Importance of Finance and Accounting Department in C&D Logistik LTD

This article discusses the importance of the finance and accounting department in C&D Logistik LTD, including the role of financial accounting, management accounting, tax function, auditing function, financing function, investment function, dividend function, and working capital function.

BM414
Financial Decision Making
C&D Logistik LTD
Marian Brandusescu H1809027/21801930

Contents
Main Body..................................................................................................................................2
Task 1:....................................................................................................................................2
Introduction.........................................................................................................................2
SWOT Analysis..................................................................................................................2
Importance of Finance and Accounting department...........................................................4
Task 2.....................................................................................................................................6
Financial ratios....................................................................................................................6
Conclusion..................................................................................................................................8
References................................................................................................................................10

Main Body
Task 1:
Introduction
C&D Logistik LTD is a growing company that provide the all type of freight on all types of
equipment throughout UK and around the world. It is founded in the year 1999 by Cristian
and Daniela in UK. The company provide the services to small, medium and large businesses
with a reliable way to move freight. It has the experts who have experience of 15 years in
logistics and freight shipping services. The company has 200 employees who help to grow
the business (D& B Hoovers, 2019). The company have large network of logistic experts that
directly the optimisation of supply chain by developing and implementing a customised
transportation solution. The annual revenue of the company is £2319.32 as per the annual
report. The company grow with the rate of 30% annually by focuses on providing the best
client care and customer services in the industry. It uses the 30000 different sources that
includes the primary sources which helps to update the data over 5 million time per day (D&
B Hoovers, 2019).
SWOT Analysis
Strength
 It has been seen that the company has large number of network in the different
location throughout UK. Large number of network is strength factor for the
organisation that helps to satisfy the consumers need and demands.
 The end to end logistics services of the company through air, rail, road, and sea. End
to end logistics are the other strength for the organisation that provides the services

from air, buses and many others. Human Resource of the organisation is also strength
because they help to achieve the objective. The employees of C&D Logistik LTD
have 15 years of experience that helps to solve the problem and satisfy the customer
at the high rate. It has 200 employees approx. that are highly qualified and dedicated
towards their work due to which the organisation continuously with 30% annually
(C& D Logistics., 2019).
Weakness
 There are large numbers of companies who provides the similar services to consumers
with the more facilities due to which the company face the high competition. The
company has less brand image in the market as compare to its competitors. It is a
difficult of the company to beat the exiting companies and gain the competitive
advantage.
 The limited brand presence is other weakness of the organisation. The growth of the
organisation also depends on its presence. It also has less presence at online platform
as compare to its competitors due to which it growing with the less rate such as 30%
(C& D Logistics., 2019).
Opportunities
 As the time passage, the technology is developed due to which the organisation has
the opportunity to grab the market share through online platform. Nowadays, it is easy
to show their presence at the online platform. The company also has the opportunity
to grab the market share by show their presence at the global rate.
It is observed that the organisation also has the opportunity to gain the competitive advantage
by adopting the new strategies and techniques.

Threat
 It has been seen that the company has high threat of its competitors due to high brand
image of existing companies in the market.
 The company expand its business in 3 more regions due to which it has to follows the
rules and regulation of this region (C& D Logistics., 2019). It is essential for the
company to follows the different rules and regulation as per the region. It can be said
that the company has threat of long term survival by implementing the different rules
and regulation.
Importance of Finance and Accounting department
Accounting department
Financial accounting
The process of recording, summarising and reporting the company transaction in order to
evaluate the financial position is called financial accounting. It is essential for the
organisation for maintaining the books to provide the information to outsiders and
stakeholders. It also helps to compare the data from previous year to evaluate the growth of
the organisation. As the company is expanding their business in 3 more regions due to which
or is essential for it to maintain the books so that it can calculate the profit and loss in
different locations. The chances of fraud are reducing by comparing and summarising the
financial data of the organisation (Robinson, Henry, Pirie, and Broihahn, 2015).
Income statement

(Source: The Wall Street Journal, 2019).

