Financial Decision Making: Significance of Accounting and Finance Duties

FINANCIAL DECISION
MAKING
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Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Critical evaluation of significance of accounting as well as finance duties, roles and functions:
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TASK 2............................................................................................................................................6
Financial analysis of Skansa PLC with significant ratios:..........................................................6
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INTRODUCTION
Financial decision making can be defined as a procedure of evaluating information that is
related to finance and interpreting it with a motive of enhancement strategies
incorporated in firm for achievement of financial goals. This report consists analysis of
financial decision making incorporated in SKANSA PLC. This organization was started
in 1984 and is based in UK. It is a construction company that pertains plans for
expanding its operations to other countries in Europe with the time span of ten years
(Barth, Papageorge and Thom ,2017).This report consists evaluation of functions, roles
or duties in relation to finance and accounting activities of an organization. Further,
financial ratios of SKANSA PLC are computed. Overall, financial performance of
company is interpreted in this report.
TASK 1
Critical evaluation of significance of accounting as well as finance duties, roles and functions:
Accounting Department: As name states, this department provides services related to
accounting,. In other words accounting affairs are handled by it/ Accounting involves activities
such as reporting and summarizing of financial transactions. It is a key or required function in
business, irrespective of the size of an organization. This department enables firm to record its
financial information which can later be utilized for efficient decision making. Hence,
department of accounting plays a crucial role in a organization
Functions as well as Duties of Accounting Department:
 Manage finances: It is a duty of accounting department is to record financial
information. It keep track of transactions related to finance, hence, it is responsible for
incorporation of effective financial management in SKANSA PLC (Black, 2019).
 Financial statements: It is a duty of accounting department to prepare financial report or
statement. This statement serves as an indicator of financial status of company, which is
further utilised for incorporating effective decision making process and preparing budgets
for future operations. Also, financial statement plays a crucial role for attracting investors
in company. (Sprenger, 2017)
 Tracking inventory status: Accounting department is responsible for tracking the status
of inventory in an organization. Evaluation of inventory is essential for analysing the role
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turnover period of inventory which serves as an indicator of company sales. As, if the
inventory turnover is high it indicates that stock of company is sold frequently which is a
good sign for an enterprise and vice versa (Copur, 2015).
 Cash flow analysis: This department keeps record of cash collected by company as well
as cash paid. It helps in evaluating the cash flow of an organization. Tracking and
monitoring of cash flow plays a vital role as it pinpoints availability of cash in an
enterprise which ensures fluency in its day to day operations.
 Payroll: It indicates record keeping and verification of pay data, such as, wage
deductions, salary payment, payment of bonuses, commissions, etc. Accounting
department ensures that adequate payment is made to staff members. It also monitors
vacations or sick leaves granted to employees. Accounting department also ensures
deduction of income tax or social security and employment tax from salaries of working
staff, which have to be paid to government.
Roles of Accounting Department
 Financial Accounting :This is concerned with all the normal working of the Accounting
Department like maintaining the payables, receivables and other accounting transection
this function the most basic function of an organisation as it helps in keeping an eye on
the transaction of the business that are occurring on the day to day basis as well as it
helps in understanding the position of the business in terms of cash assets and liabilities.
The key person in this role is the senior accountant and his assistants and mainly headed
by the Chief financial officer of the organisation.
 Preparation of the Financial statements :The major role that is played by the
accounting department in the organisation is to prepare the financial statements of the
company as the financial statements plays the major role in getting the financial aid for
the business all the banks and other lenders look at the financial statements before giving
the financial aid for the business all the other stakeholders also are keenly interested the
financial statement of the business as before in investing in the business investors look at
the financial statements and all other stake holders look at the financial statements
(Eberhardt, de Bruin and Strough, 2019).
 Financial planning: Although the planning is considered as the work of the management
as all the major decision related to business but when it comes to financial decision the
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