Functions of Accounting and Finance Departments and Ratio Analysis of Alpha Limited

BM414 CW1

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
TASK – 1:........................................................................................................................................3
Accounting Department:..............................................................................................................3
Finance Department:....................................................................................................................5
TASK – 2:........................................................................................................................................7
Calculation of ratios of Alpha Limited:.......................................................................................7
Interpretation of the ratios:..........................................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES................................................................................................................................1

INTRODUCTION
Associated British Foods Plc is food processing and retailing company having its
headquarters in London, United Kingdom. Being a multinational brand it needs to have an
extensive accounting and financing departments to carry on its operations efficiently as such
operations will be large scale and very complicated. Therefore, such report contains
information regarding various functions of accounting and financing departments like financial
accounting function, management accounting function, investment function, financing function,
etc. The report also contains accounting ratio analysis and interpretation of Alpha Limited on the
basis of return on capital employed, net profit margin, current ratio, accounts receivable period
and accounts payable period calculated for such a company as per the given data. Accounting
ratios are the comparison between quantitative financial information of an entity to infer some
meaningful relationship between the financial information used and thus, performance of the
business is analysed on the basis of such ratio whether business is showing favourable or
unfavourable indications.
MAIN BODY
TASK – 1:
Accounting and Finance Functions:
Accounting Department:
a. Financial Accounting Function – Functions relating to financial accounting comes
under the purview of the financial accounting function. Such function involves accurate
and in depth disclosure of the financial information of the in the form of financial
statements (Kintonova and et.al., 2019). Such accurate and in depth disclosure will allow
the stakeholders or the users of such financial statements to make decisions on the basis
of such statements regarding investment, divestment, advancing loans, etc. to the entity.
It ensures that financial statements are prepared according to the applicable
financial reporting framework. Associated British Food (ABF - UK) is an international
retail group which needs to follow accounting standards and principles of the countries in
which it operates to render the financial statements useful in the respective country for
the respective stakeholders. Recently, ABF presented its interim results on 26/04/2022
for the 24 weeks ended 5 March 2022.

b. Management Accounting function – Management Accounting Function as the name
suggests is the function responsible for the management accounting of the entity. Such
information under management accounting is utilized by the managers to manage the
operations of the entity effectively and efficiently and thus be able to make wise business
decision without any risk of error or inefficiency (Ascani, Ciccola and Chiucchi, 2021). It
is to be noted that management accounting function will vary from entity to entity as
management composition is different for each and every entity along with cultural
diversity of the people working in the entity.
Management accounting function involved analysis of financial as well as non –
financial data to render better decision making in terms of both quantitative and non –
quantitative aspects of the entity (Rikhardsson and Yigitbasioglu, 2018). Associated
British Food (ABF – UK) also requires such management accounting function to manage
its retail business along with the food and ingredients business.
c. Tax Function – It involves calculation of taxable income of the entity, calculation of
taxes, payment of taxes, setting aside the funds for the payment of taxes, preparation of
tax returns, responding to the notices and demands of the tax department, etc.
(Accounting and Finance: Why Is It Important to Your Business? 2022). Naturally, there
are number of types of taxes applicable on an entity like corporate taxes, dividend
distribution taxes, goods and services taxes, property taxes, income taxes, sales taxes, etc.
and thus, efficient management of the all the taxes as mentioned above is the
responsibility of the tax function of the accounting department.
Also, changes in the tax laws and applicable tax regulations are to be carefully
assessed for their impact on the entity’s calculation of the taxable income of the entity,
taxed to be paid on such taxable income and resultant funds required for such payment.
Associated British Food (ABF – UK) needs to manage its day to day tax functions it
needs to keep in mind its tax compliance and risk associated with such legal compliances.
Material transactions shall be managed for their tax effects.