Managing Financial Resources

Managing Financial Resources

TABLE OF CONTENTS
INTRODUCTION......................................................................................................................3
QUESTION 1.............................................................................................................................3
Explaining management and financial accounting................................................................3
Presenting difference between management and financial accounting..................................4
QUESTION 2.............................................................................................................................5
Assessing viability of options available referring investment appraisal techniques..............5
QUESTION 3.............................................................................................................................8
Analyzing financial statements of firm using ratio analysis technique..................................8
CONCLUSION........................................................................................................................10
RECOMMENDATIONS.........................................................................................................11
REFERENCES.........................................................................................................................12

INTRODUCTION
In the recent times, business units lay more emphasis on undertaking competent
strategic and policy framework with the motive to make optimum use of funds. Moreover,
without having wide framework business unit faces difficulty in getting desired level of
outcome or success. Now, several tools & techniques are available which firm can use before
taking decision pertaining to investment and financing decision. The present report is based
on different case situation which will develop understanding about the concept of
management and financial accounting. Further, it will shed light on the aspects on the basis of
which management accounting differs from financial. Along with this, report will exhibit
how concept pertaining to ratio analysis and capital budgeting aid in decision making.
QUESTION 1
Explaining management and financial accounting
Management accounting: It refers to the presentation of accounting information
which in turn used by management team for the formulation of policy framework regarding
day to day activities. MA assists management team in performing functions related to
planning, organizing, staffing, directing and controlling. In other words, the main function of
MA is to make appropriate forecast about production and selling aspects, cash inflow &
outflow (Eldenburg and et.al., 2019). In addition to this, aspects of MA also focus on
identifying specific cost centre and delegation of roles and responsibilities which in turn
helps in achieving success.
Financial accounting: It implies for the collection, summarization and presentation
of monetary information that resulted from business transactions. FA reports furnish
information about operating profit and business value to the concerned stakeholders
(Steccolini, 2019). Hence, financial accounting technique is undertaken by businesses with
the motive to serve information to all the stakeholders in an acceptable and standardized
format. In this way, it can be stated that financial accounting process is employed by the firm
for showing financial position and performance to both internal and external stakeholders
(Weetman, 2019). There are several functions which in turn associated with financial
accounting aspects. This in turn includes recording of systematic records, communicating
results to the stakeholders, budget preparation and cost control. It is highly significant which

helps in analyzing areas where improvements are needed. In addition to this, by analyzing
performance company can set appropriate budget for the upcoming time frame.
Presenting difference between management and financial accounting
Differentiation between management and financial accounting is enumerated below:
Basis of difference Management accounting Financial accounting
Meaning It helps management team in
making effectual decisions
about business.
FA refers to the
classification, analysis,
recording and summarization
of financial affairs associated
with the company
(Stockenstrand and Nilsson,
2017).
Objective MA is undertaken by the firm
for offering management
team with wide framework
for ensuring informed
decision making (Chibili,
2019).
The main motive behind
undertaking financial
accounting practices is to
provide outside parties such
as investors, creditors etc
with suitable information for
decision making.
Regulatory compliance In MA, there is no specific
framework with which
business unit needs to
comply. However,
institutions like CIMA,
ICWAI etc offer some
frameworks & format for
reporting purpose
(Richardson, 2017).
According to financial
accounting, business units
need to comply with specific
rules. In other words,
companies are obliged to
prepare financial accounting
reports by taking into
account IFRS, IASB etc.
Time horizon Managerial reports are
prepared as per the
Financial reports are
prepared and published by