Financial and Management Accounting: A Comparative Analysis

This report compares financial and management accounting, focusing on financial statements analysis and the performance of two companies listed on the Australian Stock Exchange. It discusses the differences between financial and management accounting, the importance of auditing financial statements, and the various ratios used to assess a company's profitability, efficiency, liquidity, and financial gearing.

Executive summary
This report speaks about the financial and management accounting. In this report it has been
mentioned that these two accounting are different in nature. Financial accounting is the
procedure of documenting, summarising and reporting all the transactions of the business for a
specific time duration. This accounting reflects the data on accrual basis . On the flip side
management accounting assist the managers to make short term and long term decision by
providing reports of the business operations. Management accounting helps in forecasting the
future, also is forecast the cash flows of the business. This entire report focuses financial
statements analysis and report. Financial statement are in the form of written records of the
activities of the business and it also reflects the financial performance of the company. But the
company has to audited these financial statements from government agencies and accountants.
Who ensures that company has paid all the tax on annually basis. Income statements and cash
flow statement are also the part of financial statement. This report states about the the two
companies who have listed on Australian Stock exchange. This report speaks about the income
statement and cash flows of these two companies. Cash flow shows all the income which is
received by the company in the form of sales and it also describes the cash outflows which states
about the expenses occurred by the company such as - fixed expenses- rent and bill payment
part from this, it also mention the variable expenses such as wages and salary of the employees,
machinery etc. the difference between cash inflow and outflow defines that company is facing
loss or profit. Apart from this, different types of product or services sold by these companies is
being mentioned in this report and how companies can enhance their sales is also prescribed in
this particular report. How management accounting help the managers of these companies to
expand their business and also make plans is defined here. This report focuses that the
companies must audited their data so that they may get the actual financial result about the
company. This report include two profitability ratio which assess the company's and its ability
to earn profit. It also states about shareholders equity and balance sheet of the company. In this
report efficiency ratios have been mentioned. This ratio shows the company's ability that are
they able to manage their assets so that they may generate good income for the company.
Liquidity ratio of the companies is also elaborated in this report. These liquidity ratio defines
the ability of the company to overcome the short term and long term obligations so that
company may repay its debts and maintain the goodwill in the market. This report shows

financial gearing ratio, this ratio states about the owners equity and also the other funds which
is being borrowed by the company. This ratio shows firms different operations which funded
by equity capital and debt financing. Apart from this, investment and market ratio is also defined
in this report.