1. DIVISION OF QUANTITATIVE METHODS SAMPLE SCENARIO 1

2. LEARNING OBJECTIVES  Using of information systems aiming at consolidated cash flow of an organization having operations geographically distributed nationwide or worldwide.  Adaptation of auditing logic in an information system for a company.  What are the data and data types?  What is the difference between information and data?

3. LEARNING OBJECTIVES (Cont.)  Data structure related to financial cash flow statement and how it is represented as the summary of transactions realized in an organization.  Structuring, saving, mining, using, and updating of data in terms of data processing.  Types of data structuring

4.  Data flow between departments for tracing cash flow  Flow timing (real time on-line / periodic on-line) in data processing for processing transactions (cash flows related)  Understanding of the involvement of the management, organization, and technology in creation of a successful IT system. LEARNING OBJECTIVES (Cont.)

5.  Networking computers for EDI (electronic data interchange) inside the organization and searching, transferring, sharing, updating, and using data globally over networks such as Internet, Intranets, and Extranets for recording the operations’ results, understanding the problems, solving problems, making decisions, managing organizations, and collaboration for all kind of requirements as design, idea generation etc. LEARNING OBJECTIVES (Cont.)

6. STAGE 1: CONSOLIDATION OF CASH FLOW STATEMENTS OF ABC COMPANY ABC Company is running a supermarket chain having sixty branches in five different regions of Turkey. Daily transactions are happening in cash, credit cards, and individual-firm cheques in branches and the headquarter. Some of the transactions’ related payments are paid by branch finance department (from Petty cash ) in terms of hard cash and cheques.

7. The procurements have been made by headquarter purchasing department based on contracts made between suppliers and ABC company even though not all the products ordered delivered to the central depot which trasfers the goods to branches based on their demand and general promotions held company wide. Finance department of the company in the headquarter is making major account payments in terms of bank transfers, electronic fund transfers, and cheques.

8. For realizing this operation, every morning consolidated daily cash flow statement should be generated in order for meeting the daily cash requirements of the company by the finance department. Each branch has its own computer networked system for keeping up the stock levels of goods, and cash flows for preparing the cahsh flow statement of the branch, but branch systems are not connected to the headquarter computer system and also to each other for ordering from central depot, transfer cash flow statements, and making stock transfers between branches.

9. Because of the financial diffculties in terms of payments, a capable new manager is hired by the company for handling the cash flow problems recently encountered. As the first request, the financial manager tries to obtain a consolidated cash flow statements of the branches including headquarter financial cash flow statement. This request announced to branches as the first duty of the branch manager every morning that previous day operation results related to cash flow statement should be transferred to headquarter finance department where they will be consolidated in order to get financial control over cash flow of the company.

10. Despite of this request, still the financial manager cannot obtain the financial cash flow statement at the right time, accurately, and completely. If he gets the cash flow statement accurately and completely, he cannot access it in desired time. Because of this, excess daily cash need is satisfied through bank credit which costs to the company even though some form of cash exists at branches. Recently, this cost is found as 10% of the general expenses and this is considered very high by the top executive management.

11. The finance manager is asked to reduce this cost as soon as possible. He has been authorized for making necessary search and incurring the related expenses.

12. Discussion Questions:  (individual) If you are the finance manager, how can you approach this problem?  (team) How can IT technologies be used for handling this problem?

13. STAGE 2: IT manager has been advised by one of his friends to hire a consulting firm for solving this problem. Based on the consulting firm study in the headquarter and branches, using a completely networked financial control system of operations with proper transfer and consolidation software is advised. Using this system, branches’ previous day financial results are expected to be transferred to the headquarter financial system automatically for consolidation.

14. The consulting firm has also completed and handed in the necessary system analysis of the existing system that has a number of shortcomings and a full functioning new system that is advised to be developed. Delivered system analysis related documents that were prepared based on the standard analysis of documentation including system requirements plan are also submitted to the financial manager. By using these documents and help of the company’s system analysts the financial manager gave a presentation to the top management about what he will do.

15. Discussion Questions:  (Individual) Do you think this complete networking of the financial systems of branches and headquarter can solve the organization’s financial (cash flow control) problem?  (Team) In addition to using proper IT technologies for collecting, summarizing, and transferring cash flow related information to the headquarter what other kinds of considerations should be taken into account?

16. Discussion Questions:  (Individual/Team) If you are the financial manager, what type of documentation you are expecting as the system analysis and design related documents and based on the submitted analysis and prospect system related documentation can you be sure this system works very well for handling the problem?

17. TAKE YOUR TIME AND ENJOY BY PARTICIPATING IN THE TEAM