Balance Sheet
(Source: The Wall Street Journal, 2019).
Management accounting
It is the process of identifying, analysing, interpreting, measuring, and communicating
information. It helps the organisation to make decision towards the organisation regarding
accounting information. As the organisation have the main responsibility to spread its large
network across its nation that is why, managerial accounting is essential for interpreting,

measuring and communicating (Mowen, Hansen, and Heitger, 2016). It helps the manager of
the organisation to take the decision regarding expansion of business.
The company develop the plan to prepare the budget report to operate smooth in the market.
The company can analyse the performance by altering and auditing the accounts. It decided
to maintain the proper accounts so that they cannot face any issue.
Tax Function
Tax function defines the social responsibilities in terms of distribution and redistribution of
characteristics of taxes. The functions of taxes are fiscal, allocation, regulatory, controlling
and incentive. These functions help to build the social image and maintain the relationship
with government. As the company have less brand image in the market that is why; it is
essential for the organisation to maintain strong relationship with the government in order to
expand the business at large extent (Kim, and Im, 2017).
(Source: The Wall Street Journal, 2019).
Auditing function
Alteration of the books in order to ensure the financial statements is accurate and truthful. It
helps to reduce the chance of fraud and cheating in the organisation. The maintenance of
books also helps to ensure the mistake that can affects the growth of an organisation. The
organisations implement this process in order to audit the books so that it reduces the
mistakes that can be happened while preparing the financial accounts. As per the
organisation, it is necessary to evaluate the funds in order to provide the loan and effective
services to organisation (Marriott, Edwards, and Mellett, 2002).

Finance department:
Financing function
It is important for evaluating the acquiring and utilisation of funds that is necessary for
efficient operations. The evaluation of funds is required to identify the source of finance,
investment and need of finance. It is required for the organisation to evaluate the funds for
expansion the business or buying new devices for transporting goods.
Loan
(Source: The Wall Street Journal, 2019).
Equity
(Source: The Wall Street Journal, 2019).
In 2018, the company has 54418 as the total equity.
Investment function
The function of investment is required for the organisation to utilise the funds in a proper
manner (Hall, 2015). It has been seen that the investment function is necessary for the
organisation to evaluate the right place in terms of buying instrument.
Investment appraisal
Investment appraisal is a collection of techniques which is used to determine the
attractiveness of an investment.

NPV
Net present value in the investment function defines the difference between the present value
of cash inflow and the present value of cash outflow.
ARR
It is the percentage rate of return which is expected on an investment or asset as compare to
the initial investment cost.
IRR
It is a metric method which is used in capital budgeting to estimate the profitability of
potential investment.
Payback method
The payback period method refers to the amount of time in which the cost of an investment is
covered.
Investment figure of the company
(Source: The Wall Street Journal, 2019).
Dividend function

This function is essential to evaluate the return amount given to shareholders. It has been seen
that the organisation utilises this function in order to maintain the strong relation with the
shareholders.
The cash dividend of the company is 5.0 per 10 shares (tax included)
Working capital function
The capital which is required to maintain the operating activities of the organisation is called
working capital function (Marley, and Pedersen, 2015). It is necessary for the organisation to
evaluate the working capital for its effective transportation services.
Assets and Liabilities
The total asset of the company is 217454 in the year 2018 and liabilities of the company are
163,011.
Working Capital
The working capital of the company is 54443 as the asset of the company is 21745 and the
current liability of the company is 163011. By deducting the current asset from current
liabilities and the result is working capital 54443.
Task 2
Financial Ratio
Analysis Alpha Limited

2017 2018
Return on Capital
employed Operating profit 300 262.5
Total asset- current
liabilities
2235-
322.50 19.6
4035-
1110 14.1
Net profit Ratio Net Profit 300 262.5
Net sales 2400 12.5 3000 8.75
Current Ratio current assets 757 1035
current liabilities 322.5 2.34 1110 0.93
Average Receivable
days Receivables 450 600
sales /365 2400/365 68 days
3000/36
5 73 days
Average Payable days Payables 285 1050
Purchase/365 1350/365 77 days
2400/36
5
160
days
Financial ratios
Return on capital employed

