Importance of Accounting and Finance Function in SKANSKA Plc

FINANCIAL DECISION
MAKING

Table of Contents
INTRUDUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Critical evaluation of importance of Accounting and Finance function within SKANSKA Plc.3
Importance of duties and roles of accounting and finance..........................................................6
TASK 2............................................................................................................................................7
a) Ratio Calculation and analysis of two year of SKANSKA Plc...............................................7
b) Interpretation of ratio analysis: causes, effects and reason for the changes in the ratios........8
Commenting over the financial performance & position of SKANSKA PLC..........................11
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRUDUCTION
Decision-making is basically the most important task of management of the company and
the impact of which the overall health and performance of the business decided. The decision-
making involve various decisions such as investment, financing, dividend and liquidity. For the
purpose of decision-making, the finance department of the company need to use the information
and data of financial reports. The preparation of financial reports is the duty of accounts
managers and team of the company. Thus, the report will discuss the roles and duties of accounts
and finance department of the SKSNAKA Plc along with the functions. The report will also
critically evaluate the importance of function of accounting and finance within the SKANSKA
company. Further, the report will calculate the ratios of the company for the period of two years
i.e., 2018 and 2019 (Yilmaz and Hazar, 2021). After calculation of ratios, the report will cover
the analysis and interpretation of result and its impact over the performance of the business.
The report will also comment on the performance of the business as per the investors
perspective after properly analysing the ratios result. The investors perspective state that whether
investing full amount of 1 million pound in SKANSKA company is profitable for the investors
of the company or not. The report will basically cover the financial and accounting aspects in
which it will be discussed that the work of finance team started after the completion of the work
of accountant. Lastly, the overall report will help the company to know about its management
role along with the steps that they need to be taken to improve its business financial and
operational objectives.
TASK 1
Critical evaluation of importance of Accounting and Finance function within SKANSKA Plc.
Accounting and finance management plays a vital role in order to run a business because
it enables the firm to track their income and expenditures along with keeping their records in
order to make the necessary arrangements that are beneficial for the firm. Up-to-date records
helps the employees within the SKANSKA PLC. to compare current financial informations from
the data that has been evaluated from previous years of the firm. It helps the managers to analyse
the performances of the company over a certain period (O'Connell and et.al., 2020). If the going
and coming of finances never gets identified then it is evident for the firm that their managers are
unable to keep their control over their business actions and activities.

When the firm are appropriately able to handle and manage their income and expenses
then there is a powerful possibility of growth within the business. The financial and operational
health of the business is based on the reports prepared by the accounts department of the
company and the decision taken by the finance team. The importance of function of accounting
and finance within the SAKNSKA company that they have to be followed are as follows:
Importance of Accounting Function
 Daily Transaction recording: As per the double entry system and accrual rule of
accounting, the accounts team of the company need to record all the day to day
transaction within books of account (Hoque and et.al., 2017). For example, the accounts
department of SKANSKA company need to record raw material purchased, work-in
progress of construction projects along with the daily expenses incurred in their books of
account to identify the net profit.
 Classification: The classification of transaction between personal, nominal and real
account is also function of company's accounts team. That's why the accountant of the
SKANSKA Plc have to classify the transaction properly to record it on correct accounts.
The accounts manager of the company are also liable for passing journal entry of
transaction in Journal Book and then posting it to ledger accounts.
 Trial Balance: Preparation of trial balance is also one of the most crucial function of
accounts department. Trial balance is basically a list of ledger accounts which have both
debit as well as credit balance. The debit side of trial balance is expense for the company
while the credit side of trial balance is income for the company. Now, after preparing trial
balance of SKANSKA the accounts team of the company have to make sure that the debit
and credit side must balance (Russo and et.al., 2021). In case if not than they need to
identify the reason of difference and until they need to open a suspense account for
further preparation of financial statements.
 Preparation of financial statements: the financial statements are those who incurred
balance sheet of the firm, income statements, change in equity statement as well as cash
flow statements which appropriately able to describe the financial conditions of the
organization. For instance, in order to prepare for the constituents of financial statement
through the functions that has been utilized by SKANSKA PLC. accounts team need to