Financial Decision Making: Framework, Interpretation, and Evaluation

FINANCIAL
DECISION MAKING

Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Framework of accounting and the finance department in a company.........................................3
TASK 2............................................................................................................................................7
Interpretation of financial statements and their evaluation..........................................................7
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
In a business, financial decision making play an important role as it use various approaches
of business for the decision making purpose. In the era of stiff competition it is essential for a
company to make healthy financial decisions which are related to the business in order to survive
at the marketplace (Grable, and et. al., 2020). In the recent times, accounting companies should
also verify that nearly everyone around the business understands how to make smart choices
based on such philosophies. In this report example of Skanska PLC is taken into consideration
for better understanding the financial decision making and accounting related activities. Skanska
PLC is a British building company which is based in the United Kingdom. In the coming two
weeks, the company is about to expand its operational activities in Europe. The company must
access the current market scenario in Europe to facilitate its decision making in the market. In
this report several aspects which are related to financial activities, monitoring and different roles
in Skanska PLC will be examined in this report. In this report, the ratio calculation will be also
performed in order to calculate financial productivity and calculations related to the market.
TASK 1
Framework of accounting and the finance department in a company
In every business financial management is very much important because it states the
current financial position of the company as well as it also deals with the record of all monetary
transactions. It is possible to make a business cost effective in the market with the help of
financial management. In a business the capital and allocation of funds can be rightly judged
with the help of professional financial management. In the corporate organisations, accounting
plays a major role by recording all the necessary transactions related to a business. It is essential
for Skanska PLC to deploy a professional finance and accounting department in order to
effectively perform all the transactions related to the company. It is important in accounting of a
company to consider variety of filing, cost accrual, pay and revenue documentation, and
accounting principles. Records, documents, feedback, detailed resource estimates, loans, interest,
and profitability in order to gain competitive advantage at the marketplace. The financial
department of Skanska PLC should perform financial operations with auditing and practical
accounting tools in order to effectively perform all the functions.
Accounting department’s importance

In Skanska PLC, financial department play a key role in maintaining all the accounts related
activities in a precise manner. The transactions which are performed by the business are essential
to be maintained with optimum efficiency. The accounting department of Skanska PLC keeps a
good monitoring and supervision on all the major financial transactions which are performed in
the business. Accounting department of Skanska PLC has several employees who are active and
professionally trained in order to effectively maintain all the necessary transactions with
accuracy (Leshchenko, 2018). The allocation of funds is done in a business with a great hope
thus it is essential for a business to keep an eye on all the financial transactions. It is the major
responsibility of accounting department to effectively manage all the transactions which are
performed by Skanska PLC throughout the year.
The accounting is precious in a business because it helps in the accurate recording of all
types of dealings and assures that now the limited partnership conducts payments in a fair
manner. It is recommended for Skanska PLC that it must really be sufficient to retain
detailed reports of commercial activities by monitoring, and also increase the quality and
integrity of information usage. The importance of accounting for Skanska PLC is mentioned
below:
 Decision making- Accounting in a business helps and facilitates all the major
interest holders with the formulation of effective decisions. The accounting
department keeps a systemic record of all the major financial transactions in the
business. A business majorly accesses the financial value of major transactions and
facilitates decision making in the business. It is major responsibility of accounts
department to precisely formulate strategic decisions with the help of accounting
related operations. The major decision making of Skanska PLC is affected by the
nature of accounting transactions in a major sense.
 Maintains systematic record- It is important to maintain systematic record of all
the transactions which are related to the business. With the application of accounting
it is possible to maintain a systematic and proper record of all the transactions. The
accounting helps in a detailed book keeping activity which essentially maintains the
monetary value of all the transactions which are associated with the business. In the
business of Skanska PLC, it is important for the account to maintain successful
record of all the transactions which are performed during the financial year. A large