Final answer:
Financial tools used for organizational control include budgets, financial statements, ratios, and audits. Financial awareness assists in strategic planning and goal achievement. These tools are vital but not the sole factors in organizational control.
Step-by-step explanation:
Understanding Financial Tools for Organizational Control
Financial tools are essential mechanisms for exercising control in an organization. Typically employed financial tools include budgets, financial statements (balance sheets, income statements, cash flow statements), financial ratios, and internal audits. Organizations gain control through these financial means by setting financial targets, monitoring performance, making informed decisions, and ensuring compliance with laws and regulations.
Financial awareness is crucial for organizational management as it provides insights into the financial health of the organization, informs strategic decision-making, and contributes to the achievement of the organization's goals. While financial tools are integral to organizational control, they are not the sole determinants; leadership, strategy, and operations also play significant roles.
Shareholders choose company managers through votes at shareholder meetings, banks act as financial intermediaries by lending out deposited funds, and when it comes to capital funding, the choice between borrowing and issuing stock depends on factors like cost of capital, ownership dilution, and financial flexibility.
Overall, financial tools enable organizations to plan for and achieve future financial goals, evaluate investment risks and returns, and make vital decisions regarding borrowing, use of credit, and raising capital.