might help an inexperienced manager to overcome possible errors; however, complex issues regarding financial decision-making and strategic solutions might be significantly affected by a manager without proper experience, since it is not possible to automate strategic decision-making processes.

References

Ramachadran, K. (2007). Financial Accounting For Management. Tata McGraw-Hill Education.