Financial Decision Making: Accounting and Finance Function, Financial Resources for SMEs, Ratio Analysis of Panini Ltd.

Financial Decision
Making

Contents
INTRODUCTION.................................................................................................................................3
TASK 1.................................................................................................................................................3
Explanation of the accounting and finance function's relevance and role in the organization............3
A description of the numerous financial resources available to a small or medium-sized firm in
order to grow its operations...............................................................................................................5
TASK 2.................................................................................................................................................6
Calculation of the financial ratios from the data provided in balance sheet and income statement of
the Panini Ltd. for the financial year 2018 and 2019.........................................................................6
Discuss the interpretation and analysis of the computed ratios, as well as the reasons and causes
behind the financial ratio variances for the years ended 2018 and 2019............................................7
CONCLUSION...................................................................................................................................10
References..........................................................................................................................................11

INTRODUCTION
Financial decisions are those made by the business owner in order to manage the
company's finances. Because money are the foundation stone of any corporation, decision
making is quite important. These decisions are taken in order to buy assets, borrow money,
and so on. These decisions have an impact on a company's assets and liabilities, and they
assist the company in making long- and short-term decisions. The financial short-term
decisions concern operating capital, while the long-term ones concern the possibility of
obtaining funds. The relevance and role of accounting and finance departments at Panini Ltd.
are examined in the following study. Furthermore, it also contains information on the many
sources of credit accessible to small and medium-sized enterprises looking to expand their
operations. This report also includes the computation of financial ratios based on the income
statement and balance sheet provided. It also includes the causes and factors that might have
an impact on the changes in Panini Ltd.'s ratio analysis for the fiscal years ended 2018 and
2019.
TASK 1
Explanation of the accounting and finance function's relevance and role in the organization.
Accounting is a critical role for any type of business. It must be carried out by every
corporate entity, regardless of its size or type. It is the art of categorizing, documenting,
evaluating, and summarizing financial transactions in order to offer Panini Ltd with a
meaningful purpose (Dinçer and et.al, 2019). Accounting aids in determining the genuine
financial status of an organization. Accounting is a means of exchanging information. The
accounting department's responsibilities at Panini Ltd. are as follows:
• Calculation of business revenue and income: The primary function of an accounting system
is to calculate revenue and income. Accounting assists a company in keeping track of all of
its costs and profits. It aids in money management by keeping track of spending, revenue, and
losses in order to present an accurate and dependable picture of the company's finances
• Profitability, liquidity, solvency, and efficiency are all factors to consider: The accounting
system provides information on settlements in the form of a cash flow statement, income
statement, and balance sheet, which are all summarized. The firm may evaluate its operations
and performance on a variety of levels using the data contained in such reports.

• Monetary Budgeting: Budgeting is a tool that assists Panini Ltd. in achieving and achieving
its goals by establishing expense targets. Accounting serves as a foundation for budget
preparation since budgets are established using historical monetary data.
• Assists with statutory compliance: Various laws have been enacted for the reporting of
accounting transactions. For the purpose of creating financial reports, a corporation must
adhere to a number of rules and principles. If the corporation adheres to the rules and
regulations, the accounting reports can be used as evidence in court.
• Assists in auditing: If the company's accounting records are well-maintained, the auditor
will be able to focus on the areas that need to be improved. Accounting enables a corporate
organization to seek advice and ideas from auditors in order to enhance the company's
financial situation.
• Tax Requirements: The financial documents provided by the firm may be requested by
various legal bodies. If the accounts are set up correctly, the firm will pay the right tax
amount. If not, the company will be held accountable for the sum demanded by the
government. As a result, accounting is extremely important (Gavurova and et.al 2019).
• Information on debtors and creditors: Accounting guarantees that the firm receives money
from accounts receivables on time and pays the amount owed to its account’s payables on
time.
• Payroll: This is the amount of money given to employees for the services they have
provided to the company. Accounting data assists human resource managers in determining
how to compensate employees for their contributions and how these payments will affect the
company's profitability.
Finance responsibilities: This information assists the corporation in determining whether or
not to make more investments. The following are the tasks of the finance department:
• Planning: The financial function aids Panini Ltd. in developing various plans using various
strategies such as budgeting and so on. The plans can be devised to help the organization
achieve its objectives.
• Projections: Using various planning and budgeting approaches, the management may
anticipate expenditures, income, expenses, and revenues, among other things.