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T a k e a n y t h r e e e x a m p l e s o f t h e c o m p o n e n t s o f a D e c i s i o n S u p p o r t

S y s t e m an d explain how they help decision makings.

Following are the three components of a Decision Support System

1.

A n n u a l B u d g e t : I t i s

rea l l y a b u s in es s p la n . Th e b u d get a l loc a t e s a mou n t s o f money t o everyactivity and/or department of the firm. As time passes, the actual expenditures are

compared to the budget in a feedback loop. During the year, or at the end of th e fi scal

year, the firm generates its financial statements: the income

statement, the balance sheet, the cash flow statement. When puttingtogether,these four documents are the formal edifice of the firms finances. However,they cannot serve as day-to-day guides to the General Manager.2.Daily Financial Statements: The Manager should have access to continuouslyupdated statements of income,cash flow, and a balance sheet. The most importantstatement is that of the cash flow.

The manager should be able to know, at each andevery stage, what his real cashsituation is as opposed to the theoretical cashsituation which includesaccounts payable and account receivable in the form of expenses and income.3.The Daily Ratios Report: This is the most important part of the decision supportsystem. It enables theManager to instantly analyse dozens of important aspects of the funct ion ing o f h iscom pan y. I t a l lo ws h im t o co mpa re t he b eha vio ur o f th ese parameters tohistorical data and to simulate the future functioning of hiscompanyunder d i f f erent scena r ios. I t a lso a l lows him t o com pare theper formance o f h is company to the performance of his competitors, other firms in

his branch and to theoverall performance of the industry that he is operating in.TheManager can review these financial and production ratios. Where there isastrong deviation from historical patterns, or where the ratios warn about problems inthefuture management intervention may be required.Examples of the Ratios tobe Included in the Decision System

SUE measure deviation of actual profits from expected profits

ROE the return on the adjusted equity capital

Debt to equity ratios

ROA the return on the assets

The financial average

ROS the profit margin on the sales

ATO asset turnover, how efficiently assets are used

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Tax burden and interest burden ratios

Compounded leverage

Sales to fixed assets ratios

Inventory turnover ratios

Days receivable and days payable

Current ratio, quick ratio, interest coverage ratio and other liquidity and coverageratios

Valuation price ratios

And many othersA dec is ion sys tem has great impac t on the pro f i ts

o f the company. I t fo rce s themanagement to rationalize the depreciation,inventory and inflation policies. It warns themanagement against impending crises andproblems in the company. It specially helpsin following areas:a.The management knows exactly how much credit it could take, for how long(for which maturities) and in which interest rate. It has been proven thatwithout proper feedback, managers tend to take too much credit and burdenthe cash flow of their companies.b.

A decision system al lows for careful financial planning and taxplanning. Prof its goup, non cash outlays are controlled, tax liabilities are minimizedand cash flows aremaintained positive throughout.Th e dec is ion sys tem is aninte gral part of f inanci a l mana gement in t he W est. I t iscompletelycompatible with western accounting methods and derives all the data that itneeds frominformation extant in the company.So, th e est ab l is hm en t o f a de ci s io nsyst em does not h inde r the funct ionin g of thecompany in any way anddoes not interfere with the authority and functioning of thefinancialdepartment, but infact helps the manager to take quick decisions andmakeprofit to the company.will have a positive impact at the macro-economic level.Following are the different waysin which company's CSR can be expressed.