Financial Decision Making: Importance of Accountancy and Finance Procedures and Financing Options for Company Expansion

This study assesses accountancy and finance procedures in addition to making fiscal decisions for a business. Monetary options are also mentioned in this analysis that assist to the corporation's asset expansion. Calculating ratios are also discussed.

FINANCIAL
DECISION MAKING

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Accountancy and financial departments importance...................................................................1
Financing options for company expansion and success..............................................................3
TASK 2............................................................................................................................................4
Calculating ratios.........................................................................................................................4
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
This study assesses accountancy and finance procedures in addition to making fiscal
decisions for a business (Ali, Danish and Asrar‐ul‐Haq, 2020). Monetary considerations are
made by finances administration. Panini plc's financial and accountancy processes are examined
in perspective of reaching long period goals and wants. Monetary options are also mentioned in
this analysis that assist to the corporation's asset expansion. Monetary percentage is used to
assess Panini plc's profitability. Perhaps the most reliable technique to assess a firm's financial
performance is to use ratios. Ratios from 2 years of fiscal reports are used to predict
performance.
TASK 1
Accountancy and financial departments importance
Financial division as this is an important section of a company that deals with wages and
budgets. It also gives exact figures to help in decision-making. This division aids in the
management of the firm's income and expenditures and thus beneath are its factors elaborated:
Dividend distribution as it is the objective is to distribute a portion of the company's earnings
to its shareholders. As a consequence, this might be viewed as a way of rewarding shareholders
for their faith in the business. The choice to pay the dividends is an important aspect of company
considerations (Ameen and Ahmad, 2017).
 Profits are distributed to both equity and preferential investors. Investors gain from
dividends, and the company's image improves as well.
 The payout is delivered first to preferred investors, then to equities investors when there
is sufficient left behind.
The gap among current liabilities and current assets is represented by working capital. It also
includes all day-to-day activities such as stock purchases and sales, as well as loan write-offs that
are payable inside a year. This technique could be employed to evaluate a firm's capacity to
finance short-term projects.
 The corporation in this case grows and expands its operations with a limited quantity of
finances.
 The primary purpose of the company is to maximise earnings by successfully managing
costs and thus saving money.

Financial operations as this outcome was achieved by increasing system reliability while
decreasing expenses. This activity aids in the management and supervision of monetary assets. It
likewise aids in the making of financial selections.
 This position requires securing start-up financing and maintaining accurate loan and
gathering records.
 A financier's primary role is to safely raise funds for expenses, activities, and
acquisitions. Shortfalls are less likely when you anticipate ahead and thus helps in the
overall working of the firm (Assagaf and Ali, 2017).
The financial operator's task is to determine where the corporation's resources should be
distributed. This is a critical activity which the organisation may need to do in order to enhance
its assets and revenue.
 Investors must invest in cutting-edge technologies and innovation that will provide longer
run advantages to boost a firm's combined wealth. Funding selections are taken following
a thorough examination of the company wherein the funds would be spent for a higher
return.
 When a business decides to engage in long-term resources, it considers income,
sustainability, and development, as well as the effect on competitiveness concerns. The
basic goal of investors is to enhance overall yield on capital.
The accountancy division's main responsibilities include maintaining track of all inner
company activity. Business activities and collections, item sourcing and selling, loan
repayments, and debtors collecting are all part of this activity. Accountancy examines corporate
data and provides income reports that demonstrate the overall health of an organisation and thus
below are its aspects elaborated:
Accountancy's main job is to assess finance activities and combine them into aggregated
corporate data. Finance accountancy is a method of documenting all monetary transactions in
order to aid subsequent decision-making and resource optimization evaluation. The following
procedures are considered into account:
 Budgeting accountancy is responsible for examining and preparing fiscal reports that
accurately reflect the company's monetary status.
 The goal of a corporate manager is to reduce costs and expenditures in order to improve a
company's fiscal efficiency.

