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Analysis of financial performance of the company

   

Added on  2020-06-06

15 Pages4235 Words239 Views
ManagementAccounting
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Table of ContentsINTRODUCTION...........................................................................................................................1SECTION 1......................................................................................................................................1P1. Management accounting and its use.....................................................................................1P2. Different methods used in management accounting reporting.............................................3M1: Advantages of management accounting system..................................................................4D1: Critical analysis of reporting systems..................................................................................4P3: Calculation of net profit by using various costing methods.................................................4M2: Analysis of various range of accounting techniques...........................................................7D2: Analysis of financial performance of the company.............................................................8SECTION 2......................................................................................................................................8P4: Planning tools used for budgetary control ...........................................................................8M3: Evaluation of planning tools..............................................................................................10D3: Analysis of financial issues................................................................................................10P5: Respond to various issues related with financial aspects...................................................10M4: Analysis of the financial issues.........................................................................................11CONCLUSION..............................................................................................................................11REFERENCES..............................................................................................................................12
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INTRODUCTIONManagement accounting is that field of accounting which deals with providing messageto managers for their use in planning, decision making, performance evaluation, control activitiesand financial reporting. It is an important aspect of any business through which company canmanage and control its daily operations (Siegel and et. al., 2010). Each organisation is tryinghard to achieve the aim and objectives by completing their activities according to framed plan. Itinvolves furnishing of the financial data to the management in such a way so that it facilitated thedecision making and modify the efficiency inside the organisation's.The project assignment consists of two sections that talk about accounting functions andits importance to the management. Different types of accounting systems are discussed in theproject. The understanding of various costing methods and planning tools which are used inbudgetary control are mentioned in this assignment. At last, how financial issues can beovercome by using appropriate techniques are also explained here.SECTION 1P1. Management accounting and its useIn an organisation, there are large number of financial transactions conducted on regularbasis. To manage those transactions, company need a perfect system which can control the entireoperations into correct format. It is because; the managers cannot handle all their accountingwork manually. As accounting is connected with collection of data, recording it into concernbooks of company and summarised into correct format. So that future decisions can be made inorder to achieved its long term objectives. Company can use all necessary information inplanning and controlling of their business operations (Talha, Raja and Seetharaman, 2010). It ismostly related with management because growth and profitability of cited company is identifiedthrough the financial statements. Company long and short term goals are mostly dependent upon the stability and positionduring the past few year. On that basis, most of the investors or stakeholders can make theirinvestment plans. The main reason to record all financial transactions with using appropriateaccounting system is to get effective results in the coming future. For Nero Ltd, the soleobjective is to incur maximum profit from its limited resources. In that manner, accountingsystems are more valuable to provide correct directions to company’s plan. Financial report is1
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considered as one of the vital tools of company. On that basis, productivity and growth can bedetermined. Accounting systems are useful for the managers to acquire competitive advantagesfrom other companies. In that process, they prepare regular report to analyse the impact ofimplementing systems in company’s growth. It will also help to determine total cost which isused during the production of products and services (Tayles, 2011). The management accountingsystem provides reliable and accurate results from the inputs which are given by the companyduring manufacturing process. Some accounting systems which are used in an organisation areexplained underneath:Price optimisation: It refers to the use of numerical analysis by a company to establishhow customers will react to various prices for the goods and services which are produced by thecompany through several modes. It is mainly based on the assumption that to determine thosecosts which are more favourable for the client and they can buy it more easily without anyoverlooks.Cost accounting system: Under this accounting system, a complete set of framework istaken into consideration to determine the overall cost of products for profitability evaluation andcost control. It is an aim which is guides management on various course of actions that are basedon cost efficiency and its capability.Job costing system: It is a system of distribution which is associated with the individualcost of a product or lot size of goods. Under this, resources are enlarged to bring a well-definedproduct or service to market for particular clients.Inventory system: It is a kind of system used for analysing and tracking of the stocklevel, orders and its sales or deliveries. It is the most helpful in production units where theinventory bills and production related documents are summarised and recorded into the system.It is a chain from which goods are transferred to industry to storehouse.Batch costing: It is similar as job costing which is incurred when a group of goods andservices are manufactured and cannot be determined to a particular products and services withinthe selected group. A batch number is provided to each lot of products.The accounting systems are used for making effective future plans for the company. It isused to analyse the performance so that long term goals can be achieved. Other essential use ofthis is to gain competitive advantages over the other companies.2
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