Importance of Accounting and Finance functions in SKANSA PLC

This research study highlights the crucial considerations in accounting and finance functions in SKANSA PLC. It discusses the roles and duties of these functions and their importance in the organization.

Financial Decision Making

Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Importance of Accounting and Finance functions, duties and roles in SKANSA PLC:.............3
TASK 2............................................................................................................................................7
Calculation of of ratios for the company and comment on performance of company................7
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business decision consists of a series of steps or a procedure to assess the advantages and risks
of activities in response to asset utilisation. The key aim of this research study is to highlight all
the crucial considerations that all businesses have to take into consideration in order to extract
useful information on economic activity. Business judgement offers options for optimising the
investment capital necessary to fulfil the goals of the company until a genetic predisposition
factor is met for firm social performance (Valaskova, Bartosova and Kubala, 2019). It presents
the monetary decision approach with both a realistic and metaphysical context. The central
aspects of all business decisions are financing, investments, delivery and management of
networked properties. The current research focuses primarily on SKANSA PLC, that was
established as a UK-based construction business in 1984. A quantitative evaluation of the
organization's financial situation using profitability ratio is protected by the study report.
TASK 1
Importance of Accounting and Finance functions, duties and roles in SKANSA PLC:
All these ideas provide a cumulative essential role for the organisation, which is used to carry out
its operating operations, in order to accomplish organisational targets, finance and economics. It
is understood that the way in which the financial statements of a corporation are recorded,
obtained, categorised and released is the accounting that is needed to make the necessary
strategic decisions. Each organisation must analyse the potential practises and the details which
include the needed information and to track the activities. In the SKANSKA PLC case,
management uses the key functions of both corporate finance to monitor their sector by
calculating both corporation sales and expenses in order to maximise efficiency.
Types of accounting and finance function
Financial planning-This is considered as the key commercial aspect for the organization's fiscal
mitigation and response but also helps to render expenses for this assistance. Leaders are
accountable for applying the financial education process within the SKANSKA Organization by
keeping both organisational and financial transactions into consideration (Rasheed and Siddiqui,
2019).
Managerial Accounting- Which is the system of creation of records, management of operational
and finance procedures and compilation of industry records. SKANSKA administration carries

out these activities in order to assist with successful business decisions thru the compilation of
financial or critical records.
Financial accounting- This requires the storage of accounting records for all expenditures, the
use of the quintuple reporting record system as well as the processing of final reports that are
required to fulfil the various legal standards for record keeping, regarding antibiotic and growth
period.In most early to large businesses, the finance manager, who will generally report to upper
management, is the party responsible for this task.
Supporting the business strategy and making financial policies- The financial main goal is to
create a monetary environment that promotes finance and commercial strategy. In order to fulfil
the goal of the company and have the organisational performance advantages in terms of possible
opportunities, the perfect amount of narrower and lengthier accounting and capital resources
should be made available. All managers have the main duty of generating value, and the
investment officer's key points are to enable them to accomplish this.
Importance of Accounting and finance functions, duties and roles:
Earnings and Spending Monitoring-Accounting finance is a primary business function and
allows one to track accrued or consequently accrued profits and expenditures (Lusardi, 2019).
For the department, identification of costs and management of the intent is important. In the
SKANSKA Company, administration uses operational and finance processes to monitor earnings
and expenditures that help increase productivity.
Sound and efficient business planning-Financial and reporting requirements are required in the
organisation as they seek to build management strategies that can strengthen the operating and
accomplish the goals of the globalized economy. In SKANSKA PLC, repair activities are a big
activity for the numerous organizational functions. In this context, leadership usually focuses on
wealth management, revenue, demand expansion, expected productivity climate and current
inventory interaction aimed at achieving financial advantage.
Allocation of business resources-Distinct actions are conducted out in the company, so
managers need to use accounting & financial elements that allow effective company decide how
to allocate funds to these various events in order to successfully achieve goal. In order to
optimise efficiency and optimal asset use, SKANSKA PLC management use accounting
information to identify and delegate all available marketing plans.

