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Financial Decision Making Module

   

Added on  2021-01-01

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FINANCIAL DECISIONMAKING MODULE

TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1Swot analysis of the company.....................................................................................................1Functions of accounts and finance department in the organization............................................2TASK 2............................................................................................................................................4Calculation of ratios of Alpha Ltd for two years........................................................................4CONCLUSION................................................................................................................................9REFERENCES..............................................................................................................................10

INTRODUCTIONThe decision which is hard and important or make by keeping in mind all the financesmix of the organization is what is financial decision making. The decisions are related toborrowing and allocating the funds which are needed for investment decision. The financialdecision includes raising funds which can be done either through using company's own money orby borrowing in the form of debentures, loan etc. it helps in maintaining efficient structure ofcapital for the company. To understand it better, the report has taken Alpha limited as a basewhich is manufacturing company situated in UK and is operating in the industry for 10 years andwant to expand is market and for that the report will do swot analysis if the company and willmention importance of accounting and finance department for making financial decision.Further, it will include ratio analysis of the company which will compare the data of previousand current years to make effective decisions.TASK 1Swot analysis of the companyAlpha limited is a manufacturing company which is planning to expand its operationsoutside UK and was started 10 years ago and serving the customers from last 10 years with itsservices. It has good reputation among the customers and has successfully retained its customers.For expanding its market sharethe company need to be aware about its strength, weakness, threatand opportunity(Malina, 2018). In order to do the internal analysis, the company need to carryout internal analysis of the company, the company will use SWOT analysis.Strengths : The strength of Alpha manufacturing company is that it is relatively stablealthough the demand for manufacturing tends to fluctuate with economic conditions of thecountry but it tends to recover from the down turns soon which act as an advantage for thecompany. Moreover, the manufacturing process of the company is highly efficient and hasability to maximize both the productivity of workers and machines which maximize the profit ofthe company. The other strength of the company is its futuristic designs which attracts customersand also it has maintained good reputation among the customers as its providing its services foryears now which increases the trust of the customers on the company and its products.Weakness – The weaknesses of Alpha limited is that it has less skilled labours and oldworkers who are hard working but not innovative and creative which can arise as an issue in the1

way of expansion. The other weakness is that it has high production cost and outdated machineswhich slower down the process.Opportunity – The opportunity of the company can be technology up gradation andreplacing outdated machines with new advanced machines which will make the operation ofcompany smooth and efficient (Osadchy and et.al, 2018). The other opportunity can providetraining to existing employees to be skilled and to hire new employees who can work on newmachines with effective skills.Threats – The threat for the company is government rules of country that it needs tofollow which can affect the operations of the company. The another threat can be newcompetitors with innovation and technology as entering in this industry is very easy (Osadchyand et.al, 2018). As company is thinking of expanding its operation outside UK thereforebusiness fluctuation can also act as a threat of the company which includes inflation, depression,boom and recession.Functions of accounts and finance department in the organizationAccounting and finance play an important role in the management of any businesses.Companies operate on cash and if cash is not managed properly, company cannot workeffectively (Van der Stede, 2015). By properly maintaining accounts and finance department ofthe company, company can manage flow of money and can direct the business towards theattainment of its goals.The various functions of accounting and finance department that lead to the success of theorganization are :Accounting department:Financial accounting- It deals with recording of transactions. In Alpha ltd, it helps inrecording all the transactions by following double entry system. It also helps the managers ofAlpha ltd in communicating all the necessary information to the internal as well as externalparties through financial statements like balance sheet, income statement etc. it also helps Alphaltd in comparing its own performance with its competitors and to evaluate opportunities ofinvestment. It helps the company in calculating financial ratios of the company by usingfinancial statements and then compare the ratios to benchmarks or other competitions in themarket which lets the company know its financial position accurately.2

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