Financial information system definition
/What is a Financial Information System?
A financial information system is an organized approach to collecting and interpreting information, which is usually computerized. A well-run financial information system is essential to a business, since managers need the resulting information to make decisions about how to run the organization. This system can be used in many ways, including the following:
Ensure that there are sufficient funds on hand to pay for obligations as they come due for payment
Put excess funds to use in appropriate and reasonably liquid investments
Determine which customers, products, product lines and subsidiaries are the most and least profitable
Locate the bottleneck areas within the business
Determine the maximum amount of funds that can safely be distributed to investors in the form of dividends
Determine the maximum debt load that the organization can sustain
Related AccountingTools Courses
Accounting Procedures Guidebook
Financial Information System Reporting
There are a number of ways in which to extract information from a financial information system, including structured reports that are run on a regular basis, ratio analyses, cash forecasts, and what-if analyses. A report writer module is used to construct the more commonly-used reports, while less frequently used data is downloaded through a query system.