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Financial decision making assignment : ALPHA limited company

   

Added on  2021-02-20

12 Pages3987 Words180 Views
Financial Decision Making

Table of ContentsINTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................3TASK 2............................................................................................................................................61. Calculation of ratios.................................................................................................................62. Assessment of the results and position of the company..........................................................7CONCLUSION..............................................................................................................................10REFERENCES..............................................................................................................................11

INTRODUCTIONFinancial decision making is referred to as an effective process which is responsible fortaking strategic decisions related with the stockholder's equity and liabilities of the organization.Financial decision making is very crucial for the sustainable growth and productivity of thecompany for a longer period. Financial functions consists of taking strategic decision relatedwith the financial reporting, planning, controlling and monitoring. The key role of accounting isto focus on immediately managing the financial issues on a timely and systematic manner. Thekey function of accounting is to control cost, prepare budget, prevention of errors, preparation offinancial statements, etc. Finance function is very crucial because it helps in determining theinflow and outflow of cash. The finance function can be categorized into long term, mediumterm and short term finance of the company. The financial function is very crucial as it helps ineffectively identifying the needs and sources of the finance and make various investmentdecision to ensure there is enough fund in order to carry out operations of the business. ALPHA limited company is a UK based manufacturing company which was founded inthe year 1954. The company aids to focus on expanding its operations in the various parts of theUK. ALPHA limited company integrates with effective management accounting techniques inorder to perform efficiently. It makes various financial statement in order to make variousfinancial, operating and investment decision regarding business. TASK 1Financial decision making is referred to as an effective process which is responsible fortaking strategic decisions related with the stockholder's equity and liabilities of the organization.The key purpose of accounting is to effectively provide the financial information of the companyto the stakeholders in order to make strategic decision. Accounting is very useful in analysingand summarizing the activities of the ALPHA limited company which in turn is very useful inevaluating the financial position of the company in a systematic and efficient manner (Nyathiand et.al., 2018). Accounting is useful in effectively keeping track of the income andexpenditures by strategically complying with various financial information and make informeddecision. Accounting is useful in recording all the financial transactions in financial statementsof the company. It is useful in preparation of budget and reducing cost. Accounting helps indetermining the fraud and error in the financial activities of the business.

Management of finance helps in carrying out all the activities in a systematic andappropriate manner (Alfraih, Alanezi and Alanzi, 2015). Finance is an effective function as it isresponsible for managing funds within the organization. It helps in planning and budget plan inorder to control the expenses and expenditures of the company. It is very useful in controllingcost of the company and attain economies of scale. This in turn helps in improving the financialposition and strength of the ALPHA company. The key role of finance is to manage cash flow ofthe business. It is also very crucial in planning profits and controlling cost of the businesseffectively. It helps in managing unavoidable risk of the business and take necessary measures toanalyse the potential risk in the market. Finance function is very crucial in the or organization asit is useful in analysing the present and forecasting the future (Bebbington and Unerman, 2018).It is very crucial for the organization to do financial analysis in order to function in a systematicand efficient manner. The key role of financial management is to take financial decisions andexercise control on the finances of the business with the help of benchmarking, key performanceindicator, financial forecasting, profit and loss analysis, ratio analysis, etc. It is also very usefulin financial planning and capital budgeting by effectively analysing the capital required by theorganization and also evaluating the source of funds in order to fulfil the capital needs of theALPHA limited company. The key role of finance is to make strategic decision related with theinvestment, dividend, financing and liquidity for smooth ad sustainable growth of the business(Lee and Lee, 2015). Management accounting techniques is useful for planning, monitoring and controlling theactivities of the management in the organization. Management accounting techniques is verycrucial as it helps in financial planning, financial statement analysis, budgetary control, cash flowanalysis, marginal costing, etc. Financial planning: The key role of management accounting is to maximize the profitsof the business through making sound financial decision making (Osadchy and et.al., 2018).Financial planning is useful in attaining the goals and objectives of the company. Financial statement analysis: It is very crucial in determining the financial position ofthe company and also critically examine the growth rate of the ALPHA limited company. Budgetary control: It helps in setting budget for the particular set period. It helps insetting a base for the future. It helps management of the organization to set budget by evaluating

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