Financial Decision Making: Role of Accounting and Finance Departments

Financial decision
making

INTRODUCTION...........................................................................................................................2
MAIN BODY..................................................................................................................................2
TASK 1............................................................................................................................................2
Overview of Skanska Plc.............................................................................................................2
Define Accounting and Finance department...............................................................................2
Importance of Accounting and Finance department....................................................................3
Role of accounts department.......................................................................................................3
Role of finance department..........................................................................................................4
TASK 2............................................................................................................................................5
Calculate the following ratios......................................................................................................5
Comment on the performance of Skanska Plc.............................................................................6
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10
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INTRODUCTION
Financial decision making is a vital part of organisation of every sector and relies on
management. It could be described as a mechanism by which the financial manager of a business
decides a need for funding to carrying out more operations, and also the allocation of funds for
various activities (Alsharari and Al-Shboul, 2019). The decision-making process must be carried
out in an appropriate manner. Owing to some kind of mistake, there might be a variety of
difficulties in the future. The plan estimate is focused on SKANSKA plc that is based on United
Kingdom and was established in 1984. Essentially, this is a construction firm that carries out
massive civil projects. The business uses a number of accounting management methods to help
manage its activities. The report is divided into two sections; the first task is to provide details on
the position and responsibilities of the finance and accounting departments. Various types of
management accounting practices and their functions is for better strategic planning are listed
throughout the report. These departments play a significant role in the successful management of
its financial capital. Essentially, the performance of a company relies on how well the accounting
department conducts its functions. Both divisions have their own responsibilities and duties.
However, the accounting and finance divisions are interconnected. Second task is based on ratio
calculation which helps the managers to perform their overall performance as well as
profitability for future decision making process.
MAIN BODY
TASK 1
Overview of Skanska Plc
Skanska Plc is a construction firm headquartered in the United Kingdom. Skanska Plc
began in 1984 and their current business plans is to extend its activities to other European
countries within next ten years. With the help of Skanska Plc’s financial statements, managers
able to evaluate their performance and decision made on the basis of it
Define Accounting and Finance department
Accounting department is a part of the management of company which is responsible for
financial reporting, managing the general accounts, paying expenses, billing clients, payroll,
expense accounting, financial analysis, and more. The accounting and finance department has
been at the heart of every company and is essential for keeping the effective financial analysis
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and marketing control required to sustain all business operations (Bakhtavar, Yousefi and
Jafarpour, 2019). The Finance Department is an essential part of an entity that is accountable for
managing funds, distributing funds inside the entity and coordinating the spending of funds on
different assets. It concerns the holding of accounts for all transactions, the use of double-entry
accounting system and the preparation of final accounts that are sufficient for fulfilling the
different legal criteria for statutory reporting, the trading platform and tax authorities. Financial
accountant has to report financial officer who is responsible for this work.
Importance of Accounting and Finance department
Accounting and financial management are so critical when it comes to managing their
companies. If they really don't know where all the funding is flowing from, there was a very
good risk for an individual who might lose control of the company. Businesses have a greater
growth opportunity when balancing their revenue and expenditure. Plus, there is greater access to
plans which can help businesses withstand unforeseen financial recessions. The company's
director would be where accounting professionals and small businesses can monitor the profits
and expenditures of a business' day-to-day operations. The accurate record helps the managers to
evaluate company's financial performance will help a business monitor its financial situation and
understand its cash flow. Holding a correct financial report helps to obey essential business rules.
Reaching at a tiny detail may have big consequences for corporate tax management.
Role of accounts department
Financial accounting: It is most important role of account department because without it,
organization unable to perform their operations. It is the method of tracking, summarising and
documenting the economic activities of an organisation via financial statements. Such statements
like statement of income, balance sheet, statement of cash flow and the statement of retained
earnings. It gives stakeholders with a summary of review and evaluation of the financial health
of shares issuing companies. It allows creditors to determine the financial stability, profitability
and solvency of companies. In an accounts department, organization needs to hire professional to
fulfil this role and prepare financial statement for the further analysis.
Management accounting: In the account department, management accounting plays
essential role which helps the managers to make decisions. Management accounting allows
managers to make judgments inside an organisation. It is also known as cost accounting,
managerial accounting is the method of defining, evaluating, interpreting and transmitting
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