ROCE is a profitability ratio that indicates the ability of an organisation to generate profit
from its capital. It has been seen that the organisation has 19.60% percentage in the year 2017
and in the year 2018, 14.10% is the percentage of 2018. It is observed that the company ratio
is decreases which state that the company cannot utilise its assets in an effective manner. It is
recommended that the organisation has to invest the amount of fixed asset in an appropriate
manner so that the excess amount of money invests in a right way (Accounting Tools, 2018).
Net profit margin
Net profit margin is also a profitability ratio that can be determined by dividing net income
by net sales. It indicates that the amount of net income which is generated the total sales. As
per the analysis, it is observed that organisation has 12.50% of net margin profit in the year
2017 but in the year, it is reducing and reached at the 8.75%. The decreasing rate of ratio
indicates that the organisation is not effective in converting sales into actual profit. It is
observed that the sales of the organisation are increase in two years such as 2400 in 2017 and
3000 in 2018 but the net profit is decreases with the difference of 42.50. The reason behind
decreasing the ratio is that the company spent the large amount on expenses and cost of goods
sold due to which the amount of profit is reduces (Adelaja, 2015). The company can improve
its net margin by reducing the expenses and raises the price of selling product.
Current ratio

The current ratio is a liquidity ratio that indicates the ability of an organisation to pay short-
term obligation within a year. In the year 2017, the current ratio of the organisation is 2.34
and in the year 2018, it becomes to 0.93. It states that the current asset of the organisation is
able to recover the current liabilities but as per the ratio of 2018, it has been evaluated that the
current asset if equal to current liabilities due to which it is difficult to recover the amount of
liabilities. It is observed that the increasing short term asset and decreasing current asset is the
main reason behind decreasing the current ratio. It is recommended that the organisation has
to pay the current liabilities as early as possible in order to reduce the amount of current
liability. The company has to increases the selling price of product and services in order to
increases the amount of cash.
Average Receivable days/Debtors collection period
The average collection period is the ratio which helps to evaluate the average number of days
in which the credit sales were received and the date the credit sales were made. It indicates
the ability of an organisation to collect its accounts receivable. In the year 2017, the company
can receive its debts in 68 days but in 2018, it receives the amount of credit in 73 days. It
indicates that the efficiency of an organisation is reduces to receive the credit amount in short
time. The reason behind lowering the receivable days in that the organisation is its careless
and setting the large days to receive the bills of credit amount. It is recommended that the
organisation has to compare the average collection period to credit amount while setting the
date (Joyner, 2019)
Average Payable days/Creditors collection period

Creditor’s collection period is the method of evaluating the days in which the organisation
has to pay the amount to its creditors. It indicates the efficiency of an organisation in order to
pay off its liabilities. It is observed that in 77 days the organisation paid their credit amount in
the year 2017 and in 2018, it pays the amount in 160 days. The asset amount of the
organisation is decreases to current liabilities which indicate that it is difficult to pay the
credit amount in minimum days. The company has to invest their profits in assets and
increases the amount of cash(Pitluck, Mattioli, and Souleles, 2018).
Conclusion
As per the discussion in task 1, it is observed that the accounting department and financing
department function is important for the organisation. The SWOT Analysis is also used in
this report in order to analyse the internal and external environment of C & D Logistik. In
task 2, the ratio analysis of the Alpha limited is done in order to evaluate the financial
position of the organisation. As per the analysis, it is recommended that the Camden Limited
cannot provide the loan to the company as its profitability ratio is decreases. The current ratio
of the organisation is also indicating that the company does not have the capacity to
overcome its liabilities. In the year 2018, the liabilities of the organisation are more as
compare to the current assets which states that the financial position is not stable that is why;
it is suggested that the organisation cannot granted the loan to Alpha Limited.

References
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