Advance Finance for Decision Making

ADVANCE
FINANCE FOR
DECISION MAKING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................5
1.4 Summarize the financial priorities that need to be considered when making financial
decisions......................................................................................................................................7
SECTION 2......................................................................................................................................8
2.1- The method of cash focuses on the instant identification on the expenses and revenues
while accrual basis focuses on forecasting of incomes and expenses.........................................8
2.2- explain the structure and content of final accounts and their uses for business decision
making.........................................................................................................................................9
3- Statements of cash flow........................................................................................................10
2.3 interpret the financial information in the financial statements you have obtained and
illustrate differences between the sets of accounts...................................................................10
2.4..............................................................................................................................................11
2.5 Financial analysis of Morrison and also suggesting the u8efulness of ratios analysis in
decision making........................................................................................................................13
SECTION 3....................................................................................................................................14
5.1 Difference between business ethics, corporate governance and accounting ethics as
controls on business accountability...........................................................................................14
5.2 Assessing the role of the finance director/chief financial officer as a guardian of business
ethics.........................................................................................................................................14
5.3 Analysing the key concepts and principles of corporate governance that may impact on
business decisions.....................................................................................................................15
5.4 Examining key national and international financial reporting standards that are relevant to
business decisions.....................................................................................................................16
Requirement...................................................................................................................................17
3.4 Critically examine techniques needed to manage cash flow and the impact of cash flow on
key business decisions..............................................................................................................19
SECTION 5....................................................................................................................................21
4.1 Financial implication made by various business ownership structure................................21
4.2 Analysing the corporate governance, legal and regulatory environment............................21

4.3 Interest of stakeholders and managers in decision making.................................................22
4.4 Evaluating the significant return on capital employed as well as managing long term
solvency....................................................................................................................................22
4.5 Importance of EPS in measuring business performance.....................................................22
CONCLUSION..............................................................................................................................22
REFERENCES..............................................................................................................................23

INTRODUCTION
Implicating the advance finance for decision making will be helpful and adequate as per
analysing and making the appropriate decisions which will be relevant with the operations of the
business. In the present report there will be discussion based on various operational techniques,
budgeting methods etc. which will be helpful in meeting the level of revenue and structural
capital. Analysing the various outcomes which are comprised of making qualitative changes in
various operations which will be helpful and adequate as per meeting the goals and stabilising
the firm in ascertaining the financial requirement. The suggestion will be provided to the
professionals working in various organization as per controlling the costs as well as managing
the operations of firm.
SECTION1
1.1 Examine and Explain the factor that guide and drive business decision-making.
Decision making is one of the most important function in an organization. Every operation in a
company needs a decision on the working of the company. Decision-making is the crucial task
for the management, there are many factors which effect and influence the decision making in
the present and future. Some of these factors are:◦ Return On Investment: it is one of the main factor that influence the decision making
process in any organization. Considering the factor of profitability of the company at the
time of decision making is very important. Return on investment is the difference
between in the money which a company invest in different activities in the business like
marketing, operations , inventory etc. and the actual return a business is getting (Nash,
2018). By estimating the return on investment it is very east to decide for the business
weather the potential returns justifies the expenses and risks involved in creating
implementing different activity plan business.◦ Image and Brand Management: Decisions on where to advertise and sell and at what
price the product is to be sold, the social activities a company engaged in have a huge
impact o the brand image of the company. Brand image of the company focuses on public
perception and intangible gains for the company. At the time of making decisions ,
concerning about public perception can influence decisions about product, sponsorship
and public relation campaigns. Brand awareness can influence the sessions regarding
pricing, marketing and displaying products and services.

◦ Opportunity cost: decision on making involves the best use of available resources which
involves the decision of choosing best alternatives between two or more options. An
opportunity cost trade off is an influencing factor in these type of decisions (Libby,
2017). what a business gets by choosing one alternative over another and what a business
has to give up is the trade off decision of a company.
1.2 Assess the significance of financial factors in business decision-making.
In decision-making process of any organization, finance is very important factor. It Is
the basic requirement for any activity in the business. Based on the revenue and outflow of
the business many decisions is taken. The significance of financial factor in business
decision-making are: Personnel: Labor is one of the most important costs for a business which it securely
sustains. Each employee in the company represents a significant dedicated cost, which it
expects a return on investment while hiring the employees. The cost of an employee is
considered as an investment in growth and revenue of the business, hiring more
employees is considered as business expansion and growth of companies capabilities.
When finance of the company allows, companies may take the personnel related risk to
achieve growth. Growth: any company wants to grow to increase revenues, margins and profits. The
financial position of the company is to be calculated in order to grow the size of
business, market, to ascertain risk management and ownership (Klychova and et.al.,
2015). Available capital includes cash in hand, available credits and investment capital is
the main resources for the growth of the company. Cost cutting: the company has to make decisions to cut the cost in order to preserve the
profit margins if the finance resources is not up-to the mark. If the revenue of the
company is decreasing, it may lead the company to become tighter on its various
activities like purchasing, training and equipment, travel expenses etc.
1.3 Identify the characteristics of business risks that impact on financial and business decisions.
Any difficulties in business and financial and operational activity in business can leads to
the possibilities of the business risk and uncertainties. Each risk carries different implications for
business owner to overcome. Financial and economic condition can also effect the financial and

business decision of the company. The business risk that will effect the financial and business
decision are: Market fluctuations: the fluctuations in the demand and supply of the product in the
market can effect both financial and business decisions. With the decline in the demand
of the product, the decision regarding operational management will be effected, as well as
the financial decision regarding the increase in production and inventory amount will be
effected. market fluctuation leads to worsened the gross margins and profitability which
leads the management to change the business decisions. Fluctuations in foreign currency and interest rates:since the cost and the value of assets
and debts of business operation are influenced by the fluctuations in interest rates or
currency rates in market, it will affect the financial condition of the business (Heitzman
and Huang, 2018). The business, than has to make new decisions regarding sales volume
and material volume in foreign currencies.
 Competition: More the competition in the market more the risk of loosing the customer
for the business. The business has to take new marketing decision to attract the customer.
With the increase in competition in the market, the sells of the product will decrease
which leads the business to reduce its price which will affect the profit margin of the
company.
1.4 Summarize the financial priorities that need to be considered when making financial
decisions.
Before making financial decision, management should ascertain what are the financial
priorities of the company. Financial decisions is a comprehensive financial planning and wealth
management firm that helps high-net-worth business to achieve their financial goals. Financial
goals are made by making the financial priorities. The financial priorities to be considered for
decision making are: Cost control: this measure is used to reduce or control the business expenses. By
identifying and evaluating the business's expenses, management can determine weather
those cost are reasonable and affordable. For this a proper budget should be made, and on
the basis of this budget operation cost could be reduced through methods such as cutting
back,moving to a less expensive plan or changing service providers. Cost control is one