Financial Decision Making: Understanding Accounting and Finance Departments and Calculating Ratios for Alpha Ltd

Financial Decision Making

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Task 1...............................................................................................................................................3
Task 2...............................................................................................................................................7
Calculating Ratios........................................................................................................................7
Commenting on the Ratio Calculated..........................................................................................9
Recommendation.......................................................................................................................11
CONCLUSION..............................................................................................................................11
REFERENCES................................................................................................................................1

INTRODUCTION
Financial decision is the term used to refer to the decision making process. The financial
decisions are concerned with acquiring and putting the funds in effective exploitation of a project
proposal to generate maximum returns and maximize the shareholder wealth.
A British based MNC dealing in consumer goods named as Uniliver is the world’s largest
soap manufacturing company. In this report the meaning of accounting and finance departments
will be understood. The varied roles of accounts and finance department will be highlighted.
Further in the task 2 of this report the ratios will be calculated and commented upon for
Alpha Ltd. The report will describe the meaning of various ratios and interpret them for
evaluating the performance of Alpha Ltd.
MAIN BODY
Task 1
Accounting Department: Accounting department is that division of Uniliver that is
concerned with all the activities for preparing the financial statements, general ledger keeping,
bill clearance, consumer bill drafting, payments of the staff members, and related activities
(Nawir, Alber and Syafitri, 2021). The entire economic front of the company maintained by the
accounting department of Uniliver. There is a major role of accounting department behind the
long term continuance of the organization.
Importance: Accounting department is very important for Uniliver in order to run the
business. The organization with the help of its accounting department is able to keep track of its
cash inflows or income and cash outflows or expenses of the company in accordance to the
adherence with the legal requirements. The financial information is provided to the management
of Uniliver through the accounting department in the quantitative terms.
Finance Department: The finance department is that department of an organization
which is responsible for the management of the cash related activities (El‐Haj and et.al., 2019).
Importance: The finance department of Uniliver is important as it makes sure that the funds of
the organization are distributed efficiently and in sufficient amount and at correct time are
effectivity in the business operations (Sultana, 2019).
Role of Accounts Department:
 Financial Accounting: The foremost role of the accounts department is financial
accounting. The role of financial accounting of accounts department is fulfilled through

the making of records, then summarizing them and finally reporting them to the board of
directs in the form of financial statements (Surma-Syta and Majek, 2021). The outcome
of financial accounting function of accounts department is in the form of stamen of
financial position, cash flow statements and profit and loss statements. These statement
carry huge importance and are used by the stakeholders of the company.
 Management Accounting: By the role of management accounting the accounts
department of the company identifies the financial information. After the identification of
the financial information the information is measurement. The effective measurement of
the financial information once done the accounts department by following the
management accounting role analysis the identified and measure financial information.
The analysis results are interpreted by the department. After the interpretation of the
financial information analysis the department communicates the interpreted results to the
management of the company for further use of it for organizational goals (Tashnazarova,
2021). The role of management accounting of accounts department is different from the
role of financial accounting. The accounts department with its role of management
accounting reports the financial information to the management, accounting is basically
done for the management. Whereas the financial accounting function of accounts
department is concerned with preparation of financial statements for the stakeholders.
 Tax Function: The next role of the accounts department in an organization is tax
function. By the tax function of the accounts department it is ensured that the company
runs with the due compliance with the rules that have been formed by the governing body
regarding the taxes. Tax transactions are recorded by the accounts department. There are
two types of tax transactions. As a result of tax transactions the liabilities can be created
known as tax liabilities or the assets can also be created referred to as tax assets (Soomro,
2018). The income statement of the organization represents the tax figures that are
sometimes not concealing with the values that are computed as per the tax accounting.
The reason behind the variedness in the figures is a result of the fact that rules and
regulations concerning the tax are sometimes enacted fast and sometimes their enactment
gets delayed. As a result of this the identification of the types of expenditure varies in
both the cases. The identification of the tax figures should be accurate for the concerned