MANAGEMENT AND GENERATION OF FUNDS: Resources are available for the start and
continuity of an enterprise, meaning that organisational managers must determine the
appropriateness of taxpayer resources in required functioning the organization's function
effectively. In this case, they require financial managers to determine the precise need for
funding, to track the allocation of funds inside the company and to recognize the effective
sources of funds. The administration of SKANSKA uses financial reporting processes to monitor
finances accurately, establish the required capital situation of the organization, and figure out the
best way to raise funds wherever necessary.
Revenue Management- For those related to capital or marketable securities, this policy is a
central project introduced by the accounting department (Warmath, Piehlmaier and Robb, 2019).
The methodology of management consulting includes the share of workload that the business
will perform at any predefined timeframe or duration. The Associate Finance Team and Senior
Auditor are in charge of overall taxing operations and management, while every element of the
FA is controlled by the Chief Executive Officer. SKANSKA PLC should have ample sales force
as a construction business in order for any construction project to have the operating income
value. To be precise and less dependent on forecasts, SKANSKA PLC would also require correct
sales forecasting methods.
Investment valuation method - This is guidance and counselling by the Accounting and
Finance Division and is a very useful business strategy. The buyer can use the financial analysis
method to determine the correct option among options as it allows the owner to determine the
outcomes of the portfolios. SKANSKA PLC is a very good construction business that holds an
important portfolio of investments. In way to lure large shareholders and hire potential
customers, the operational and finance departments of SKANSKA need to create successful ads
for financial analysis was conducted in order to include new funding sources and financial
planners in the market.
Establishing the Manuals of Financial Rules and Policies - The key duties of the company’s
value chain are the development of revenue recognition that regulate all business and audit
operations. Such initiatives will ensure that all processes are carried out by the sector
simultaneously and publicly. Since such methods have to be accepted by top leadership, the
accountancy division usually established them. Fiscal plans for financial statements are rules
provided either by accountancy department. Financial accounts are very relevant for SKANSKA,

as they can help the company keep a record of its income. Tracking transactions seem to be the
most valuable things to remember and retain, if losing control on such a money transaction will
destroy the corporation's global financial sector.
Action plan with long-term targets- The organisation intends to improve and develop its
operations to a large degree, and to also follow a mission. To do the same, administrators are
required to devise long-term strategies. But in manufacturing, an effective execution strategy that
integrates finance and business processes and gathers data for this reason will execute a long
plan. In order to support an action plan to achieve lengthier expectations, administrators use
financial details in SKANSKA.
Budgeting-This is one of every corporation's fundamental pillars. This has to be achieved
effectively, as the credibility of the business essentially relies on how efficiently expenditures are
produced (Raissi and Missaoui, 2019). Financial preparation is a core feature of the reporting &
finance department as it maintains a detailed list of forecasts within the organisation. The
Finance Team has been able to examine the figures and assess the company's current situation.
Expenditures help consumers visualise a future vision in just such a way that the enterprise needs
to be adequately effective to function effectively. Accounting is necessary for all larger or
smaller firms, so SKANSKA PLC, as a well-sized business requires even larger values to fulfil
the requirements for competitive market. SKANSKA PLC. In accordance with existing market
analyses, the targets to be set, along with the location of the competitor, must be determined.
Without adequate budgeting methods, effective planning is not feasible.
Eradicating frauds-Stopping fraud and emphasising honesty in all transactions is one of the key
roles of auditors within the same corporation. It is hard for top leadership to stop theft on their
own. Management team is heavily dependent on finance and business divisions for the avoidance
of fraud (Belghitar, Clark and Saeed, 2019). As the financial director handles outflows, as
stronger control raises great responsibilities, the boss should be entirely accountable. The larger
the scale of the business, the larger the employees but the larger the chance of fraud by the
corporation. SKANSKA PLC is an enormous corporation and coping with bribery is even harder
for a major company. Monitor and revenue cycle management must maintain a tight watch on
accountability to assist SKANSKA PLC in eliminating bribes overall.
SKANSKA PLC's operational and finance unit should recognise the roles and obligations
mentioned in way to stay an effective business entity. The Accountant has a high level of value

