Financial Decision Making

Financial Decision Making

TABLE OF CONTENTS
INTRODUCTION......................................................................................................................3
TASK 1......................................................................................................................................3
Critically evaluating the importance of Accounting and Finance functions along with the
duties & roles with regards to SKANSA PLC.......................................................................3
TASK 2......................................................................................................................................7
Commenting on the financial performance of Skansa Plc using ratio analysis tool..............7
CONCLUSION........................................................................................................................12
REFERENCES.........................................................................................................................13

INTRODUCTION
Financial decision making refers to the process which emphasizes on setting
competent monetary goals and framework. In the context of business organization, financial
decision making is highly significant for gaining competitive edge and desired level of
outcome or success. Hence, it is an accountability of manager to develop strategies which
maximizes shareholders wealth or profitability. In the current times, business unit employs
several accounting theories and models while making decision. The present report is based on
the case scenario of SKANSA Plc which deals or operates in construction sector. Now, for
fulfilling business aim and objectives company is planning to explore its operations in
Europe. In this, report will develop understanding about accounting functions. Further, it will
shed light on the roles and duties played by an accounting manager within SKANSA Plc.
Along with this, report also entails financial position and performance of concerned
organization for the period of 2018 & 2019 by employing ratio analysis technique.
TASK 1
Critically evaluating the importance of Accounting and Finance functions along with the
duties & roles with regards to SKANSA PLC
Accounting may be defined as a process which emphasizes on recording business
transactions or events systematically. In the context of SKANSA Plc, accounting and finance
is highly significant which helps in summarizing financial statements effectually. This in turn
assists stakeholders in decision making to the large extent. Importance of accounting and
finance functions can be evaluated in the following way:
Facilitates systematic record keeping
In business organization, A&F department plays a vital role in recording business
transactions on daily basis (Forcellati and et.al., 2021). By this, firm can track transactions
associated with business and thereby would become able to develop competent strategies for
the upcoming time period.
Ensures rationale decision making
A&F managers have accountability to provide stakeholders with appropriate financial
statements so that they can make appropriate decisions. Moreover, financial statements

contain information about net profit, loss and other details pertaining to business. By using
this information management team of SKANSA Plc can take better decisions about business.
Compliance with legal aspects
Now, for ensuring standardization companies are obliged to prepare annual report by
taking into account legal aspects (Key Functions of Your Accounting Department, 2021).
Accordingly, manager of SKANSA Plc need to keep in mind IFRS, IAS and other accounting
rules while preparing financial statements.
Assessment of profit and loss
Accounting manager is accountable to calculate and highlight profit or loss associated
with the specific accounting period. In this context, SKANSA Plc’s manager plays a crucial
role in keeping records pertaining to revenue and expenditure.
Evaluation of company’s financial performance
There are several stakeholders who interested in company’s financial position and
performance such as investors, employees, management, suppliers, creditors etc. Thus, A&F
departments provides stakeholders with input for performance evaluation (What are the
functions of accounting?, 2021). By undertaking financial statements concerned stakeholders
can do evaluation of companies performance from several perspectives such as profitability,
liquidity and solvency etc. In this way, by preparing final accounts A&F department assists
stakeholders in decision making to a great extent. Besides this, manager of A&F perform
ratio analysis with the motive to inform high management team about the extent to which
performance improved over the years. Manager clearly indicate areas where performance
level decreased along with the reasons. By using this information management can do
suitable modification sin the existing framework. On the critical note, ratio analysis is based
on past performance, whereas management concerned about future. Business conditions also
vary from one year to another. Meanwhile, at the time of performance evaluation SKANSA
Plc’s manager should keep in mind all the aspects associated with this model. Through this,
appropriate framework can be presented by the manager for decision making purpose.
Business assets protection
Managers who working within accounting & finance department also plays significant
role in protecting assets related to the business enterprise. In other words, accounting