Business Finance and Economics: Importance of Accounting, Financial Statements, and Management Accounting

Business Finance
&
Economics

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK ..............................................................................................................................................3
1. Explanation about the main determinants of macro or micro economic factors to showcase
the business performance in impact with the competitive environment.....................................3
2. Defining the importance of accounting within an organisation with respect to both reporting
and decision-making...................................................................................................................4
3. Difference between the main financial statements and explain the layout & terms used
within the Statement....................................................................................................................6
4. Evaluate & Interpret the following ratios by using balance sheet and income statement:......8
5. Explain management accounting and discuss its importance for planning, controlling and
decision-making within an organisation.....................................................................................9
CONCLUSION .............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Organization finance and economies are the interlinkage between the financial and
economical criteria. Financing is focused upon the accounting system and economies is centred
on the assumptions which basis on the outcome of companies relative formulation(Aisy,
Mulyono and Susilowati, 2017). The company is also showing the different factors of economy
which will put down impact upon its competitive advantages. The company is also showing it
roles & importance over the accounting per-forma and management accounting with the proper
layout and calculation of resources of the major financial statements.
TASK
1. Explanation about the main determinants of macro or micro economic factors to showcase the
business performance in impact with the competitive environment.
Organisation is performing based upon various inclusion of the components in the
marketplace either with positive or negative impact. This supposed to be in the
controllable or uncontrollable environment for influential decision-making power. The
major determining factors in regards with firm performance are as follows:
1. Customers: Business has inclination of the large scaling individuals which can be B2B,
B2C, domestic or global recognized. They are majorly impacted upon the running
concern by taking their decisions of purchasing from the outside world. These are the
micro-economic factor because it can be controllable in nature by fulfilling their taste &
preferences without delay.
2. Suppliers: This determinant is consisting the control nature in the market-area to
establish their identification with various business. If supplier-person is setting up the
monopoly in the field by covering largest area, they can brought up impact upon the
performance of enterprise(Arnold, 2018). Because their products & services become core
and necessary for the business entity.
3. Demographics: This is the concept of considering various segmenting & targeting
market strategies which includes the age, region, culture, lifestyle and other factorization.
If the company is choosing right target market with different allocation strategy, this
means they are in the block of stable performance.

4. Political: Every business are under the eye-lock of the governmental & political power,
rules & regulation to legally optimize and running the enterprises in the smooth manner.
If entity is also not properly follows these cautions and obligations, this means they are
infringing the laws. This is showing the negative impact on the business performing
activity.
Economic Factors that affects competitive environment:
These facets having connection with the goods, services and cash-movement. This
determinants are showing the financial status of the company (Bikfalvi, 2017). These includes
some of the major objectives of the scenario which are:
1. Interest rate: It is vary from place-to-place along with individuals. These ratings amount
specially shown in the banking institutions for different transactions on money movement
for large loans for domestic as well as global companies. These type of rates for various
nations are impactful for its competitive benefit.
2. Exchange values: This scaling is based upon the export & import dealings fluctuation in
the market. It is focused on the present timing rates of transactions. Any kind of changing
values at the time of exporting & importing will directly affect the company's competitive
advantages because of high & low amounting in the marketplace.
3. Recession: It has the potentiality to change the buying behaviour of the customers based
on their demanding & supplying. If recession increases, companies have to drop out their
pricing level. It become highly impacted positive or negatively upon the beneficiary area
of the organization (Birch, 2017).
2. Defining the importance of accounting within an organisation with respect to both reporting
and decision-making.
Accounting system is using for the measurement and summarization of the monetary
funding. It is helpful for taking beneficiary judgements and to make improvement in the financial
positioning in the system by doing better placements of given information. Business also
recorded their data in the Statement of financial position and income portfolio. This reporting of