Strategic Finance for Criminal Justice Organizations  book cover
1st Edition

Strategic Finance for Criminal Justice Organizations

ISBN 9781439892237
Published April 11, 2012 by Routledge
292 Pages 32 B/W Illustrations

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Book Description

Traditionally, the study of financial decision making in law enforcement and criminal justice entities has been approached from the perspective of tax revenues and budgeting that focus only on the past and present. Capital investments of cash flow provide future benefits to all organizations, and among courses in business administration, these notions of long-term financial management are critical to a sound understanding of organizational finance. Strategic Finance for Criminal Justice Organizations examines capital budgeting techniques from a quantitative perspective that targets the strategic future of revenues within the criminal justice and law enforcement sectors.

Explaining capital budgeting concepts through the use of practical examples, this volume discusses:

  • Economics and the use of money as a tool to facilitate the exchange of goods and services
  • Human decision making, impediments to rendering objective decisions, and methods for improving decision objectivity
  • The consequences of making capital budgeting decisions, the concept of risk, and the time value of money
  • The rendering of decisions using the payback time method and the mathematical formula necessary to use it
  • The concept of discounting and decision rules for net present value
  • How to make an internal rate of return financial decision
  • The mathematical formula for the profitability ratio/index method and using it to make financial decisions

In all organizations, it is essential that financial decisions are made through informed insight considering all relevant factors. This volume contributes to improvements of the skills that are required to robustly render beneficial, long-term strategic decisions within the law enforcement and criminal justice environment.

Table of Contents

Introductory Concepts
The Concept of Money
Formative US Transactions
Nineteenth-Century US Transactions
Contemporary US Transactions
Considerations of the Money Concept
Categorization of Decisions
Chronological and Risk Aspects of Decisions
An Integrative Perspective
Models and Simulations
Black Market Decisions
Legal Market Decisions
Integrative Observations
Capital Budgeting Concepts
Concepts of Decisions
Objective Decisions
Impeding Factors
Group Decisions: Cardinality and Groupthink
Bounded Rationality and Satisficing
Decision Style and Capacity
Countering Impediments
Group Dynamics
Nominal Group Technique
Delphi Technique
Systems Approach
Neural Networks
Scenario and Sensitivity Analysis
Integrative Perspective
Financial Management Decisions
The Attributes of Financial Relationships
Methods of Financing Organizations
Bond Debt
Stock Equity
Loans and Credit
Grant Funding
Goodwill and Charitable Funds
Insurance Policies
Confiscation, Seizure, and Forfeiture of Assets
Value-Added Concepts
Contexts of Prisoner Labor
Contexts of Work-Release Programs
Contexts of Recidivism
Integrative Financial Management
Tools of the Trade: Making a Decision
The Time Value of Money
Concepts of Future Value and Present Value
Future Value
Present Value
Considerations of Rate
Determining the Rate Variable
Determining the Time Variable
Comments Regarding the Time Value of Money
Foundational Understanding
Capital Budgeting Methods
It Is Time for Payback: The Payback Time Method
Payback Time Method
Application of the Payback Time Method
Single Investment Initiative
Mutually Exclusive Investment Initiatives
Multiple Capital Investment Initiatives
Discounted Payback Method
A Present for the Present: The Net Present Value Method
Net Present Value (NPV) Method
Application of the NPV Method
Multiple Capital Investment Initiatives
Accepting Multiple Initiatives
Advanced NPV Considerations
How Do We Rate? With the Internal Rate of Return
Internal Rate of Return (IRR) Method
Application of the IRR Method
Accepting Multiple Initiatives
Advanced IRR Considerations
Chapter Comments and Summary
Red or Black? The Profitability Index Method
Profitability Index (PI) Method
Application of the PI Method
Accepting Multiple Initiatives
Advanced PI Considerations
Putting It All Together! Let’s Make a Decision
Accepting Multiple Initiatives
Advanced Capital Budgeting Considerations
Chapter Comments and Summary
Day and Night Shifts: Integrating the Concepts
Benefit–Cost Ratio Concepts
Leasing versus Purchasing Concepts
Scenario Analysis Concepts
Sensitivity Analysis Concepts
Break-Even Analysis Concepts
Complements, Not Competitors
The Slammer: Concluding Remarks

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"The book satisfies the academic need to introduce theory while providing relevant real-world application. It provides a logical progression through the world of organizational financial decision-making, and is geared to the non-finance major. It also provides insight into strategic best practices and is adaptable to audiences at the local, regional, and international levels."
—Ernest C. Fields, Ph.D., in Journal of International Students