BSC Techniques and Management Accounting Analysis

The assignment discusses the importance of intermediate management accounting for businesses and analyzes the data on using BSC in business operations. It also uses sensitivity analysis to create financial models to assess internal and external impacts on organizational performance.

Intermediate Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1: Evaluate the financial and business performance of Everton Football Club.....................3
2: Evaluation of the use of short term decision-making techniques.......................................5
3: Critical evaluation of using sensitivity analysis to assist Everton to create financial model..6
4: Recommendation................................................................................................................8
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Nowadays, it has been seen that maximum companies want to make use of accounting
system in order to manage their business operations in an effective manner. Management
accounting will lead to increase productivity and efficiency of “Everton football club company
limited”. The primary aim of managers is to make use of financial transactions in order to
generate positive results by utilising resources of the company in more effective manner.
This company is dealing as a football club in Liverpool, England that usually competes in
premier league. Everton were established as St. Domingo FC in 1973. During there domestic or
international matches, fans has integrated and sit in the similar parts of stadium. For the duration
of 1927 to 1928 campaign, Dixie Dean marked a record of 60 league goals for Everton, as they
went on to attain the first division. After winning the league matches and cup they lost out in FA
cup final to Manchester united (DRURY, 2013).
TASK 1
1: Evaluate the financial and business performance of Everton Football Club
Intermediate management accounting is an essential part of a well organised programme
which is designed for anyone that is just starting out their own business operation, finance and
accounting journey. This assists in increasing their accounting and financial skills. The balance
scorecard is being used as the most comprehensive system for examining performance of
Everton Football Club’s financial condition. BSC presents as an effective evaluation and
measurement system of performance which is more complete than financial accounting system.
It is said to be perfect combination of financial performance evaluation which consists of current,
past and future performance data and put non-financial criteria beside the financial outcomes.
Also, it would provide full attitude to an organisation to manager regarding the news inside and
outside an organisation. It also creates casual relationships among different elements of a
Football club and views their uniform entity. As per the advance researchers, balance scorecard
is the perfect evaluation of performance with their general views to Everton Company with a set
of financial and non-financial scales (Stice and Stice, 2013).
Although, Balance Score Card (BSC) was implemented as a perfect technique of business
operations for the purpose of analysing financial performance of an organisation. It is turned
around into a perfect strategic management system which is generally helpful for the company.
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Henceforth, the companies went beyond the starting aims of Everton Football Club. Most of the
companies found that BSC define as exact details of using goals for the purpose of evaluating
actual results and operations. Therefore, most companies found BSC to define the exact details
of objectives, analysis of real outcomes and operations management. The reasons of
development is unsuitable and shortcomings of the existing systems. One of the major issues
found in present organisations which is generally and sport gyms is lack of recognition towards
performance practices. Nowadays, this football academy of England is one of the greatest
football academy which always gives their best efforts to win maximum matches.
The Balance scorecard used to allow companies to track financial outcomes while
monitoring overall progress in developing internal capabilities required for future growth of
Everton. The tools was not more intended to be a proper replacement for financial measure but
rather than an effective technique to determine the overall productivity of the company. BSC
used to provide proper suggestion that views about Everton Football Company from four
effective perspectives. It used to develop certain kind of objectives which help to make use of
KPI and other related aspects.
Illustration 1: BSC perspectives
(Source: BSC perspective, 2018)
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 Financial: This often use to make position of other appropriates in the public sectors. By
this perspective aspects an organisation financial performance and their effective use of
resources.
 Stakeholders: This particular aspect of organisational performance determines various
viewpoints of players or other key parties that are associated with Everton Football Club.
 Internal process: It is crucial to determine performance by using lenses of quality and
efficiency which is associated to business operations of Football Club.
 Organisational capacity: There are various aspects those are related with human capital,
technology, culture and other ability that are highlighting the performance of an
organisation (Banerjee, 2012).
2: Evaluation of the use of short term decision-making techniques
In order to determine overall productivity of an organisation, it is crucial to analyse
performance of Everton Football Club. For this purpose, cost volume profit analysis is used.
