Financial Decision Making: Purpose of Accounting and Finance Function, Sources of Finance, and Financial Ratios Analysis of Panini Ltd

FINANCIAL
DECISION MAKING

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK 1............................................................................................................................................3
1. Analyse the purpose of the accounting and finance function within an organisation.............3
2. Sources of finance ..................................................................................................................5
TASK 2............................................................................................................................................7
1. Computation of financial ratios of two years..........................................................................7
2. Comment on the performance of Panini ltd results on the two years’ financial ratios
calculated in part A above. your comment should include possible causes and reasons for
changes in financial ratios over the two years............................................................................9
CONCLUSION .............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Accounting and finance department is an important aspect of a company which help in
achieving the organisational goal. This report include various types of function and roles of
accounting and finance department. These department inter-related to each-other, Accounting
department keeping track of financial activities within the company and provide these
information to finance department. Finance department use this information in order to control
cost and funds and also prepare budgets(Ng, 2018). Financial ratios of Panini ltd is calculated
with the help of given data which clear the financial position of the company. This report also
contains the interpretation of ratios in the basis of two year calculations. Ratios help a company
to compare its financial position of the company and determine its growth and deficiency.
TASK 1
1. Analyse the purpose of the accounting and finance function within an organisation.
Accounting department: It is the method of recording, clarification and summarising
of transaction and event. The process of accounting starts to identify the transaction and events
which is related to financial character and then is to recorded in books of account it is called
Journal. Transaction and events are transferred in secondary book known as Ledger. After that
they classified as income, expense, assets and liabilities and summarised in Balance sheet and
Profit and loss account(Pandey and et.al., 2020). The whole process is called accounting.
 Keeping Financial Records: It is a basic function of accounting. All business transaction
relates to financial is recorded day to day such as sales,purchases and payments. To keep
financial record in a systematic manner helps to protect the business,reduce the cost and
maximization of profit, to identify risk and helps growth of the company.
 Making Bill Payments: It includes to checking the bills are properly expensed,helps in
recording of bill date to date, identify cash and bank expense, recording expenses in
proper head.
 Decision Making: Accounting is providing relevant information to the user of accounts
which helps in taking decision making. To keeping record properly helps the investors to
invest the company.
 Monitoring financial transaction: The monitoring of the transactions are helps to
identified those expense which is incurred by company in huge amount are to reduce in

next year helps in reducing cost and increase the profit of company(Liang, Moroney and
Rankin., 2020).
 Paying employee salaries: It recorded the employees data in a systematic manner so that
identified the amount which are payable to the employees. It is also helps to analyse the
salary are to pay in accordance their work, and extra benefit like bonus ,commission is
also pay properly.
 Keeping digital records: In modern system of accounting helps to record the transaction
and events in electronically so identify the expenses are not recoded in double. Digital
record are also checked by other parties like investors and employees.
 Control: Accounting is identified the weakness of operating system and provide feedback
the effectiveness. It provide the information to government to exercise the control. To
using past data analyse the future performance of the entity. It combined the effect of all
the transaction which incurred in current year.
Finance department: The department is mainly helpful to solve the issues of the firm’s
financial documents. It also controls the income of divisions and expenditures with respect to
maintain the smooth running of projected activities.
 Investment function: This function shows the comparison between the rate of interest
and the firm’s investment. It also requires the formula of investment that is, value of
investment – interest rate and it shows the decrement in the slope of investment function.
 Financing function: This function of finance department shows the procurement and
utilization of funds for the productive running of projected firm tasks. This type of
function is also known as the financial management(Rashid and et.al., 2022). It also
responsible for the administration and planning of financial funds.
 Dividend Function: this function is performed by the board of directors of the company.
In this function the board of directors decided that how much dividend will be distributed
to there shareholder & how much money will retained in the company so that company
can use that amount in development of there Business. It is also very important because
the company's reputation is depend on it. This function helps company to attract the
maximum number of investors that will enhance the company's value and goodwill.
 Working capital function: Finance department allocate fund to operate company's routine
function. In other words working capital refers to the funds which need to perform day to