Financial Decision Making - Assignment

Financial Decision
Making

Table of Contents
INTRODUCTION...........................................................................................................................1
Main Body.......................................................................................................................................1
Role of management accounting techniques:..............................................................................1
Evaluation of role of management accounting techniques and its use in planning, control and
decision-making:.........................................................................................................................3
REFERENCES ...............................................................................................................................4

INTRODUCTION
In business world, the procedure related with the making of valuable decision that are
relevant with liabilities and equity of shareholder and also effective decision in context of
issuance of bond is known as financial decision-making. There are mainly three kind of financial
decision make by management of company which includes investment decision that can be for
long and short term, financing decision in order to raise funds for company and most important
dividend decision which make easy for them to distribute profit in proper manner. There are
mainly three type of financial statement such as income statement, balance sheet and cash flow
statement that support in determining the total cost involved in different process and activity of
company and thus help in making decision related to increasing in profit. In this report the role of
management accounting techniques that are used to plan, control and make effective decision.
Accounting covers different types of ideas and principles that businesses must observe and
carries out the fundamental tasks of a business organization that are useful to the company,
including storing, summarizing and analysing the different financial transactions. The word
function of finance can be described as a kind of exercise that is systematically linked to the
control and strategic planning of economic resources. Fundamentally, the financial functions are
the financial planning component for company.
In this project Southern Windows is selected selected that use to produce doors and
windows as per the customer requirement. The company was first set up in Antrim Northern
Ireland around 35 years ago and now has been designing number of designer and durable goods.
The firm offers full variety of renewable and safe uPVC windows and doors for both business
and national industries with excellent quality and also most trending development (About
Southern Window, 2019). The company is dealing in glass material from a quite long time so
they are able to produce unique goods by mixing aesthetics including latest techniques which
makes customer more attached with there products. In resent time company is able to substance a
wide range goods with the help partnerships with leading supplier of country and in other
nations.
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Main Body
Role of management accounting techniques:
In today's era, the process of of cost accounting or management accounting is related with
determining, evaluating, examining and interpreting meaningful financial information which
enables manager to make effective plans and decision to run day to day activity in profitable and
productive manner. There are number of precious managerial accounting technique that use to
attain the desired goals. In companies such as the management of Southern Windows and
accountants uses such techniques that are required to provide fluidity in the practices and
development projects of the company. This also helps in the management of economic assets to
establish responsibility and accountability. There are variety of methods that are crucial for the
respective company which is essential for growth and effectiveness of inner and structural of
business firm. Interpretation of the various methods used by manager in accounting management
are discussed below:
 Financial Planning: This is consider to an act that is related with deciding in advance in
context of financial operation which are essential to attain the primary objective of
business in respective time (Klinsukhon and Ussahawanitchakit, 2016). Financial
planning ascertain both short and long term financial aim for a company, as it aid
manager to formulate financial strategies and prepare methods in order to attain the
objective. In Southern window managers use this method to guarantee that short-term and
long-term funds are available to help them plan fresh innovations in older process. They
use to make proper projected demand for financing on the grounds of present results and
activities and alerted to potential financing requirements.
 Analysis of financial statements: It is related with procedures to ascertain the
importance and meaning of financial statement which aid to estimate future earning,
ability to pay outstanding amount and maintain profitability of company. This analysis
support manager to give actual and clear picture of company performance and make
effective plans in order to improve the existing results.
 Fund flow statement: This techniques is used to examine the alteration within the
financial position of company in two consecutive date. Funds flow statement use to show
the actual path from where the monetary funds are arising for Southern Window and also
use to give clear image about the usage within an accounting year (Wright, 2016). Trying
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to take big investment judgements and evaluating the effectiveness of any fund-related
decision is crucial (Correia, Dussault and Pontes, 2015). The declaration of fund flow
points to regions where resources are generated and regulates or monitors the use of these
money.
