Management Accounting and Finance for Decision Making

Management Accounting
And
Finance for Decision
Making

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
TASK 1............................................................................................................................................3
1. Evaluation of International Financial Reporting Standards (IFRS) adoption from the
perspective of prompting accounting practice harmonization................................................3
2. Simplified balance sheet with three sub-headings in the assets and three subheadings in the
equity and liabilities:..............................................................................................................6
3. Computing the working capital, working capital need and net cash:.................................8
4. The common-size income statements for the 2016-2019 periods:.....................................9
5. Analysis of statements (Balance sheet & Income statement) and critical evaluation
performance of the company................................................................................................10
6. Computation of Profitability Ratios and analyses them from the perspective of gaining
insight into efficiency of use of company resources:...........................................................12
TASK 2..........................................................................................................................................14
1. Alpha Ltd’s cash budgets for months: October, November, and December this year and
January and February next:..................................................................................................14
2. List and comment on other factors that should be taken into account by the company
management when considering this proposal:......................................................................16
3. Budgeting:........................................................................................................................17
CONCLUSION..............................................................................................................................20
REFERENCES..............................................................................................................................22

INTRODUCTION
Phase of decision-making can be seen as a control and balance mechanism which
keeps business rising vertically and linearly. That implies that the decision-making is directed at
a objective. The priorities are pre-set strategic targets, strategic planning and vision. The
organization may face several challenges in financial, organizational, marketing and tactical
spheres in achieving these objectives (Goh, 2019). These problems are addressed through
thorough decision-making. Management accounting and finance are two major aspects of
decision-making phase within every business enterprise. These both aspects cover almost all the
managerial and financial functions which are directly or indirectly assist or support decision
making. Further, such aspects also involve processes related to financial reporting, analysis of
financial reports and some models or concepts for strategic decision making (Quattrone, 2016).
The study covers critical examination of international financial reporting aspect and
current crucial international financial reporting challenges; and Comprehending role and
importance of the financial statements by evaluation and interpretation of the for the strategic
decision-making. Further study consists of critical review od range of major strategic
management-accounting-models and key concepts along with its crucial roles at the local &
international level. Study for all these purposes consists of two assessment based on case study
of (i) Honey Badger corporation which is primarily a producer, distributor and marketing entity
of the non-alcoholic product concentrates and syrup; and (ii) Alpha limited which makes a range
of products all of which follow a similar production process and have the same cost structure.
MAIN BODY
TASK 1
1. Evaluation of International Financial Reporting Standards (IFRS) adoption from the
perspective of prompting accounting practice harmonization
Most of world's countries have reshaped their accounting procedures in last few years of 21st
century particularly. These developments include adopting and modifying local accounting
procedures, and harmonization with International Financial Reporting Standards (IFRS) –
previously International Accounting Standards (IAS). Process of integration of the international
trade and corporate globalisation are on the rise. As a consequence, financial statements
compelled in accordance with local accounting system of nation can hardly fulfil needs of

foreign investors, business partnerships, bankers and judgment-makers who are familiar with
global standards (Fuzi, Habidin, Janudin and Ong, 2019). In meantime, growing and evolving
markets are focus of world's leading sectors that operate in saturated western nations. To carry
out their operations in developed countries effectively; they have to follow the relevant
international-accounting standards. Furthermore, foreign direct investment is a big booster for
developing nations ' economies, and investor can require vivid and coherent financial
information-emphasizing why developing nations need to follow international financial reporting
standards. To overcome gap between country-specific reporting standards, International
Accounting Standards Committee (IASC) formed in 1973 by group of qualified accounting
professionals with goal of formulating universal and universal accounting practices towards
minimizing gaps in worldwide accounting principles as well as the reporting practices. In this
regard, it was suggested the International Accounting Standard (IAS), that has been vigorously
championing uniformity and uniformity of all the accounting standards. After that, IASB has
taken over from International Accounting Standard or IASC in Apr. 2001 setting of international
accounting standards. IASB has now revised and agreed to International Financial Reporting
Standards or IFRS as International Accounting Standard (IAS) and After that IFRS almost took
place of IAS (Inani and Gupta, 2017).
Harmonization is a method of rising the degree of International harmonization allows different
nations to follow same rules whilst producing a financial statement, such particular practices
allow different bookkeepers and professionals to understand financial reports of numerous
businesses corporations nationally or globally. Harmonization also makes it possible for
international investors, financial experts and global borrowers to grasp international corporations
' financial statements and comparing investment incentives and enable them make best
investment decisions. The national accounting harmonization framework viewed harmonization
as happening within geographically proximate nations. The foreign accounting harmonised
paradigm provides for border-less world in which accounting information are comparable
between nations and freely accessible to foreign users. consensus between nations as regards
accounting standards as well as practices and procedures. The adoption of the IFRS by a
corporation provides significant economic advantages in countries where financial reporting is
subject to strict regulation. Such advantages include an rise in fair market value of stock, a rise in
market competitiveness and a decrease in capital costs. When backed by a good regulatory

