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Financial Decision Making Assignment - Alpha Limited

   

Added on  2020-11-12

13 Pages3859 Words375 Views
Financial Decision Making

Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1TASK 2............................................................................................................................................4a. Calculation of the ratio analysis of Alpha Limited.................................................................4b. Analysing the performance of the Alpha Limited in terms of its ratios evaluated.................5CONCLUSION................................................................................................................................9REFERENCES..............................................................................................................................10

INTRODUCTIONFinancial decision making means selecting the best option or source for raising the funds,allocating those funds to highly profitable projects and utilizing the funds in a way that facilitateslarger returns. It acts as the crucial decision that the financial manager has to take in relation toits sufficient availability of the funds in the future so that changing conditions can be meteffectively and efficiently. The present study is based on two tasks where in the first task itincludes the information relating to the Nestle company and deep insights has been thrown onthe importance of the accounting and finance department within the Nestle company. Task two isbased on the Alpha Limited, formed in 1975, set up in UK, deals in the business ofmanufacturing and the company has plans for expanding its business in various segments of UK.Furthermore, the task two includes the computation of the ratios of the Alpha Limited forassessing its financial performance. TASK 1Significance of the accounting and the finance departmentNestle is the multinational company formed in the year 1905 by merger of Anglo-Swissmilk corporate which is set up during the year 1866 by the brothers Charles page and Georgepage, founded by Henri Nestle. The company deals in various range of the products that includesmedical food, breakfast cereals, baby food, bottled water, coffee, tea, dairy products, snacks, petfoods, ice-cream and frozen food. The company operates over worldwide and offers its productsin all the countries across the world. The employees of the enterprise are said to be around308000 presently. Annual turnover of the company ascertained as 91.43 billion which leads tohigher revenue and the market share of an entity is large including the Europe and United states.The major strengths of the Nestle is it is one of the leading and highly diversified firm which isoperating in several markets with the functioning in the sectors of different markets. Serving thevarious segments with its wide range of brands creates the strong ability of the company to theweather economics. It is called as the most trusted and the recognized brand worldwide and hasattained the customer loyalty. The main weaknesses of the company that can be analyzed are themarketing cost of the corporate is so high as it is highly dependent on its advertisement forshaping the opinion of the consumers and in meeting the sales target. Lot of opportunities arepresent for the brands like it could have chosen for online retail which results in opening up ofthe newer channels of distribution such as Amazon, Flip-kart etc. Major factors that leads to1

threats for Nestle are its competitors such as Walmart which highly pressurizing the brand incutting down its prices and this results in lower profitability for the firm in the overall market. Importance of accounting and finance department- 1.Accounting department- This department plays a crucial role for the Nestle company asit relates with several activities which are very much essential for the firm to run itsoperations smoothly. It involves the financial accounting, management accounting, taxfunctions and the auditing function. Financial accounting- Accounting department ensures the effectiveness and efficiencyin performing these functions which leads to adequate reporting of the financial transactions. Infinancial accounting the department looks towards the past data with the purpose of determiningthe value of the company as a whole which in is essential for creating the well known image ofthe brand all over the world. Accounting function is important for the reporting the financialinformation to the shareholders and the investors so that they can use that information formaking suitable decisions regarding their investment made in the company. This departmenthelps the firm in knowing its financial performance and the financial position across the world.Accounting department ensures the planning and the controlling process by providing thenecessary documents such as profit and loss statement, balance sheet, cash flow statement etc.with full of accuracy and fairness.Management accounting- This leads to the effectiveness of the management accountingas well which is also a major role that the accounting department plays with the Nestle. Throughthe better flow of the transactions of the business management could make right decisions andeffective planning which results in more productivity. Management could plan for the budgets insuch a manner that helps the Nestle in developing the strategies, controlling the cost andeliminates unnecessary spending. For preparing the budget, prior records are needed which arewell maintained by the accounting department. For ascertaining the cost, performance andinformation regarding the inventory, accounting function is important in the organization.Thus, financial accounting and managerial accounting are the two major function that theaccounting department is responsible for. The other functions that are tax and auditing are alsoone of the significant function and the part of the Nestle company.2

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