Financial Decision Making: Importance of Accounting and Finance Functions

FINANCIAL DECISION
MAKING

TABLE OF CONTENTS
INTRODUCTION.......................................................................................................................................3
MAIN BODY..............................................................................................................................................3
TASK 1.......................................................................................................................................................3
TASK 2.......................................................................................................................................................8
a) Calculating Ratio for SKANSA PLC (SP).......................................................................................8
b)...........................................................................................................................................................10
CONCLUSION.........................................................................................................................................13
REFERENCES..........................................................................................................................................14

INTRODUCTION
Financial decision making is process of acquisition, financing and management of
company’s monetary resources. In current era it has become important for organization to have
effective management strategy, approaches and models for overcoming cut throat competition.
The rivals has increased in every industry due to easy entry which is enabling competition to
rise. This requires firm to gain competitive advantages in terms of financial decision making for
improving its lacking areas and utilizing strengths in more effectual pattern. The present report is
based on Skanska Plc. a United Kingdom based organization. The purpose of current case study
is to give suggestion while planning for expanding operational activities in Europe. Current case
study will give emphasis on importance of accounting and finance function along with its roles
and duties. Present report will represent calculation for ratios through referring financial
statements of Skanska Plc (SP). The consequences of low performance & improvement areas
will be provided.
MAIN BODY
TASK 1
Organization utilizes various types of functions for smooth functioning of business
operational activities. This all plays crucial role in enhancing effectiveness and progress in
decision making process of Skanska plc. Accounting and finance functions contribute heavily in
making company success more effectual. With respect to this, it is dependent of Skanska
capability of implementing roles & responsibilities in effectual pattern.
Importance of accounting function with roles & Skanska plc.
Accounting functions such as systematic recording, facilitating rational decision making, legal
compliance, projection of business decisions making, determining profits and loss for changing
prevailing business strategies, etc. There are several usages of accounting functions which allows
firm to be efficient for dealing with changing circumstances of business (Kaya, Türkyılmaz and
Birol, 2019). The main purpose of implementing accounting functions is enable business to

provide information economic entity for measuring company's money for deciding course of
action for various alternatives.
Summarizing, recording and classifying financial transaction
There are numerous transaction that company conducts on regular basis which company
need to remember for knowing it’s all expenses and incomes. In addition to this, it is help
businesses to summaries complex transaction in numerical forms (Lin, 2019.). This records all
these data for having reference in future in order to make strategic decision by considering each
small aspect. SP will be able to evaluate its financial transaction by implementing accounting
function which will lead firm to derive competitiveness in order to classify relevant and
unnecessary information for better management.
Control of financial policy and formulation of planning
Company formulates proper structure in order to plan each activity so that company can
avoid duplication and gain clarity. Skanska Plc would be able to formulate policy for controlling
its operational and other similar practices for ensuring company is going in right direction or not
(Miles and Miles, 2019). Controlling aids company to monitor its actions for getting comeptitiev
benefits Future course of action with prepared procedure and guideline can be attained for
reaching desirable position. SP will derive various benefits with implementing this specified
accounting function as It will permit firm to adapt changing circumstances with ease.
Prevention of errors & frauds
Activities of employees can be checked and controlled with help of Accounting features.
There are numerous personality that works in company for reaching towards a common goal. In
order to expand business scale it becomes essential for organization to get a accurate details of
resources utilizes accurate information for comparing between revenue and expenditure. For this
purpose organization requires a tool for avoiding unethical practices. It plays important part in
neglecting such situation for attaining positive outcomes.
Analyzing Financial Data
The main purpose of implementing accounting function is to gather the actual
interpretation of gathered data . All this informational is aids organization to make proper
evaluation firm’s current position. It is executed by utilizing various approaches of accounting
for analyzing data. Clear conception, repayment of debts, profit margins, work efficiency,