Financial Decision Making: Importance of Accounting and Finance Departments, Sources of Finance, and Ratio Analysis

FINANCIAL
DECISION MAKING

Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1.1 Evaluating the importance of accounting and finance department:.......................................3
1.2 Sources of finance for the growth and expansion of business...............................................5
TASK 2............................................................................................................................................6
Part A: Computation of ratios -...................................................................................................6
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
In this below report, Financial decision of a firms are taken with the help of analysing
finance and accounting functions. Financial decisions are made by finance manager. Accounting
and finance function of Panini plc are analysed below to meet future aims and objectives (Gulin,
Hladika and Mićin, 2018). In this report source of finance are also discussed which help in
increasing the capital in the business. Performance of Panini plc is measured with the help of
ratios. Ratios are the best way to analyse accurate company’s performance. Performance is
analysed by comparing ratios of two year of financial statements.
TASK 1
1.1 Evaluating the importance of accounting and finance department:
Accounting Department: The main duties of finance department are keeping record of all
financial transaction which take part within the organisation. This transaction includes Account
payables & receivables, purchase and sale of assets, payment of creditors and collection from
debtors etc (Hastert and et.al., 2018). Accounting department analyse the financial records and
prepare statements showing company positions.
Accounting functions:
A. Managerial Functions: The managerial function helps in preparing internal reports which
look into upcoming trend and sale expectations. Managerial function make decision
making process easy. Management help in designing new product and also measure its
profitability by comparing the targeted costs. Some functions are discussed below:
 It involves in collecting and analysing the information regarding financial
transactions.
 It helps in determining breakeven point and profitability of the firm and also
suggest majors to enhance the financial performance of the company.
 It helps in measuring rate of return so that they can select most profitable
proposal.
Financial Function: The main function of financial accounting is analysing financial transaction
and convert into Consolidated financial statements (Lanz, Sorgente and Danes, 2020). Finance
accounting refers to bookkeeping of all financial transactions which help in Future decision
making and measuring financial growth of the company. Some functions are discussed below:

 Financial accounting function refers to the tracking and preparing financial report
which gives accurate position of finance in the firm.
 Financial manager aims to decrease the cost and expenses to maximise profit of
the firm.
B. Tax Functions: Tax functions refers to the accounting methods which empathises on tax
and tax returns rather than public financial statements. While filling the tax returns
manager has to follow all rules and regulations regarding tax policies. Some functions are
discussed below:
 This function provides guidance to the management to make such transaction in
which company don’t need to pay higher taxes so that they can maximise their
profits.
 Tax accounting focuses on income, donation, profit, losses and tax deductions
which are consider while auditing.
Auditing Function: It refers to the measuring accuracy in the financial statements which are
prepared by company (Manurung, Effrida and Gondowonto, 2019). Auditing help in detecting
any financial frauds in the company. Some functions are discussed below:
 To identify the timing and extension of auditing process, auditing function plays a
very important role.
 In the process of auditing, accountant has to maintain Secrecy of information and
accurate valuation of the assets.
 Accounting and account auditing institutions control over all auditing functions.
Finance Department: This is an integral part of a company which refers to the management of the
payrolls and expenses. It also provides accurate information to contribute in decision making
process. This department help in controlling the income and expenses of the company (Ottaviani
and Vandone, 2018).
A. Investment Function: this function is performed by finance manager to decide where to
put the funds of the company. This is an important function performed by the company to
maximise its capital and profits.
 To maximise the profit of the company, investor has to invest in new technology
and innovation which generate future benefits. Investment decisions are made
after full research regarding the company in which fund will investing.