Importance of Accounting and Finance Functions in SKANSA PLC

Financial Decision
Making
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Executive Summary
This report has been prepared for the management of SKANSA PLC keeping the financial
information of company in context. In first part of this report, importance of accounting and
finance functions within company have been discussed. It also includes discussions on duties and
roles of accounting and finance team in company. In second part of the report, various ratios
have been calculated for two years of the company, using information from its financial accounts
and comments have been developed about company’s performance from an investor’s point of
view.
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Table of Contents
Executive Summary.........................................................................................................................2
Introduction......................................................................................................................................4
Task 1...............................................................................................................................................4
Importance of accounting and finance functions....................................................................4
Roles and responsibilities of accounting and finance department in reporting and decision-
making....................................................................................................................................6
Task 2...............................................................................................................................................7
A. Ratio analysis.....................................................................................................................7
B. Comment on financial performance of SKANSA PLC.....................................................9
Conclusion.....................................................................................................................................11
References......................................................................................................................................12
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Introduction
Finance is known as bloodline of a company. The accounting and finance department of a
company is responsible for ensuring stable financial health of the company (Cannon, Hillebrandt
and Lansley, 2016.). This report has been prepared for the management of SKANSA PLC,
keeping the financial information of company in context. SKANSA PLC operates in construction
industry. It is based in UK and was founded in 1984. It plans to expand its operation
internationally within a decade. This report has been prepared with an objective of discuss scope,
duties and importance of accounting and finance function in the company. Also, financial ratio
calculation and analysis have also been discussed in this report.
Task 1
Importance of accounting and finance functions
Every business requires funds and finances to keep its operations going. Accounting and
finance functions do that part for the organisation. Accounting involves recording, summarising
and presentation of financial information in financial statements while finance is concerned with
analysing and reporting financial information to senior management, in order to assist them in
policy formulation (Harris and et.al., 2020). There are three key financial statements in a
company:
 Statement of Income – It is a period statement that is used to ascertain financial
performance of the company for a specific accounting period. It contains revenues and
expenses of the business to generate profit/loss.
 Balance Sheet – It is a point statement that is used to ascertain financial position of the
company at a specified date. It contains information about standings of assets, liabilities
and capital as on the specific date.
 Cash Flow Statement – It is also a period statement that is used to ascertain cash inflow
and outflow within the specified accounting period. It is prepared in three forms – cash
flow from operations, investments and finance.
Accounting and management functions are important as it helps in:
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