Financial Decision Making INTRODUCTION 3 TASK 13 Evaluation of the role of accounting and finance: 6 Interpretation and Analysis of financial ratios: 7
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FinancialDecision Making
Table of ContentsINTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................3Evaluation of the role of accounting and finance:.......................................................................3TASK 2............................................................................................................................................6Calculation of the ratios to analyse company performance:........................................................6Interpretation and analysis of financial ratios:.............................................................................7CONCLUSION..............................................................................................................................10......................................................................................................................................................10REFERENCES..............................................................................................................................11
INTRODUCTIONFinancial decision making implies to systematic and organised set of activity concernedwith choosing most appropriate and efficient alternative among different alternative course ofaction related to fiscal operation. Basic objective or motto of it is to bring and choose new orinnovative steps in order to attain business objective, vision and mission (Ball, 2013). Reportprovides explanation about various elements like terms, structure of financial statements andapplication in planning, controlling and decision making of techniques of managementaccounting in context of Camden Limited. It is United kingdom's top supplier and manufacturerof uPVC windows and doors. Report also contains workings of ratios along with relevance todifferent users and duty of accounting and finance in business entity regarding decision-makingand reporting in context of ALPHA Limited, UK's manufacturing company. TASK 1Evaluation of the role of accounting and finance:Overview of company: In UK, Camden Limited is most famous supplier and provider of uPVC doorway,entrance and windows. Company provides customised designs of windows and entranceaccording to customers choice. Company has main head office in Antrim, Northern Ireland andmanaging its business across the UK through it. Company is renowned for theiruncompanionable designs and range of windows, entrance doors. It has reached in this positiondue to experience of approx 36 years and unique product quality in industry. It design andprovide products which are long lasting and complies with security norms (Camden Group.2019). Recently company made funding in recycling of uPVC products and offer recycling of itsold products. Company with its unique ideas and innovation giving tuff competition in uPVCindustry. It has product range which are substitute of normal demanding products with changingenvironment and climate. It is supplying products for domestic and commercial use in UK.Structure of and terms used within the financial statements:Financial statements majorly combines income statements or profit or loss accounts,balance sheet or statement of financial position and change in equity or shareholder's fund, cashflow statement etc. Structure of balance sheet includes owner's equity, liabilities and all assets.Balances shown in balance sheet is value of all liabilities and assets as on fix specified date.
Shareholder's fund or owner's equity includes capital, reserves and current year profit. Liabilitiesare further divided in current liabilities and non current liabilities. Assets are also classified asnon current assets i.e. tangible assets, fictitious assets etc. and current assets i.e. inventory, cashand cash equivalents etc. Structure of income statements comprises net turnover, cost of goodssold, gross income, direct and indirect expenses and net income. Income statements combineboth trading account and profit & loss account (Bryer, 2013). In trading account part gross profitcalculation is shown. Gross profit is computed by adjusting opening and closing inventory, anddeducting direct expenses from total amount of sales. Where as in net profit part all indirectexpenses and incomes are exhibited. Net profit is computed by deducting all indirect expensesfrom indirect incomes. Indirect expense and income are those gain and expense which are notdirectly related to core business activities of business activity. Role of management accounting techniques: Management accounting contains most valuable functions which facilitates managementby rendering information or aggregations to managing employees/officials in trade enterpriseassisting them in taking judgements and decisions. The whole of process and concerned activitiesof management accounting focuses towards use of specific relevant tools and techniques that tobring smoothness in process of controlling, decision-making and planning. Here major aim ofcompany officials is to provide effectiveness and make vital improvement in company's keypractices. In large companies like Camden LTD accountants or managerial personnels usingdifferent techniques to achieve desired efficiencies company's operations and practises. It alsoassist in systematic allocation and assignment of monetary and fiscal resources to increase andattain accountability. Techniques are adopted by companies set guidance and policies forconducing trade and management practices. financial planning, cash flow statements, analysis offinancial statements, fund flow statements etc. are most widely accepted management accountingtechniques. There multi-purpose techniques which are necessary for complete development ofand to provide efficiency in internal and external processes. Following is a discussion on varioustechniques management applies under management accounting:Financial Planning: It simply implies to set of specific tasks and functions that areconducted by companies to project findings, estimate capitals and asses the need ofcapital requirement while considering competitive factors. It helps to create financialpolices and guidelines regarding procurement, investment & application and management
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