Managerial Accounting

Question 1

What are descriptive analytics, and how can they assist a company?

Answer 1

• Involve the interpretation of historical data to better understand changes that have occurred in a business; considers: what has changed?
• can be analyzed using year-over-year changes

Question 2

What are diagnostic analytics and how are they used by a company?

Answer 2

• Focuses on WHY something has happened; they look at the processes and causes instead of the results.
• Can be done through pulling reports, drilling down, queries, etc.

Question 3

What are predictive analytics and how are they used by a company?

Answer 3

• Encompasses a variety of statistical techniques that analyze current and historical facts to make predictions about the future; use patterns found in historical transactional data to identify risks and opportunities
• Predicts trends and behaviors

Question 4

What are operational risks?

Answer 4

• risks that arise from ineffective operations, poor resource management (capital and employee), failed practices/ processes/ due diligence

Examples:
- there is a faculty product on market and they have not addressed
- employee morale is low
- didn’t perform required reconciliation
- unable to pull reports/ review specific items (ie, not knowing what’s going on)
- accounting errors
- significant manual processes
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