This particular technique is to evaluate how modification in costs and volume effects on a
company's total incomes and net operating earnings. In order to analyse, performance this
analysis, there are various assumption which are consists of sales price per units remain constant.
Those assumption are delivery one of the best and effective responses to every costs and earning
though linear from related range of activities.
The primary objectives of using CVP (Cost Volume and Profit analysis) is to analyse
costs and overall volume effects those are being seen over the company financial position. By the
help of this, different types of assumptions are going to be used such as price, cost and other
variables those are being plotted through using an economic diagram. It is one of the effective
measures of cost accounting that is associated with overall impacts which changes as per the
varying levels of football accessories sales and other product costs. It is only reliable, if costs are
fixed within a particular stage (Zamora, 2011). The basic CVP formula is related with overall
price per units multiplied through using various numbers of units sold which is equal to variable
cost.
Limiting factors: In management accounting, these are said to be one of the vital
constraints which is associated with football resources. For example, low enthusiasm among
players and other aspects those are affecting the performance of Everton Football Club. There
are other aspects which are described as follows:
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Single limiting factors evaluation:
If Football club has more than one services and faces a shortage in overall supply of
equipment of an individual resources. One another option will being able to determine
production quantities on regular basis for contribution per units of various other products those
are associated with football company. There are certain limitations which are always present in
limiting factors such as optimum production plan which cannot be found using the method in
more effective manner (Herzig and et.al., 2012).
This study provides maximum influence of decision-making in organisational leadership
that make huge impacts on regular basis, growth and their effectiveness. Although, everyone
make regular efforts to take decision on daily basis, but it has been clear that understanding the
appropriate role which is more democratic in generating more specific outcomes for the
company. There are certain aspects or decision which will be crucial for Everton Football Club
to make each activity operate under the organisation would deliver the best and suitable
outcome.
3: Critical evaluation of using sensitivity analysis to assist Everton to create financial model
According to Schaltegger and Csutora, (2012) a sensitivity analysis is an appropriate
technique used to evaluate how various values of an independent variables will make impact on a
specific dependent variables. These can be examined though taking all given set of assumption
which is related with the business operation. It is the study of total uncertainty in the overall
output that provides numerical model or system which can be apportioned to various sources of
uncertainty in their overall inputs. It will be helpful in enhancing better understanding of
relationships among input and output variables in a business model.
It is perfect system which is being useful for the management of Everton Football Club to
analyse several values for a definite set of independent variables. There are various values and
assumptions which are subject to various changes and errors. It is globally defined as the perfect
investigation of these potential changes that are making impacts during finding a definite
solution drawn from given business model. In accordance to keep track of external changes, the
entity is required to implement positive methods that would provide perfect help in order to
determine overall performance of club business and other financial stability. The sensitivity
analysis is used to determine various changes in quantifiable variable of a given project (Hansen,
2011).
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The purpose of this analysis:
 In the sensitivity evaluation, only unfavourable modification is accounted to determine
overall impact of changes that happens on profitability of a project. This usually assists in
examining key components that are having major impacts in the costs and benefits of a
given project plan.
 It assists in evaluating all those consequences of unpleasant amends in various segments
of variables. Some other aspects are also present in Everton football in which any change
will make huge impacts on the project decision-making (Jansen, 2011).
Financial model:
It is known as one of the simple tools that are built for the purpose of forecasting a
business financial performance into the coming time. There are various steps which are needed
for the purpose of creating financial business model. Effective decisions can be made in order to
improve performance level of Everton Football Club. But, it has been examined that there are
two types of marketing conditions that can affect decision making process while formulating a
financial model and these are internal and external. There are few strategies through which
financial model can be made and these are:
Adjudge the purpose and audience: This can be stated as the first stage which plays a
vital role while developing a financial model. Some of these type of exemplary can look similar
but may have different objectives and this depends on targeted audience. Business can be
improved by targeting financial model in a proper way.