climate, businesses with significant gaps in GAAP and IFRS requirements display the maximum
benefit. In fact, in earlier adopting companies, advantages are high not only in year of IFRS
transition but also in year that reporting process is formally required. Results support the
perception that good implementation of reporting requirements not only strengthens investor
clarity but also improves adopter's market share (Mirzaey, Jamshidi and Hojatpour, 2017).
Harmonization relaxes the growing complexities for financial bookkeepers in formulating and
consolidating financial statements, since they become considerably streamlined after
IFRS guidelines become followed. The MNCs benefit primarily from this. As the various
reporting obligations are decreased, which entails direct costs like data processing, categorisation
and auditing whereas still including indirect costs, primarily owing to reporting
requirements discrepancies. Although harmonising reduces users' total costs, especially in case
of MNCs, while adopting criteria in short run, it may increase costs, particularly where
investment in the capital assets is implicated. For example, accounting profession will need to be
excellently-aware and educated regarding the new guidelines, whilst adopting IFRSs. Similar
manner, colleges and universities will also need to rethink their curricula, especially concerned
to accounting profession.
Accounting harmonisation may intensify cross-border contamination, as this has been
seen that widespread adoption of IFRS decreases obstacles to cross-border investments and
encourages substantial foreign equity investments within jurisdictions adopted by IFRS. As a
reaction to their local detrimental market disruptions, the enhanced globalization of
investors bases encouraged by IFRS adoption allows local markets increasingly vulnerable to
international threats via foreign investor exchange. In response to direct transfer of contagion
owing to trading activity by international investors, accounting harmonization will promote
comparative comparability throughout 20 national boundaries between companies and
marketplaces. For example, unfavourable circumstances can escalate to financial uncertainty in
one nation may alter investor expectations about yet another nation's financial stability, leading
other investors to withdrawal of capital for fear of more market stresses. In the face of
incomplete information, investors could exaggerate the degree to which data signals can be
extrapolated across nations, leading in inaccurate cross-inferences as well as contagion
(Rikhardsson and Yigitbasioglu, 2018).

2. Simplified balance sheet with three sub-headings in the assets and three subheadings in the
equity and liabilities:
Simplified Balance sheet of Honey Badger
Liabilities 2018 2017 Assets 2018 2017
Shareholder's Fund Non-Current Assets
Common stock, $.25 par
value
873.00 873.00 Property, Plant and
Equipment
Capital surplus 3857.00 3520.00 Land 385.00 217.00
Reinvested earnings 24506.00 23443.00 Buildings and
improvements
2332.00 1812.00
Accumulated other
comprehensive income
(loss) and unearned
compensation
Machinery and equipment 5888.00 4881.00
on restricted stock -3047.00 -2788.00 Containers 396.00 195.00
26189.00 25048.00 9001.00 7105.00
Less treasury stock, at
cost
14389.00 13682.00 Less allowances for
depreciation
3090.00 2652.00
11800.00 11366.00 5911.00 4453.00
Long term Liabilities Trademarks with
Indefinite Lives
1724.00 1697.00
Long-Term Debt 2701.00 1219.00 Goodwill and Other
Intangible Assets
1829.00 882.00
Deferred Income Taxes 399 442 Investments and Other Assets