for the improvement of companies. That is why it has a work undertaken to formulate the right
plans and strategies to ensure that the goals of the organisation is reached as appropriate
(Schotten and Morais, 2019). By following the methods and procedures suggested by the
accountancy divisions correctly, SKANSKA is much stronger enough to maintain its role or
increasing it to a whole different extreme. For the review, management and regulation of all
company banking markets and for the reliability of all operations, revenue recognition abilities
are undertaken. It is important to have a clear knowledge of the aspects of financial accounting
that actually occur while working inside the organisation in order to build and operate a
company, so that they're being professionally managed.
SKANSKA PLC's effective finance and accounting department will be a considerable value to
the group. By offering the best picture of financial security, the department will be encouraged to
keep consumers confident. Therefore the Agency must be equipped to accept an adequate
balance between the production of risk and profit benefit. Financially, this represents an
acceptable compromise between risk and the production of capital for profit. A formal and very
well judgement system for the company is facilitated by money planning. SKANSKA PLC will
also have a competitive advantage as it would enable the company to respond quickly to all
strategic facets. The overall operations of the department will work well, and one of the main
factors is the funding flow to sufficiently meet expenses.
TASK 2
Calculation of of ratios for the company and comment on performance of company
Return on capital employed:
Particulars/Details Year 2018 Year 2019
Net profits 600 675
Capital employed 3825 5850
ROCE: Net profit /
Capital Employed *
100
600 / 3825
* 100 =
15.69
675 / 5850
*100 =
11.54
Working notes:

Calculation of capital employed
Particulars/Details Year 2018 Year 2019
Total assets 4470 8070
Less: Current liabilities 645 2220
Capital employed =
Total Assets less total
current liabilities 3825 5850
ROCE teaches administrators about how their capital is better handled by a company. ROCE can
be used as a foundational management analysis to determine not whether businesses are
managing their capital well or not (Gelman and Kliger, 2020). Extra capital returns, or ROCE,
are a long financial ratio that quickly the capital assets are used by an entity. The information
shows the performance generated by an employing dollar. This was calculated by evaluating the
multiple proportions of the SKANSA PLC community that the company's productivity was very
strong in 2018 compared to 2019. The effects of the above ratios show that the returns on capital
expended in 2018 were roughly 15.69 and decreased in the following year to 11.54. This
indicates that the company is losing its competitive advantage, as this decline in ROCE implies
that perhaps the corporation's competitiveness has declined over the years in delivering gains.
Net profit margin:
Particulars/Details Year 2018 Year 2019
Net profit 600 675
Sales 4800 6000
Net profit Margin = Net
profit / Total
sales/revenue * 100
= 600 /
4800 *100
= 12.5 %
= 675 /
6000 =
11.25 %
The NP's margin means the profit that is left to owners, i.e. buyers. It calculates the
organization's total efficiency, with the exception of net sales, which reports the operating
performance of the corporation. Fair net profit levels could only be generated if the bulk of

operations are completely ruled through (Peng and Huang, 2020). This offers a net received
profit and total marketing relationship. The net benefit ratio is the productivity factor, which is
calculated as a metric and thus multiplies the result by 100. The corporation's net profit margin in
2018 was 12.5 that decreased to 11.25 in 2019, representing a declining profit margin. This
indicates that the potential of the organisation to generate net income from the operational
business has been reduced. This declining productivity pattern is an indication that the business
performance in producing net profits has been limited.
Current ratio:
Particulars/Details Year 2018 Year 2019
Current assets 1515 2070
Current liabilities 645 2220
Current Ratio =
Current Assets /
Current Liabilities
= 1515 /
645 = 2.35
= 2020 /
2220 = 0.93
The current ratio is the leverage ratio that calculates the capacity of a company to cover its
current obligations with cash collected from its overall assets. Both are measured as per the’s
operating assets by reducing the entire assets (Asandimitra, Aji and Kautsar, 2019). The balance
sheet reports total assets to established business obligations and informs us that it is appropriate
to meet commercial enterprise liabilities by the sum of total assets. Currently, there is no
appropriate level quick account, since ratios are more important when calculated in the context
of the competitiveness of the company and its rivals. There is indeed a large reduction in the
commercial enterprise rate of 2.35 in 2018, which fell significantly to 0.93, reflecting a declining
trend in the willingness to compensate for short volatility. This incremental trend in the liquidity
ratios below 2 shows in 2019 that the group's brief liquidity status is not solid. This decline is
due to a greater increase in current l
Average Receivable days/ Debtors collection period:
Particulars/Details Year 2018 Year 2019
Account receivables 900 1200