 Budgetary Control: In company, the management accountant use the tool of budgetary
control for controlling and planning for several activities of company. It is an crucial
methods which support manager to direct the entire staff member to execute the business
operation in appropriate manner so that results can be attained. In respective company
management used budgetary control procedure to ensure the affectivity and determine the
ground backside deviation which enables in satisfactory planning that are further used to
manage the quality of the work and suitable decisions to increase productivity.
 Communicating: In business world the success or failure of management is based on the
effective communication network, it means that important information must be
transferred from one place to another within same company so that useful decision are
taken to gain desired results. In southern window management accountant use to prepare
the precious reports that help to give necessary information to the entire workforce so that
objective can be accomplished (Kim and Upneja, 2014).
Evaluation of role of management accounting techniques and its use in planning, control and
decision-making:
In present time it has been evaluated that all organization wants to make organizational
procedures more smooth and simple. Management accounting strategies offer additional
guidance in meeting the requirements that improve the process of production and rise overall
efficiency and effectiveness (Daher and Mohtar, 2015). Companies such as Southern Window
use one or even more methods to monitor the entire financial and accounting system, enhance
planning efficiency and bring efficient company decision. These are discussed below:
Financial Planning: It have been critically evaluated that manager of southern window
uses financial planning control and determine the monetary funds required to run operation, plan
effectively to distribute the income and make decision for determining the best level of
investment within various assets. This techniques entirely support respective entity to increase
different operation and production practices in desired manner so that goals can be
accomplished.
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Fund flow statement: This is evaluated that management by using this technique of
management accounting are able to plan for future actions related with the usage of fund and
make decisions according to planning which increase there affectivity.
Communication: From the role mention above it has been evaluated that management
accountant of southern window use to make plans for communicating important message related
with any modification in older process that support to deliver more comfortable and luxuries
service to customer. In case if employee faces any issues related with procedures or are not agree
with the plans of management they communicate back to manager in order to make proper
modification which support to attain long term success (Kliger and Gilad, 2012).
Budget Control: Controlling budget is significant task for business entity. Budgeted
figures are determined by business organisation on the basis of previous trend's analysis,
management experience and other relevant analysis. This is crucial aspect of organisational
planning, decision-making and overall controlling structure.
Analysis of Financial Statement: Management evaluates financial statements to assure
the organisational success and growth. It defines organisation's performance in all context and
point out towards any weakness in entity's organisational and financial structure. By doing
comparative analysis in southern window manager use to plan for future and take decision to
control any weak area of business (Tridimas, 2012).
CONCLUSION
In conclusion it have been stated that financing and accounting are strategic in the context
of business entity. In maintaining financial and bookkeeping operations through an organisation,
management accounting as well as its methods are beneficial. Financial choice aims at
maintaining an optimal structure of the company, i.e. a correct balance of debt and equity, to
guarantee trade-off between danger and return to employees. It is also stated that the business has
to calculate different kinds of financial ratios that help the business evaluate the economic
performance of the business as demonstrated by its financial statements. Management accountant
effectively perform their financial and accounting tasks by implementing distinct methods. It
also helps to improve outcomes and data reliability and precision.
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REFERENCES
Books and Journals:
Kim, S. Y. and Upneja, A., 2014. Predicting restaurant financial distress using decision tree and
AdaBoosted decision tree models. Economic Modelling. 36. pp.354-362.
Kliger, D. and Gilad, D., 2012. Red light, green light: Color priming in financial decisions. The
Journal of Socio-Economics. 41(5). pp.738-745.
Tridimas, T., 2012. Financial supervision and agency power: reflections on ESMA. In From
Single Market to Economic Union: Essays in Memory of John A. Usher. Oxford
University Press.
Correia, T., Dussault, G. and Pontes, C., 2015. The impact of the financial crisis on human
resources for health policies in three southern-Europe countries. Health Policy. 119(12).
pp.1600-1605.
Klinsukhon, S. and Ussahawanitchakit, P., 2016. Accounting information transparency and
decision making effectiveness: evidence from financial businesses in Thailand. The
Business & Management Review. 7(5). p.112.
Wright, D. J., 2016. Superstitious behavior in financial decision-making. Available at SSRN
2811965.
Daher, B. T. and Mohtar, R. H., 2015. Water–energy–food (WEF) Nexus Tool 2.0: guiding
integrative resource planning and decision-making. Water International. 40(5-6).
pp.748-771.
Online
About Southern Window. 2019. [Online] Available Through
<https://southernwindows.co.uk/about/>.
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