Financial Decision Making: Role of Accounting and Finance in Tesco Plc and Ratio Analysis of Alpha Ltd

FINANCIAL
DECISION MAKING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Task-1..........................................................................................................................................3
Task-2..........................................................................................................................................7
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Financial decision-making is the process of making the decision regarding the finances
and funds of the business. This involves the decision of acquisition and utilization of money
within the business so that management able to manage the smooth functioning of business. The
present report will cover two tasks (Naim, 2022) The task 1 of the report will cover the critical
evaluation of role of accounting and finance within Tesco Plc. The report will also cover the
examples of Tesco Plc in order to enhance the viability and reliability of information. Further,
the task 2 of the report will cover the calculation of different financial ratio of Alpha Ltd based
on their financial statement. On the basis of calculation of ratio, the report will also comment on
the performance of the Alpha Ltd from a potential investors' perspective. Lastly, the report will
comment on the performance of the business based on its financial ratios.
MAIN BODY
Task-1
Accounting and financial functions-
Accounting refers to set of practises where business related transactions are taken into
books of accounts, here finical information are collected, classified, recorded and summarized to
serve organizational purposes, this is an essential process since in the modern era of business
without proper data a business can not be run with proper efficiency. The scope of accounting is
getting expanded with the progress of time, but the main streams are financial accounting, cost
accounting, management accounting (ALAWAQLEH, 2021)
Role of accounting functions-
The roles of accounting functions are widely ranging, since in the modern era of business
the accounting functions are getting expanded, at the same time their role is also getting
augmented. There are different branches of accounting such as financial accounting, cost
accounting, management accounting etc.
Financial accounting-
Financial accounting is one of the oldest branch of accounting where all business
transactions that can be measured in the monetary value are identified, measured, recorded and
presented in order to meet organizational needs. For instance- Tesco plc which has presented its
financial accounts in order to bring better decision-making capability in benefit of the
organization. With the help of financial statements it can be seen that in the year 2019-20 Tesco

financial services made profit of around 1068 million pounds at the same time it came down to
735 million pounds in the year 2021. So on the basis of the information it can be deciphered that
there is need to pay attention to its practise that how it is getting operated and which areas are
having need to be reformed (McLaney and Atrill, 2020)
The role of financial accounting is very mammoth, it helps to make budgets for the entity.
Budgets are one of the easiest type of planning which aids the entity to eradicate variations and
making operation process errorless. Budget making is only possible if there are sufficed amount
of financial data is available, so with this regard the role of financial accounting is very much
viable. For instance- other sectors of the entity are working good, in the year 2021 TESCO plc
made profits of 48848 million pounds in UK for its business activity, so it may go for higher gain
which is possible with better control on funds and operations.
Financial accounting assists the controlling of funds and operations. The success of an
entity lies in the success of their operations and funds management so pertaining to the notion,
financial accounting plays vital role. It makes the task simpler to manage operations.
Cost accounting-
Over the time with the changing market circumstances the market propositions are also
getting changed, now the entities are price takers, so they have need to reduce their costs and
maximize their revenues. For fulfilment of the aim cost accounting which is one of the most
prominent branch of accounting is making the way barrier-less.
It aids to keep proper control on the cost of the entity. The entity may keep all relevant
information about their cost factors so can control it with higher efficiency, if the cost is well
managed then their would not be issues of revenue. For instance- in the market Sainsbury, M&S
and many such entities are placing tough competition before TESCO so with cost leadership it
can eradicate the potential troubles (Faridi, Nawazn and Bibi, 2022)
Cost accounting is also helpful to hike efficiency of the operation. Since here all different
realms such as material, labour, overheads are taken into focus, on every and each element there
is strong surveillance is kept, it enables business to improve its efficiency.
One of the biggest advantage is to know variations. Now there are range of cost
techniques such as variance analysis, standard costing, unit costing etc. are available which are
making the act of cost management simpler, with the help of these techniques the entity can
eradicate all potential troublemakers and can hike its market performance.