Annual total sale 4800 6000
Average Receivable
days = Accounts
Receivables / Total
credit sales * 365 days
900 / 4800
* 365 =
68.44 or 68
days
1200 / 6000
* 365 days
= 73 days
The receivable periods in transactions, also referred to as interest income periods, are generally
the times after which payment revenue is received by clients. This proportion is very relevant for
administrators to determine both transfer rate and account receivable measurement (Roa, Garrón
and Barboza, 2019). The trade payable period calculates the total number of days typically paid
by credit consumers to the company. The lower amount of days suggested that the credit review
output was well compiled, and the lengthy duration of days suggested an extended amount of
time. For both the business, the trade payable period was 68.44 days, who were lifted to 73 days,
although for the corporation is not a positive indicator. The upward trend in the proportion of the
corporation's effectiveness in retrieving the deferred revenue duty from the business was also
decreased.
Average Payable days/ Creditors collection period:
Particulars/Details Year 2018 Year 2019
Account payables 570 2100
Cost of goods sales 3900 5250
Average Payable days =
Accounts Payables /
Cost of goods sold * 365
= 570 /
3900 * 365
= 53.35
= 2100 /
5250 * 365
= 146
Accounts payable times are a pricing objective measure that measures how easily a firm is
paying off creditors (suppliers). The projected maturity period demonstrates the company's total
length of time it requires to loan money to lenders (Al Muhairi and Nobanee, 2019). This is
determined by calculating the amount of annual business days, based on the points allowed of the
lenders. Contributes In 2018, due client periods was 53.35 days, with a large disparity reaching

146 days. This huge spike in accounts receivable in reporting indicates that a corporation's wider
liquidity status is not positive because the corporation avoids payment to its vendors.
A combined analysis of all the measures reveals that the company's effectiveness in 2019 has
declined compared to 2018. Through period, the institution's competitiveness status has
diminished and there is a decline in ROCE, finding out the decline in the earnings of the firm.
Suggestion to investors: In accordance of above analysis, this can be recommended to
stakeholders that they should not make invest in above company. This is so because company’s
performance has been reduced in current year as compared to past year. Each ratio is indicating
that company is not able to manage their funds and other aspects in an effective manner. So due
to such reasons, it is suggested to investors that they should not make invest in above company.
CONCLUSION
It's been inferred from the above project study that the process of financial assessment is a
crucial factor to be taken into account by both businesses as it promotes the effective
accomplishment of long and narrower targets. Accountancy tasks, roles and requirements are
very relevant for both organisations, as they will lead to the successful management of
organisational and operating operations. For corporations, it is also very useful to base the study
on the future ratio when attempting to assess the balance sheet. The numerous measures which
could be used to calculate the economic performance of the business are the Measures the
difference, the NP figure, the current ratio, the can get time as well as the integrate resources.

REFERENCES
Valaskova, K., Bartosova, V. and Kubala, P., 2019. Behavioural aspects of the financial
decision-making. Organizacija, 52(1), pp.22-31.
Rasheed, R. and Siddiqui, S.H., 2019. Attitude for inclusive finance: influence of owner-
managers’ and firms’ characteristics on SMEs financial decision making. Journal of
Economic and Administrative Sciences.
Lusardi, A., 2019. Financial literacy and the need for financial education: evidence and
implications. Swiss Journal of Economics and Statistics, 155(1), p.1.
Warmath, D., Piehlmaier, D. and Robb, C., 2019. The impact of shared financial decision
making on overconfidence for married adults. Financial Planning Review, 2(1), p.e1032.
Raissi, N. and Missaoui, S., 2019. Understanding Investor Biased Reaction and Financial
Decision Making. International Journal of Business and Management Invention
(IJBMI), 8(03), pp.34-49.
Belghitar, Y., Clark, E. and Saeed, A., 2019. Political connections and corporate financial
decision making. Review of Quantitative Finance and Accounting, 53(4), pp.1099-1133.
Schotten, P.C. and Morais, D.C., 2019. A group decision model for credit granting in the
financial market. Financial Innovation, 5(1), p.6.
Gelman, S. and Kliger, D., 2020. The effect of time-induced stress on financial decision making
in real markets: The case of traffic congestion. Journal of Economic Behavior &
Organization.
Peng, X. and Huang, H., 2020. Fuzzy decision making method based on CoCoSo with critic for
financial risk evaluation. Technological and Economic Development of Economy, pp.1-
30.
Asandimitra, N., Aji, T.S. and Kautsar, A., 2019. Financial Behavior of Working Women in
Investment Decision-Making. Information Management and Business Review, 11(2 (I)),
pp.10-20.
Roa, M.J., Garrón, I. and Barboza, J., 2019. Financial decisions and financial capabilities in the
andean region. Journal of Consumer Affairs, 53(2), pp.296-323.
Al Muhairi, M. and Nobanee, H., 2019. Sustainable financial management. Available at SSRN
3472417.