Financial Decision Making and Ratio Analysis of Panini Limited

FINANCIAL DECISION
MAKING

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................4
TASK 1............................................................................................................................................4
Part a............................................................................................................................................4
Part b............................................................................................................................................7
TASK 2............................................................................................................................................8
Part a............................................................................................................................................8
Part b............................................................................................................................................8
REFERENCES..............................................................................................................................12

INTRODUCTION
Financial Decision Making involves analysis of various financial data including financial
ratios to arrive at a decision whether to invest in the given company or not. It shall be analysed
that whether the company is showing favourable results and is yielding highest conceivable
returns. Below report is in respect of Panini Limited which is a bread making company and thus
can be called a manufacturing company. The below formed report will involve discussion of
various functions of accounting department and finance department like financial accounting
function, tax function, investment function, dividend function, etc. Also, various ratio will be
calculated like net profit margin, gross profit margin, current ratio, etc. and thereafter will be
interpreted for better understanding of the operations of the company.
TASK 1
Part a
1. Accounting Department:
1. Financial Accounting Function – Financial accounting function involves functions
related to storing, recording, analysing, summarizing and reporting of financial
information of an entity. Such function is responsible for accurate processing and
analysis of financial information to render useful financial statements for its intended
users (Greenberg and Hershfield, 2019). Responsibilities of this function involves to
check whether the financial statements are prepared as per applicable laws, rules and
regulations, whether all errors apparent on records are corrected, whether all the
applicable accounting adjustments are done and whether accounting standards as
applicable are followed in preparation and disclosure.
2. Management Accounting Function – Management Accounting information is
utilized by the managers to be able to make efficient operational business decisions.
Panini Limited being a manufacturing company may use the information from
management accounting function in costing and management of the processes. Also,
such functions may vary from industry to industry as processes and requirement of

each industry is different. It can also be called as cost accounting which assists the
entity to achieve business goals by identifying, analysing and interpretation of the
information. It includes analysis of both financial and non-financial data to allow
effective decision-making by the management to provide effective management.
3. Tax Function - Tax function basically involves identification and calculation of
taxable income, calculation of taxes thereon, setting aside funds to pay the taxes on a
timely and efficient manner. It includes various categories of taxes namely sales tax,
goods and service tax, income tax, property taxes, etc. The function involves
assessing the impacts of changes in any of the tax regulations on the company. It
involves tax planning for savings in payment of taxes and to come up with the
strategies for such savings (Yue, Gizem Korkmaz and Zhou, 2020). Panini Limited
being a bread making company needs to comply with tax obligations related to
processing activities, selling of its products, tax laws on the expenditures of the
general nature and company specific expenditures according to any rules, regulations
and laws being formulated.
4. Auditing Function - Auditing function as the name suggests involves analysis of the
financial statements, records, documents of the company to look for any errors or
mistakes appearing prima facie on the records or in detail with a view to render
accurate financial information for the intended users like management, shareholders,
creditors, government, etc. It may also include the internal audit function which is
being conducted by an internal auditor who may or may not be an employee of the
entity but works with an objective to advice company on the reliability and
effectiveness of its financial statements and relevant financial records. Panini Limited
being a limited company is also required to meet the legal obligations, test the going
concern, etc. which are covered in auditing function of the entity. Such a function will
involve reporting to the board of directors or audit committee of the entity regarding
financial statements and internal controls of the company.
2. Finance Department:
1. Investment Functions - Investment function basically involves all the functions
related to investments of a company. Be it investing in the investments, managing of