Decision Making Using Relevant Cost Concepts
What is Relevant Cost? A relevant cost is a cost that differs between alternatives in a decision and will affect the future cash flows of a business. It is a cost that is pertinent to a specific business decision because it will be incurred or avoided depending on the choice made. Irrelevant costs, such as…
Read article Ethical and Non-Financial Considerations in Business Decision-Making
Introduction While financial metrics like profit, cash flow, and ROI remain central to business decision-making, ethical and non-financial considerations are now recognized as essential to building sustainable, trustworthy, and successful organizations. These additional factors safeguard a company’s reputation, long-term viability, and stakeholder trust—making them critical in today’s highly transparent and accountability-driven business environment. 1. Ethical…
Read article Decision Making Using Activity-Based Costing (ABC)
Introduction Activity-Based Costing (ABC) is a refined costing approach that allocates overheads and indirect costs to products, services, or processes based on the activities they consume. In decision-making, ABC gives managers clear insights into true cost drivers, enabling better pricing, product mix selection, and strategic decisions. How ABC Works ABC assigns costs through:• Identifying key…
Read article Decision Making using Cost-Volume-Profit (CVP) Analysis
Introduction Cost-Volume-Profit (CVP) analysis is a powerful financial tool that connects the dots between costs, sales volume, and profits. It helps businesses answer key questions: How many units must be sold to break even? What happens to profit if costs or prices change? CVP analysis is crucial for managers making pricing, production, and resource allocation…
Read article Risk Analysis in Practice: Practical Insights for Bankers
Risk analysis isn’t just theory—it’s an everyday reality that keeps banks safe and sound. Here’s a simple breakdown of how banks do risk analysis in practice, with useful tools and examples you can relate to. How Banks Handle Risk Analysis Step-by-Step 1. Spotting the Risks Banks look out for all kinds of risks: 2. Measuring…
Project selection Under Risk and Uncertainty
Making capital investment decisions in banking isn’t always straightforward. Risks and uncertainties—like economic changes, new regulations, or shifting customer behavior—can all impact whether a project delivers the expected returns. So, how can banks confidently evaluate investments when the future is unclear? Let’s explore some practical tools and approaches that can help. Why Risk and Uncertainty…
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