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Financial Decision Making : Zara

   

Added on  2021-02-20

12 Pages3842 Words84 Views
Finance
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Financial DecisionMaking
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Table of ContentsINTRODUCTION...........................................................................................................................3MAIN BODY ..................................................................................................................................3TASK - 1 .........................................................................................................................................3Role of the accounting / finance and management accounting system in planning, controllingand decision making process: .....................................................................................................3CONCLUSION: ..............................................................................................................................7REFERENCES................................................................................................................................8TASK – 2 ........................................................................................................................................9(A) calculation of the different ratio of the Alpha Ltd for the two year: ....................................9(B) Comment on the financial performance of the Alpha Ltd: .................................................10REFERENCES..............................................................................................................................12
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INTRODUCTIONThe term finance is defined as management of the large amount of money by a particulardepartment in the firm (Loibl, 2018). It includes the management of the assets, liabilities,revenue and expenses and debts of the business. It involves the procurement and utilization ofthe funds in the so that a business can carry out the financial operation in a efficient manner. Thefinance / accounting function based on the making the decision by the finance management withthe data and information by financial statement and reports. The financial decision involves thedecision related to raise the fund from the share capital and debentures. These are thefundamental business information and system that help in decision making process related tofinancial information and data. In the report, the management accounting system and techniquesthat is relevant with financial and other information in respect of the organisation. It also coversthe financial ratio that is based on the financial statement like trading and p&l account and thefinal account of the company. The accounting and financial system of an organisation play asignificant role in in order to prepare the financial statement and reports in the business. To better understand the financial decision making concepts, company Zara is chosen to preparethis report. The company is retail sector that is placed in the Spain. The company is founded inthe year of 1974 and the management of the company is planing to carried out its activities atdifferent location and the product are clothing, accessories, shoes, swimwear, beauty andperfumesin upcoming years. It is crucial to the business management to measure the financialstatements and reports so they able to make the decision for the requirement of the financingresources to expand the business.
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MAIN BODY TASK - 1 Role of the accounting / finance and management accounting system in planning, controlling anddecision making process: The management accounting techniques and system are the basic business operation thathelp in the devising the planning process, performance management and decision makingprocess and provides the structured expertise in the particular profession to control the reporting.It is controlling activities that help in formulation of the business strategies and implications ofthe rules and operating process in the system. There are different types of the managementaccounting system that are needed to operate the business activities. Some of the managementaccounting system are described as under:Financial Planning: This is long term process of estimating the required capital and fundsto invest in the particular projects. It frames the long term policies of the business relatedto procurement of funds, investment and management of financial resources. Thefinancial plan covered the comprehensive statement of funds related to Alpha companythat described the long term objective, funds, saving, expenses and management of theresources in order to uses in the future. The management of the Zara is needed to use thefinancial resources in a effective manner in the future projects as per the financialplanning of the business (Danovi, Riv and Azzola, 2016). Analysis of the financial statement: This process contents the analysing and inter-pratethe financial statement and reports in front of management of the company (Lichtenberg,Qualls and Smyer, 2015). These financial statement covers the fundamental structure offinance like final accounts as trading and p&l account, balance sheet and other reports ofthe company. This is the particular process of measuring the financial statements for thepurposes of the decision making in the alpha Ltd These reports and statement are used bythe external stakeholder to understand the financial health as well as businessperformance.Historical cost accounting: It is a economic term that is defined in the cost accountingthat drives the value of an assets on the final accounts as per its original cost when assetsis purchased on the same amount. The historical cost method is used for the fix assets in
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