Financial Decision Making: Evaluating the Importance of Accounting and Finance in SKANSKA Plc

FINANCIAL DECISION
MAKING

TABLE OF CONTENTS
INTRODUCTION ..........................................................................................................................3
TASK 1............................................................................................................................................3
Evaluating the Importance of accounting and finance ................................................................3
TASK 2............................................................................................................................................7
Calculation the financial ratios....................................................................................................7
Reviewing financial performance of SKANSKA Plc..................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Financial decision-making is the process of understanding the pros and cons which are
related to the decision-making of the company for the use of money. In this project the chosen
organization is SKANSKA Plc which is construction company based in UK. This project will
explain the structure of the financial statements while critically evaluating the importance of the
accounting and finance functions, duties and roles within this organization. This project will use
some examples from this organization to complete the project. In this project the financial
statements of the organization is also going to be used for the calculation of the ratios that will
help in commenting the performance of company for the investors.
TASK 1
Evaluating the Importance of accounting and finance
Accounting and finance of the company plays a vital role in the business management.
The major purpose of managing accounting is to know about financial performance of the
company. If the company's finance is stable then it can directly impact the business operation in
positive way. In addition to this, finance and accounting is a very important for business as it
keeps record the financial transactions. With the help of accounting and finance the owners of
the company can evaluate the financial position and health of the firm. For example- to be
successful, the managers of the company focus on controlling money. According to Akbulaev,
Mammadov and Shahbazli (2021), all the business operate on financial resources and if the firm
don't control that amount of money then they can run business smoothly.
 Recording transactions- With the support of finance and accounting books, the
company can easily understand the cash flow like what comes in, what goes out. With the
help of finance the company is able to track on their expenditure which helps them to stay
very organized while making decisions. They are able to make proper budgeting,
anticipate sales and revenues and make proper decisions about how to manage business
transactions.

 Filing taxes- By going through the financial records of the business, the owners and
management team of the company can see what good it did and where the cash went, on
the basis of that they make informed decisions (Han and et.al., 2018).. It is essential for
the firm to comply with laws and rules related to it. They must focus on regulations in
order to avoid any legal issues which can harm business operations in the future.
 An accountant and finance manager helps the firm to maintain expenses and income and
also keep record on the money flow to make strategic business decisions. Not only this,
finance and accounting of SKANSKA plc can develop the business strategy which helps
them to earn more profit. For example- business strategy such as setting financial goals,
keep monitoring loss and profit reports, keeping records of cash expenditure with the
team members will help them achieve success (how are accountants playing a role in
business strategy, 2022).
 Analysing financial performance- Keeping the accounting books in a proper manner,
can help the business to know about whether they can pay bills on time or not. It helps
the firm to keep analysing performance of business by referring to their previous
performance. By doing, so they can understand the current business condition and make
necessary adjustments.
 Comparison of financial reports- the accounting department of the company helps the
business to know about the success and progress of the firm. By doing comparison the
firm is able to know about the financial position with other firm (Han and et.al., 2018).
This can allow the company to evaluate and monitor their progress compared to their
competitors. From this, SKANSKA plc can improve their areas which they are lacking
behind. By doing so, the firm is able to discover investment opportunities and grasp it
immediately for the success of business. In order to take action the financial department
can make proper reporting of cash inflows and outflows. For this they must work in
harmony with other people in the organization so that they can centralize important
financial information.
 Less stress- Also, they can understand whether they can pay salaries and wages to
workers and employees. If the company know about their capacity then they can make
run business less stressful which is beneficial for both employees and company's
performance.