Taxation elements are accountancy methods that focus on expenditures and taxation filings
instead of total income reports. Management must adhere to all relevant rules and laws when it
relates to taxation paperwork (Eichelberger, Mattioli and Foxhoven, 2017). The following
qualities are explained in detail:
 This job aids managers in executing activities in such a way that perhaps the business
rarely has to spend additional taxation and may grow earnings.
 During a taxation inspection, revenue, donations, profits, deficits, and write-offs are all
taken into account.
Auditing responsibilities as it has to do with ensuring that a firm's accounting documents are
accurate. Auditing aids in the detection of accounting problems within a business. The following
actions are highlighted:
 Accountancy and financial accountancy authorities oversee the bulk of audited activities.
 All through the internal assessment activity, the analyst must ensure
confidentiality, security and precise inventory assessment.
 The auditing function is critical for determining the unbiased assessment technique's
entire width.
Management responsibilities as the management position helps to the formulation of
corporate assessments that examine developing trends and sales estimates. Management tasks
assist in selection. Administration assists in the creation of innovative items and evaluates their
efficacy by estimating anticipated expenses. Here are few of the points mentioned:
 It entails gathering and evaluating data about daily activities.
 It helps determine the firm's turnout percentage and revenue, as well as measures to
improve the corporation's underlying efficiency. It aids in the estimation of greater
payouts, allowing the most lucrative idea to be chosen (Eklof, Podkorytova and Malova,
2018).
Financing options for company expansion and success
For both short and long-term initiatives, there seem to be a variety of funding sources.
Stock, mortgages, liquid assets, lending, and liabilities are some of a firm's financing options.
The following are the primary variables explored:
Bankers and similar commercial entities offer cash loans and credit cards, among other
services. Such transactions are made with credit cards, with the option of paying the balance

back eventually. It enables clients to lend cash to buy things. If the repayment is not made, the
card holder could suffer harsh penalties. Whenever the current bank balances falls below 0, the
overdraft option on either side provides liquidity. It enables the business to reimburse
expenditures even if the accounts get depleted.
 Credit cards contain a higher percentage of fees and are a company's short-term fiscal
pressure. Each credit card has an activity restriction determined by the customer finance
institution.
 An overdraft is a type of short-term lending. Despite the minimal percentage charge,
there appears to be a withdrawal restriction.
Credits and advances as based on the recipient's temporal period, credit could indeed be short
or long term. Debts are often obtained for the aim of advancing and growing a firm. They can be
divided into 2 categories:
 Secure mortgages are debts that are carried out based on particular assets. If the
corporation refuses to repay the lenders, the banking firm can confiscate the firm's assets
to pay off the debt (Hussain and Sajjad, 2016).
 Unsecured mortgages are often approved depending on a person's creditworthiness, with
a lesser credit amount than secured mortgages.
Crowd sourced is when a little sum of money is collected from a big variety of individuals in
order to increase participation. For a business, this is a critical form of income.
 A longer run finance plan that involves issuing industry stakes to raise funds is known as
publicly fundraising. This business trades funds for a stake of its stock.
 Companies typically seek taxpayer support from a number of sources to enhance finances
for their business operations.
TASK 2
Calculating ratios
The gross revenue ratio: It is a metric employed to evaluate a firm's success. It indicates
the sum of cash left over after paying for workers and raw supplies over a length of time, and is
sometimes referred to as the price of trademarks provided.
Gross Profit Margin = Revenue – COGS / Revenue * 100
Year 2018

= 3500 / 10000 *100
= 35%
Year 2019,
= 3265 / 11500 *100
= 28.39%
Operational income ratio: This would be the income that remains once operational
costs have been removed from receipts, and it is vital to estimate it correctly and exactly since it
has the potential to create value to the business in the long term.
Operating profit margin: operating profit / Net sales *10
Year 2018,
= 2765 / 10000 *100
= 27.65 %
Year 2019
= 2305 / 11500 *100
= 20.04
ROCE- Return on Capital employed is a statistic for evaluating a firm's productivity and
competitiveness. It assists shareholders in determining whether or not a firm is fit for investment.
ROCE = Earnings before interest and tax / capital employed
Capital employed = Fixed assets + working capital
Year 2018,
= 2765 / 8755
= 31.58 %
Year 2019,
=2305 / 10211
= 22.57 %
The current ratio: It is one of the most essential and crucial components because it
determines a firm's capacity to repay shorter run debt in a particular financial period. The current
assets to current liabilities proportion is calculated using this ratio.
Current ratio = Current assets / Current liabilities
Year 2018,
= 1175 / 970

