Financial Decision Making Report

Financial Decision Making Report

Executive Summary
This report presents about the importance of financial decision making in respect to
the accounting and the finance department in an organization. Along with analyzing the
financial position and performance of the SKANSKA PLC from the perspective of an
investors. Based on eth findings, it is not feasible to invest in the SKANSKA PLC.

TABLE OF CONTENTS
INTRODUCTION......................................................................................................................4
TASK 1......................................................................................................................................4
Evaluating the importance of accounting and finance function within an organization........4
TASK 2......................................................................................................................................7
Part a: Calculation of the financial ratios for the two years...................................................7
Part b: Analysis and interpretation of the financial ratios......................................................8
CONCLUSION........................................................................................................................10
REFERENCES.........................................................................................................................11

INTRODUCTION
This report is about the financial decision making of the SKANSKA PLC which is a
construction company based in UK. The company was started in the year 1984and is having a
presence in most of European nations which is its key strength and is willing to expand
busines in other countries in next 10 years. This provides an insight on the importance of the
accounting and finance function in an organization and determining the financial position and
performance of the company.
TASK 1
Evaluating the importance of accounting and finance function within an organization
1. Accounting department:
 Financial accounting
The financial accounting plays an important part which allows the organization in
keeping track of their financial transactions. It is the branch of accounting which financial
transactions of the business is recorded which is further used for undertaking business
decisions. For example, the accounting department of SKANSKA PLC will use it in
generating various types of accounting reports which mainly involves income statements,
balance sheet and the cash flow statement of the company. This will help in communicating
about the overall health of the organization to both internal and external users (Atrill and
McLaney, 2016). Based upon this, the users take decision whether to invest in the company
or not. Along the reports prepared can be further used for the purpose of effectively
comparing it with the other companies within the same industry in order to gain an insight
about the company’s performance in comparison to its competitors. But it requires staff with
good knowledge and skills of financial accounting for preparing the reports.
 Management accounting (MA)
The management accounting is mainly concerned with the effectively providing
accounting information to the internal management team for undertaking business decisions.
This form of accounting is beneficial for the company and is widely used now. The MA is
used in effectively planning the business activities through the way of timely preparation and
presentation of the information at different interval (Ax and Greve, 2017). It involves
forecasted budgets and other relevant information will assist in planning the business
activities more appropriately. For instance, SKANSKA PLC can be benefited through the
reports prepared under this approach in terms of taking relevant decisions on account of
introducing new product in the market. This will provide support at different stages from the