Financial Decision Making

This document provides a detailed analysis of the meaning, responsibilities, and tasks of financial and accounting activities in organizations. It also includes the computation of various ratios of Skanska Plc and a comment on their performance. The document focuses on the importance of financial decision making and its impact on the organization's success.

Financial Decision
Making

Table of Contents
Introduction......................................................................................................................................3
TASK 1............................................................................................................................................3
Detailed analysis of the meaning, responsibilities and tasks of the organisation of financial and
accounting activities....................................................................................................................3
TASK 2............................................................................................................................................6
Computation of various ratios of Skanska Plc.............................................................................6
Comment on the performance.....................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

Introduction
It is similarly actual important among all financial management to confirm they are capable
of making successful decisions as well as to identify financial decisions mostly as mechanism
which will rely on the development of multiple potential decisions. Financial control is very
important for businesses to ensure that they evaluate each and almost every part of company
financial action while preparing to make changes in their results. It is the determination of
straight the creation of highly effective upcoming proposal of the organization. In accomplishing
the long-term economic targets and benefit of higher wages, for firms to ensure this strategy is
achieved in a systemic way, greater sales (Barth, Papageorge and Thom, 2017). The present
study focuses through an overview of Skanska Plc, a building business based primarily in the
UK. It remained established in 1984 in addition to has remained running methodically. This role
addresses multiple aspects grounded scheduled the entity. These are essential to the
organization's financial accounting functions, activities and responsibilities. In addition, to assess
the company's results, different metrics are measured and in this article, an overview of the
results is included to provide recommendations to investors on investing.
TASK 1
Detailed analysis of the meaning, responsibilities and tasks of the organisation of financial and
accounting activities
It is really relevant to any and all companies, such as Skanska, to ensure that they all pay
more attention to that same decision-making process. Each of the corporation's executive
committee is required to design a company paper, focusing on the measurement and funding of
the organization's financial accounts, tasks and responsibilities. In terms of entity, both of them
are confirmed in this study below:
Accounting and financial activities: they are the primary reporting and control tasks that all
companies must undertake to effectively achieve potential objectives (Chen, 2018). The Finance
Group in Skanska Plc concentrates mostly on following requirements:
 Final accounts generation: The primary transparency and financial features. It
would be very hard to evaluate if the actions made in recent years have produced
good or negative outcomes if the company cannot publish financial statements.
Throughout this feature, there have been 3 main types with final accounts. This

provides a statement on gains and expenses, balance sheets and cash flow. All
will help to assess not whether the business can achieve its monetary goals.
Mostly with aid of them who benefit future judgement and the execution of
challenging activities, the sustainability, the profitability, the true role etc. may be
calculated. It is really essential to be oriented; as it lets the company retain
accurate records on all operations.
 Performance assessment: This is among the key accounting and financial features.
This helps one to evaluate the good or negative results of the methods that have
already been developed, which makes it quite applicable for the business. If the
company cannot measure its actual outcomes, it may be quite stable to regulate
whether or not possible expectations are extended. Analysis of the present
condition will also assist in predicting the adverse effects of any efforts taken in
the potential. If Skanska Plc's management is unable to achieve however it is very
hard for customers, lenders and so on to fulfil their demands.
 Observance of the rules: it is also very essential for the accounting department to
ensure consistency with all laws when drawing up final reports, and it will afford
to disregard legal impairments. It cannot work systematically in Skanska to play
this task; it will be really hard to guarantee the prejudice in financial declarations.
Unless the standards are followed, the accountability and exactness of the
financial reports can also be impaired. For the company, this role is critical to
disregard any legal impairment in operations as well as other financial enterprises
(Eberhardt, de Bruin and Strough, 2019).
 The formulation of major choices based on current situation: this financial and
accounting role notes that the formulation of major choices as per the current
situation of the organisation is from the utmost significance for all companies
such as Skanska. It would improve productivity and accomplish future goals. For
the organisation to expand, administrators or management may need to perform
the role when they are driven to reach their long goals.
 Accounting and finance tasks: There are numerous duties relevant to the
department of finance and accounting. They should all be Skanska-focused as it
will help to reach all potential goals:

