Financial Performance Management: Issues, Tools, and Implications

Financial performance
management

Table of Contents
INTRODUCTION...........................................................................................................................1
PART1.............................................................................................................................................1
1. Detailed explanation, analysis, and evaluation of the issues that are faced by a firm in
managing its environment costs and the ways that are used by a company to do its accounting1
PART2.............................................................................................................................................3
1. Identification and evaluation of the tools that are used by management accountants so as to
provide right information so that a business can perform well in its long run and also the
implications of its key performance indicators............................................................................3
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Financial performance management is an essential as well as integral part of each and
every firm that is operating in the market irrespective of the industry in which it is doing its
operations (Ambroise, Prim-Allaz and Teyssier, 2018). As it is the management of the financial
performance and all the firms closely monitors all the aspects so that each and every resource
that a company possess can be allocated in an effective as well as in an efficient manner. This
report covers various topics such as environmental management accounting and its related
aspects, environmental costs its importance, methods of recording, accounting, and its
controlling measures. Apart from this the report also covers various aspects of decision making
and planning tools that are used by a firm so that it can achieve long term growth and
profitability in the long run. Further budgetary control, key performance indicators that are used
to improve financial performance, and financial sustainability is also discussed in this report.
PART1
1. Detailed explanation, analysis, and evaluation of the issues that are faced by a firm in
managing its environment costs and the ways that are used by a company to do its
accounting
Environmental management accounting is a process of identifying, analysing, and
evaluating the factors that are related with the environment that directly as well as indirectly
affects the working of the business. It is very beneficial for all the firms that are doing its
operations in the market as the government provides various types of allowances and subsidies to
the firm that abide by the rules and regulations. Further it will attract a large amount of
customers too and it is useful for the society as well. There are various systematic approaches
that are used by various firms in different manner so as to comply with all the set laws (Aspal
and Dhawan, 2016).
Environmental costs are the costs that are closely related with the current as well as
future deterioration of the environment because of the economic activities of a firm. These are
sometimes hidden in total cost and thus the companies have to recruit specific personnels that are
qualified and experienced enough so as to improve the working of the business in the long run. It
is very important for all firms to reduce the environmental costs as low as possible so that
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profitability of the company can be increasing which will result in improved market share in the
industry.
Cost vs benefit is a very important aspect from the firm's point of view as it helps the
company to determine its efficiency and effectiveness in terms of profitability that is achieved by
the firm. It is very by different firms in different ways according to the needs, requirements, and
demands of each individual organisation. In this firstly all the benefits of he company are
accumulated and then summation is done and after that all the costs of the business are added in
a sequential manner. After the summation process of both benefits and costs separately benefits
are deducted from the costs so as to analyse the true profit generating capacity of the firm. It is
very important for a firm that is planning to expand and capture a larger share of market in the
long run (Bartolacci, Caputo and Soverchia, 2020).
There are various different types of techniques that are used by management accountants
to identify and manage environmental costs as it is an important, crucial as well as critical aspect
from a business's point of view. Different techniques are used according to the requirements of
industry in which the firm is operating but majorly most of the management accountant uses
these different types of techniques as they are old as well as tries and tested and also possess a
good success rate for the firm that uses it. These are input/output analysis, activity based costing,
flow cost accounting, and life cycle costing. For example a firm allocates its resources and costs
according to the needs of a particular activity and thus resulting in improved efficiency in
activity based costing.
Environmental costs comprise a very important part of a firm and each and every firm
has to pay special attention to all these costs as it is very helpful in increasing the current rate of
profit of the firm. Managing these cost are very important for every firm that is working in the
market irrespective of the industry as it is very beneficial in utilising the resources that are
available with the company in an effective and efficient manner thus resulting in improved
profitability and growth of the firm in the long run. It also helps in sustainable use of the
available resources that are very essential for a business as well as for the society as it can reduce
the load on natural assets too and that's a very good sign for the environment taken as a whole
(Busch and Friede, 2018).
There are various different types of ways by which environmental costs can be identified
and recorded but it depends on the organisation in choosing the best method from the alternatives
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