Business Finance and Economics: Factors Affecting Business Performance, Accounting Significance, Financial Statements, Ratios for XYZ Plc, and Importance of Management Accounting

Business Finance and
Economics

Contents
Introduction.........................................................................................................................................3
Task......................................................................................................................................................3
Discuss the external and internal factors of business performance and differentiate whether they are
micro- or macroeconomic..................................................................................................................3
Elaborate the significance of accounting in decision- making within a business...............................4
Discriminate between the main financial statement and describe the format and terms used in each
report.................................................................................................................................................5
Compute the ratios for XYZ Plc for the ending year march31, 2019 and 2020 sequentially.............6
Explain management accounting and elucidate its importance in planning, control and decision
making within a business enterprise..................................................................................................7
CONCLUSION....................................................................................................................................8
References..........................................................................................................................................10

Introduction
This report looks into the determinants that impacts the results of XYZ Plc company.
Along with this, it also gives a valuable insight on the importance of financial accounts in the
decision-making process. In addition to this, it contains the explanation of different parts of
financial statements and their differences. Moreover, this report encompasses the numerical
data on the different kind of ratio with their interpretations and it also includes the discussion
on the managerial accounting and its benefits in the field of planning, controlling and
decision- making.
Task
1.Discuss the external and internal factors of business performance and differentiate whether
they are micro- or macroeconomic.
The accomplishments and achievements of any organization is grounded on how
efficiently and effectively the business enterprise is handling its functioning, operations, and
utilization of resources and money that they have used for the different purpose in a firm
(Malm, and Sah., 2018) . The company’s functions are performed by analyzing both the
factors i.e., the internal as well as the external as these factors can have direct or indirect
influence on the working of a firm. By interpretation of such elements a firm can get an idea
on the customers needs and preferences. These determinants can be controlled and sometimes
could not be by XYZ Plc.
Below mentioned are the aspects that impacts the performance of a company.
 Competition in market: If the company is not doing something in a unique way, then
it will always have to face the rivalry from the other businesses. Because there are
many existing enterprises that are dealing with the same kind of products and
services. The competencies between the companies and market fights will have an
impact on the business. Organization must come up with something different to stand
in a market for long run and have a close look on what its rivalries are bringing on the
table.
 Advancement and development in technology: For bringing the upgradation in the
business a company must adopt the new methods and techniques. As there are other
organizations that are improving their firms by adopting such changes. XYZ Plc.

Company shall use the mechanism and tools in its firm that are totally new and
advanced in order to gain cost effective advantages against the competencies in
accordance to the cost of commodities and services.
 Suppliers and creditors: These play a major role in the day-to-day activities of a
business concern (Cumming., Johan and Zhang., 2019). The suppliers and creditors
are known as the backbone for any firm because they provide material and credit
facilities to the company. An organization works smoothly and it happens due to the
contributions that they make for any company. For this a business must make sure
that they pay the best price to its suppliers and repay its loan on time so that the
relations can be maintained. A company needs to have good amount of working
capital for this purpose.
 Consumers: These people are the foundation stone for any business and the biggest
assets for any company. The business enterprise shall understand and observe the
needs and preferences of the customers for attracting sales from them. In this case,
XYZ Plc. has made an expansion in the firm on the big level. It is dealing in both B2B
and B2C model, this will help to extend its sales operations across the globe. So, it
should have good understanding of its customer base to bring the positive effects in its
performance.
2.) Elaborate the significance of accounting in decision- making within a business.
Accounting is the procedure used by the business for keeping the systematic-record of
its day-to-day transactions that takes place in a company. It assists recording and observing
the financial performance of a company. It is very important for any business enterprise to
avoid errors and omissions.
Role of accounting:
Accounting has a significant role in any business concern, because it aids the firm to keep
track of its expenditure and income, losses and profits. It also helps the business in getting the
final result on the position of assets and liabilities by preparing the financial statements.
Importance of Accounting in the decision- making process is given below-
 Assists in making the reliable and faster decisions- A company can decide in an
appropriate manner as it can interpret the income statements, cash flow statements