 Future expense and income forecasting: it is among the key financial and transparency
activities that must be targeted more by Skanska auditors, as it will assist them in
assessing all future expenses. It would allow them to be able to face everything and have
their funds apart to meet them adequately. In addition, sales may also be calculated using
the accountancy to build potential budgets (Greenberg and Hershfield, 2019).
 Routinely carrying out all operations: this task is to be applied in systematic fashion to
the financial accounting services of the company. Sufficiency may be allocated to all
teams required for implementing the operations by allocating appropriate funds. Skanska
Plc can help ensure that all its potential targets, including higher earnings and sales,
highly happy consumers etc., are accomplished.
 Compliance with the organisational specifications: it is necessary for all organisations to
fulfil all specifications to carrying out certain operations correctly. One is financing, that
is an oversight and finance responsibility. This will help manager meet all lengthy goals
if it is handled correctly. It is among the biggest tasks and it would be very hard to carry
out the activities and to reach potential goals and targets if this is not cantered. To breach
damage in the future, it would be very relevant for managers to actually listen towards
this role (Hershfield, John and Reiff, 2018).
Accounting and finance positions: ensuring that all companies pay more attention to their
operational and finance positions such that financial operations are routinely carried out is
extremely important. A few of the major business and audit functions are discussed as follows:
 Report both sales and expenditures: This principal functions of accounts and finance is to
record reports on revenue and expenses that exist throughout the year. The study of the
potential payment of all its costs, by means of income produced during the year, could be
beneficial for the company such as Skanska. It will be very hard to complete future
objectives unless the evidence is not systemtically registered. (Hirshleifer, Jian and
Zhang, 2018).
 Managing money balance: Financial management have a duty to manage every working
capital such that the true cash flow as well as outflow can be calculated during the
financial statement. It would be very impossible to maintain that potential targets in
Skanska Plc can be completed effectively if managements are not capable of controlling

the flow of capital. This is one of the principal functions that can continue to coordinate
all the company's operations and can accomplish all long-term objectives.
 Accountability: Its accounting and financial function sets out that the company can
produce all reports of revenue and expenditures so they are capable of helping to
accomplish future goals. In the assistance of individuals and teams, the current role of the
company can be understood and future decisions made. For the managers the financial
division of Skanska, this task is very critical as it will assist them to secure the success
efforts of the company succeed.
The debate is based on the study of multiple forms of accounts, responsibilities and financial
positions at Skanska Plc. They all play an essential part for the firm in addition to they resolve
help achieve all possible goals, like management, financial condition, higher earnings and
incomes. It would be very difficult for management to respond to the advancement of the
company and its success if they cannot actually listen to them. In Skanska each management
committee takes on most of the tasks, obligations and responsibilities of finance and accounting
because they concentrate more on the creation and success of the company (Jetter and Walker,
2017). It is crucial for the accounting department to ensure that all rules are followed when
reviewing the final reports and it will help to avoid legal interventions. It cannot work
systematically in Skanska to play this task; it will be very hard to guarantee the prejudice in
financial declarations. If the requirements are monitored, the transparency and exactness of the
financial documents can also be impaired. This purpose is right useful for the industry to
disregard some sort of legal inference in activities as well as other practices of company.
TASK 2
Computation of various ratios of Skanska Plc
Ratio analysis may be described as an examination of that same corporation's current
financial situation in order to assess its actual results. It is also very hard to make potential
decisions unless the organisations are unable to evaluate the current position. The managers
throughout Skanska Plc measure various kinds of ratios that administrators use to assess the
current market situation. The formulas together with the proportion definition are the following:
 Return on capital employed: This is used principally to receive money and to determine
company capital performance. If it is not correctly measured, the management will

deceive in predicting potential market roles. The following are the equations for Skanska
Plc:
Formula: operating profit / capital employed * 100
Particulars 2018 2019
Net profit ..750.. ..975..
Capital employed ..2325.. ..2850..
Results ..32.26%.. ..34.21..
 Net profit margin: it focuses primarily on evaluating the company's financial success by
essential the correlation between turnover or turnover as healthy as net income
manufactured during the year (Lichtenberg, Ficker and Rahman-Filipiak, 2016). For
Skanska Plc, the formula is defined:
Formula: Net profit / sales * 100
Particulars 2018 2019
Net profit ..600.. ..675..
Net sales ..4800.. ..6000..
Results ..12.50.. ..11.25..
 Current ratio: based primarily on corporate operating assets. It can be decided that the
organization can cover all its current liabilities again with aid of existing assets in one
year again (Loerwald and Stemmann, 2016). For Skanska, the formula is the following:
Formula: current assets / current liabilities
Particulars 2018 2019
Current assets
………
1515……..
..2070…
…
Current liabilities .645.. ..2220..
Results ..2.35.. 0.93
 Total Days of receipt / Collection period for the debtor: the percentage is determined
specifically to define the days whenever debtors are charged in order to provide funds for
planned operations. It will bring a negative impact on bank decision-making if the
organisation is indeed not responsible for assessing. The thorough review of Skanska
Plc's longer repayment periods is as mentioned below:
Formula: Accounts receivable / sales * days in the year
Particulars 2018 2019
Accounts receivables ..570.. ..2100..
Sales
..4800……………
……
..6000…
…..