Set up an assumptions page: This is the second stage where set up is being done of
assumption page. First page includes all the suggestions and assumptions that have been used
under the model.
Set up profit and loss statements: Under this phase, profitability and loss statements can
get set up in appropriate ways. It indicates situation of the company which will help them in
pulling investors towards them (Jiles, 2014).
Build up cash flow statements: After pulling out detailed version of profit and loss
statements, decisions are being made in order to improve cash flow statements. Under this,
things can get included like beginning Cash balance, Cash Flow of finance, operations,
Investing, Ending Cash Balance and other a few other elements (Kihn and Ihantola, 2015).
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Put together your balance sheet: This is the last phase where all the above mentioned
elements are being included to pull up the final report.
Basic financial model for Everton Football
Particular 2016 2017 2018
Net revenue 25000 35000 87000
Less:
COGS 15000 26000 53500
Gross profit 10000 9000 33500
GP% 40
25.7142857
143
38.5057471
264
Operating Expenses
Labour 5000 4000 15000
Marketing 2000 1500 2750
Total 7000 5500 17750
Operating profit 3000 3500 15750
Operating margin 12 10
18.1034482
759
NOTE: Data has been taken on an assumption basis.
4: Recommendation
From the above information collected regarding Everton Football Club, it has been found
that performance of the club can only be resolved by using various models and techniques. They
need to make use of those techniques in an effective manner so that chances of mistakes can be
reduced. On the basis of financial model, it has been seen that they are getting a healthy gross
profit margin in respective years. Whereas, operating margin is also providing more effective
responses in near future with 12, 10 and 18 % of total growth chances. After making proper
analysis, it has been seen that if company is using BSC techniques, they can easily be able to
analyse their overall performance. This will lead to generate better outcomes and profitability for
the coming time (Burritt and et. al., 2011).
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CONCLUSION
From the above project report, it has been concluded that intermediate management
accounting is an essential aspect for every business company. Their are various crucial
information which are needed to be taken into consideration. This project is providing vital
information about Everton Football Club Company. Further, this project is assessing data about
using balance scorecard in their business operations. Moreover, use of various sensitivity
analysis to create financial models in order to analyse internal and external impacts on the
performance of the organisation has been discussed in the assignment.
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REFERENCES
Books and Journals:
Banerjee, B., 2012. Financial policy and management accounting. PHI Learning Pvt. Ltd..
DRURY, C. M., 2013. Management and cost accounting. Springer.
Herzig, C and et.al., 2012. Environmental management accounting: case studies of South-East
Asian companies. Routledge.
Jansen, E. P., 2011. The effect of leadership style on the information receivers’ reaction to
management accounting change. Management Accounting Research. 22(2). pp.105-124.
Jiles, L., 2014. Management accounting career readiness: Shaping your curriculum. Strategic
Finance. 96(2). pp.38-42.
Schaltegger, S. and Csutora, M., 2012. Carbon accounting for sustainability and management.
Status quo and challenges. Journal of Cleaner Production. 36. pp.1-16.
Stice, E. K. and Stice, J. D., 2013. Intermediate accounting. Cengage Learning.
Zamora, V. L., 2011. Using a social enterprise service-learning strategy in an introductory
management accounting course. Issues in Accounting Education. 27(1). pp.187-226.
Burritt, R.L and et. al., 2011. Sustainable supply chain management and environmental
management accounting. In Environmental management accounting and supply chain
management (pp. 3-20). Springer, Dordrecht.
Kihn, L. A. and Ihantola, E. M., 2015. Approaches to validation and evaluation in qualitative
studies of management accounting. Qualitative Research in Accounting & Management.
12(3). pp.230-255.
Hansen, A., 2011. Relating performative and ostensive management accounting research:
reflections on case study methodology. Qualitative Research in Accounting &
Management. 8(2). pp.108-138.
Online:
BSC Terminology: Perspectives. 2018. [Online]. Available through:
<http://www.balancedscorecard.org/BSC-Basics/About-the-Balanced-Scorecard>.
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