The position of the financial analyst in the corporate structure and the scope of his or her work are interdependent. The financial analyst is a staff member who diagnoses the effects of management proposals and/or decisions on the financial health of the firm. Acting as an internal consultant, the financial analyst examines profitability, cash flows, and operations; conducts studies; interprets information; and designs financial controls. Although some of this analysis is focused entirely within the firm, the analyst also must examine the dynamic economic, social, political, and competitive environments that are external to the firm, in an attempt to gauge their impact on the firmís well-being. This information is used to assist in the process of financial planning and forecasting. The analyst provides this information as input for upper-level managementís decisions; generally, he or she does not set policy or make decisions. Major decisions are made by top management, which may include the CFO and treasurer of the firm. In addition, the financial analyst must perform many tasks on a periodic basis. These activities include analyzing the companyís liquidity and profitability and supervising its day-to-day financial operations, including accounts receivable, accounts payable, and cash balances. The analyst must also contribute to longer term projects by analyzing the firmís capital structure and major investment alternatives. The analyst also completes specific projects that are either self-initiated or, more commonly, requested by others. For example, if the analyst notices a market variation from a normal financial ratio, he or she may try to determine the underlying cause of the variation and report it to management as part of the control function. Also, the analyst may examine the effect of a current economic force on the company, such as how a tax policy change might affect the firmís cash flows and stock value. The financial analyst may assist operations management in determining whether to lease or purchase a specific asset. Some problem analyses are critical to the success of the entire company, such as the decision whether to expand or sell off one of the operating division; others are as commonplace as deciding whether to purchase Treasury bills or certificates of deposit (CDs) with surplus cash. Within the companyís organization structure, the position of financial analyst may be centralized or decentralized or have elements of both. Centralizing the analyst function places it at corporate headquarters, separate from the operational units for which it performs most of its analyses. Decentralizing the position places analysts in each of the firmís divisions to do division-specific work. Centralization allows the firm to pool expertise, promote interaction among the analysts, and maintain objectivity, as the analysis views a divisional issue from a companywide point of view consistent with the firmís overall strategy. However, certain circumstances create advantages for a decentralized financial analyst function. A decentralized organization is useful: (1) when the analystís role is to advise the operating manager, who has some independence to make division-level decisions; (2) when the operations of the division are complex and the analyst must possess specialized expertise to make useful recommendations; and (3) when the larger firm is really a holding company for different, independent organization (e.g., one corporation may operate a banking division, another may run an insurance division, and so on).