Results …43 days.
...128
days…
 Average collection period of paying days / creditors: the time of payment of creditors is
referred to as the time period of creditor settlement. It is really vital to any organization,
so that only they can receive transactions for just a significant period of time (Lu, Won
and Cheng, 2016). For Skanska, the approximation is the following:
Formula: accounts payable / cost of goods sold * days in year
Particulars 2018 2019
Accounts payable ..900 ..1200
COGS
.4800*365.
.
..6000*365.
.
Results ..68 days.. ..73 days..
Comment on the performance
The proportion study showed that the corporation's output was decreasing in 2019 due to
the reduction in net sales, returned on current and capital proportion in 2019 relative to last year.
For management, it is really crucial to consider effective plans for the business, in order to boost
company efficiency. The debt recovery duration is therefore extended in 2019, indicating that
Skanska Plc's efficiency is slow in 2019 relative to 2018. The required payment for borrowers
also represents it in 2019, the periods when companies paid the borrowers (Rai and Lin, 2019).
By means of various discussions, the factors, consequences and explanations for shift in business
ratios can be analysed:
 A rise in revenue is among the key factors of improvements in the business ratios. Sales
throughout 2018 amounted to 4,800, growing to 6,000 in 2019. Because of this,
transaction prices etc. the balance sheet components have been influenced as well as the
financial statements have changed.
 A significant change in existing liabilities may be a further trigger for improvements in
the proportions. These amounted to 645 in 2018, up to 2220 in 2019. The explanation for
the reduction was primarily because the existing 2019 assets in relation to obligations
were 2070. This has resulted in a fall from the prior year in the projected proportion for
2019. In order to boost the efficiency of the organisation, it is also very necessary for all
the executive team to organize funding for satisfying short-term agreements.
 A relatively poor margin rise relative to revenue, is among the factors for shifting ratios.
Sales for 2018 amounted to 4800, up towards 6000. But in 2019 revenues just came to

75. As a result the organization's performance has been impaired and has declined in
comparison with last year.
 Adjustments to the accounting ratios have a huge influence on the company's financial
condition. Since the organization's success in 2019 is not strong compared with 2018,
business funding is very challenging. As a result, future investors' appetite will be
diminished. Furthermore the gradual deterioration in financial results has negative
implications for revenue, earnings and profit margins as well. It would be very necessary
for Skanska Plc to make successful future actions throughout order to boost its money
position.
Investor's Recommendation: Based on Skanska Plc ratio research, it was calculated that future
buyers that are position to finance 1 million pounds in the business will not next year spend the
capital in the enterprise. A development in Skanska must be planned by the shareholder for 2 or
three years, but his success should be analysed (Serrano-Silva, Villuenda-Rey and Yáñez-
Márquez 2018). These will give the researcher larger expected returns if it is successful. The
investor would raise the likelihood of poor returns on each capital that is spent by doing this
investment in 2012.
CONCLUSION
From this concept analysis, financial decision-making was inferred as the implementation
mechanism to make rational management choices in order to meet the financing aims and
outcomes effectively. It would be incredibly difficult for management to accomplish future aims
and objectives if they cannot make successful choices for this next timeline. There remain altered
answerability and investment tasks, tasks and responsibilities that all businesses essential to
essence on. Some of them appear to be closing intelligences, performance assessment, obedience
with all law and possible actions depending on the present situation. Besides all this, it is also a
matter of finance and business responsibilities and commitments to estimate future expenses and
profits, to carry out all activities systematically, to fulfil company criteria, to monitor the transfer
of cash, and to retain accounts, etc. There were various types of proportion determined when
planning for an entity to set its economic viability. Some include returns on employed money,
net profit, current cost, average for account receivables and receivables. It is convenient for
management to evaluate whether or not company is experiencing success by measuring both of

them. Investors might use the percentages to assess whether or not assets can be spent in the
company.

REFERENCES
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