= 1.21:1
Year 2019,
= 2110 / 512
= 4.12:1
The acid test ratio: It gauges a firm's capacity to pay off much of its current liabilities
with readily accessible quick instruments like money, earnings, movable resources, short-term
investments, and current holdings which could be swiftly transformed into monetary terms. A
corporation with a fast percentage of one possesses current assets equivalent to current liabilities,
indicating that it could start settling current liabilities sans compromising long-term investments.
Quick ratio = Current assets – stocks / Current liabilities
Year 2018,
= 1175 – 350 / 970
= 0.85:1
Year 2019,
= 2110 – 674 / 512
= 2.8:1
Stock turnover proportion: The stock turnover ratio measures how well a business
manages its inventories. Stock turnover ratios that are greater are advantageous since they reflect
lower warehousing as well as other maintaining expenses. Little stock, inadequate selling, and
ineffective stock control are all indicators of a smaller proportion.
Inventory turnover ratio = Cost of goods sold / average inventory
Year 2018,
= 6500 / 512
= 12.6 times
Year 2019,
= 8235 / 512
= 16.08 times
Debtor recovery period: This statistic indicates how long it will require a company to
recover most of its debts. The shorter the period of debtors, the higher the productivity, and
conversely. It aids in evaluating the firm's revenue and productivity.
Debtor collection period = 365 / sales on credit / accounts receivable

Year 2018,
= 365 / 10000 / 760
= 27.74 days
Year 2019,
= 365 / 11500 / 1340
= 42.54 days
Creditor's settlement period: This ratio shows the amount of duration it requires to
repay a loan. If it required a considerable time, it would be good to the corporation (Samo and
Murad, 2019).
Creditor's collection period = 365 / cost of sales / trade payable
Year 2018,
= 365 / 6500 / 920
= 51.6 days
Year 2019,
= 365 / 8235 / 495
= 21.94 days
Individual ratio analysis
After all appropriate changes have been made and the gross margin ratio is implemented to
compute the corporation's operational income. The more effective the administration, the bigger
the gross income ratio. Panini Plc's fiscal figures reveal that the business is likely to be more
effective in 2019 than it had been in 2018 (Jung, Glaser and Köpplin, 2019).
The operational profitability margin of a corporation demonstrates its efficiency, or how
successfully its activities lead to revenue. It's being used to determine whether a firm's financial
are sound. In 2018, Panini Plc made more profit than in 2019 (Koto and Pulungan, 2017).
A greater return on capital investments is usually appreciated because it signifies that the
company can produce greater revenue throughout time. Panini Plc's yield on investment was
higher in 2018 than it was in 2019, indicating that the firm’s financial effectiveness has
decreased in 2019 (Kusumah and Fabianto, 2018).
A current ratio of one or higher is deemed acceptable, indicating that the company could
satisfy its obligations. Panini Plc. has performed better in 2019 than it did in 2018 by meeting its

relatively short term liabilities. In 2018, the corporation maintained an excellent current ratio
(Liu, Vredenburg and Steel, 2019).
Panini plc's current holdings would probably not be sufficient to cover its current liabilities
in 2018. Nonetheless, by quick activities, the company improves its fiscal alternative for
fulfilling obligations in 2019 (Roychowdhury, Shroff and Verdi, 2019).
With time, Panini Plc. grows increasingly efficient in controlling its inventory. It was
substantially lower in 2018 than in 2019, and therefore, based on these findings, the organisation
should initiate appropriate initiatives to assist the business endure and thrive in the big scheme of
things, so that it could remain well in front of all its rivals in the industry wherein it operates and
therefore expand as a corporation as a whole.
As per the fiscal ratios listed above for the periods 2018 and 2019, Panini Plc. needed more
longer to gather revenues in 2019 than it did in 2018, indicating a decline in the firm's efficiency
over period.
Panini Plc's creditor settlement duration has significantly decreased in 2019, according to the
mentioned proportion for the periods 2018 and 2019, indicating a decrease in effectiveness over
2018. As a result, the business should increase its operational productivity that would help it in
the big scheme of things.
CONCLUSION
According to the information provided in this analysis, the company indicated previously,
Panini Plc. employs a variety of tactics to increase its operational efficiency. The study examines
Panini Plc's accountancy and financial procedures, as well as the many types of funding it
employs to run its company. In addition to reveal growth prospects and appropriate measures, the
productivity ratio is utilised to evaluate the firm's performance in 2018 and 2019. Panini Plc's
corrective approach is to acquire additional shareholders that will enable the business sustain its
revenue and stability.

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