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Financial Decision Making Assignment Solved - Alpha Limited

Added on - 22 Nov 2020

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FINANCIALDECISION MAKING
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1Role of Accounting & Finance in an organisation.......................................................................1TASK 2............................................................................................................................................6Calculation of Ratios....................................................................................................................6CONCLUSION................................................................................................................................9REFERENCES..............................................................................................................................10
INTRODUCTIONFinancial Management is a process of decision making through which finance managersof a firm manage various elements of Financing Mix such as Debt, Equity and Capital Structureso that they can take decision related to expansion, diversification and investment. Managers ofbusiness firms also makes decisions by evaluating and analysing financial statements such asIncome Statement, Statement of cash flow and Balance Sheet. Further, for making efficientdecision managers of a firm uses different functions such as Accounting and Finance. The belowreport explains role of Accounting and Finance Function in an organisation like Tesco. Further,this report also calculates different types of profitability, efficiency and liquidity ratios of AlphaLimited of two financial year to evaluate companies performance.TASK 1Role of Accounting & Finance in an organisationAccountingAccounting is a method of classifying and recording financial transaction of anorganisation. This method is used for the purpose of disclosing financial information of acompany by collecting and analysing all the financial data. Thus, accounting plays an importantrole in a business firm.According to (Minnis and Sutherland, 2017), Accounting helps a business organisation inanalysing its profits, revenues, cost and expenses. Further, accounting also play a role inmanaging cost, assess amount of taxes and helps company in analysing various investmentprojects and alternatives.It is necessary for all companies to follow a standard accounting procedure andaccounting principles. Tesco is a UK based retailer which offer groceries and other merchandisein many countries across the globe. As this company is covering a large market it is essential forfirm to record and maintain operational and financial transaction.As per the view of (Vanauken, Ascigil and Carraher, 2016), accounting is classified indifferent types according to the functions and departments such as Management Accounting,Cost Accounting and Corporate Accounting. Thus, it is also examined that this function is notoperated without accounting.Finance1
Finance is an activity through which an organisation is able to manage its monetaryresources and funds. As per the view of (Berger, Minnis and Sutherland, 2017), without money afirm is able to procure its resources and assets as a result performance of a company getsdeclined.Further, it is essential for a firm to manage and acquire so that it is able to estimate itsfuture expenses and investments. Further, finance also plays a vital role in managing risk,minimising cost and in making various decisions related to investment and expansion. Tesco alsouses finance function in its organisation to manage and maintain financial so that company candiversify its operations in new market which in turn maximises Brand Image and profitability ofthe firm(The Role of Accounting in Business.2016).As per the view of (Lakis and Masiulevičius, 2017), Accounting and Finance Function isvery important for an organisation because Accounting depicts financial information such asprofit and expenses of past year whereas Finance helps business in projecting companies futures.Further, both these functions benefits a business firm by resolving their operational and financialproblems.Role of Accounting FunctionMost important types of Accounting are Management Accounting and FinancialAccounting. Tesco is able to set its future goals and objectives with the help of financialaccounting whereas with the help of management accounting company can attract its customersand investors by disclosing financial information.Decision Making-For operating business of a company in an efficient and effectivemanner its is necessary for manager to make various decisions and formulate strategies so that itcan achieve profits in long run. Managers of Tesco is unable to make decisions if they do nothave detailed information related to Assets, Liabilities, Income and Expenses and all theseinformation is presented by company throughManagement Accounting Function. Thus, thisfunction of accounting play a role in disclosing financial information of company to internalmanagers so that they can make future decisions and plans.This function of accounting is beneficial for every business firm as with this managersare able to select most viable and feasible investment alternatives by using all accountinginformation. Management Accounting Function also play a significant role in formulating rulesand regulation for the companies workers so that they can perform business activities according2
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