Importance of Accounting and Finance in Business

Financial Decision

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
TASK 1............................................................................................................................................3
Importance of Accounting and Finance function in business......................................................3
Duties and roles of Accounting and finance team.......................................................................5
Some examples of finance and accounting roles and duties within SKANSA plc......................7
Task 2...............................................................................................................................................7
(a) Ratio Analysis........................................................................................................................7
Evaluating Performance of the SKANSA Plc on the basis of ratio analysis...............................8
CONCLUSION..............................................................................................................................10
REFERENCE.................................................................................................................................12

INTRODUCTION
Financial decision is related to the crucial decision, in which all company's need to make
it appropriate in order to improve business performance. Such an decision includes financing,
investing and dividend decisions. The managers of accounting and finance plays important role
in such an task. So for this purpose, the report will cover the ration analysis of the SKANSA plc
of the two year (Kim and Im, 2017). The report will also interpret the result of such analysis and
identify the possible causes and reason behind any poor performance. After that the report will
also state the possible changes that the company will make in order to improve their profitability,
liquidity and efficiency ratio. The report also describe this all concept and analysis along with the
importance of accounting and finance in any company and the role of the finance managers in
managing the finance related task of the company.
MAIN BODY
TASK 1
Importance of Accounting and Finance function in business
Accounting and finance is the most important function performed in every business.
Management is very much concern about the business financial and accounting aspects. Many
times there are two different departments found within the company carrying out accounting and
finance functions individually (Mensah and Gbadago, 20180. Accounting function again
performed in different aspects such as, financial accounting for finding out about the financial
performance and position of the business in the period preceding the performance of financial
accounting. Another branch of accounting is management accounting, which is concerned with
forecasting and budgeting future aspects of the business. Next is auditing function which is
performed by accounting team, where a separate auditor is hired by company's (SKANSA Plc),
and the auditor is responsible for performing the task of determining whether the financial
statement duly prepared by the company is accurate or not. Also, whether the company's
financial statements are indicating going concern principle and company's solvency or not. At
last auditing function is meant for ensuring that the company is complying with legal obligations
applicable on it.

Finance function is also a very important function concerned with making decision
related to investments, procuring and utilizing finance in the business, providing reasonable
returns to the shareholders and ensuring sufficient working capital within the company. There are
much importance of these two broad functions that is, accounting and finance within each
business.
Accounting provides for keeping financial records of the business for long term: By
performing the function of accounting, company's can keep records of their financial activities,
where tracking of income and expenses can be easily performed and the same can be helpful in
managing future cash flows and finance related aspects.
Accounting and finance aids in avoiding legal problems: If accurate recording of financial
activities is done, then the following of laws applicable on SKANSA Plc can become possible.
As there would be a major problem if any minor detail of the business would be ignored.
Financial managers concerned with the performance of accounting and finance functions must do
it with an utmost care as poor financial recording may put your business in legal troubles.
It provides tools on the basis of which financial performance can be analysed easily:
Management and owners can see whether their business is performing well or not (Serrano-
Cinca, Gutiérrez-Nieto and Bernate-Valbuena, 2019). An assessment can be done on the basis of
comparison between current and historic performance of the business just by looking at its assets
and liabilities. So, financial managers and owner at SKANSA Plc can make out how well it is
doing by looking at its financial statements. Such analysis of performance helps in learning from
mistakes and ensuring lucrative future.
External and Internal communication can be well facilitated: Financial and accounting
function helps in communicating financial performance of the company (SKANSA plc) to both
external parties and internal stakeholders associated with the company in some or the other way.
Appropriate performance of this function helps in attracting investors and accordingly procuring
finance for the company. It also communicates strengths and weaknesses of the business and
necessary steps can be taken as earlier possible.
Strategy development can become possible: An appropriate strategy can be developed by
performing accounting and finance functions in the best possible manner. A close and an
appropriate review of financial statements helps in making informed financial decision. An