logo

Financial Decision Making

   

Added on  2021-02-21

11 Pages3679 Words92 Views
FINANCIALDECISION MAKING

Table of ContentsINTRODUCTION...........................................................................................................................3MAIN BODY...................................................................................................................................3TASK 1............................................................................................................................................3TASK 2............................................................................................................................................6CONCLUSION..............................................................................................................................10REFERENCES..............................................................................................................................10

INTRODUCTIONThe financial decision making is a process of taking decisions regarding to allocation offinancial resources in an effective manner (Calvo, Ivorra and Liern, 2016). This is being done byhelp of proper evaluation of financial statements. Basically, in the absence of accurate decisionabout finance this can be difficult for companies to manage their financial resources. As well asif an entity takes financial decision strongly then they get able to beat others in competition. Toaddress various task of project report, a company is selected that is “John Lewis”. This companyis located in United Kingdom and founded by John Lewis in 1929. The product portfolio of thiscompany is larger that contains a vital range such as fashion, beauty, electrical and cleaningproducts (About John Lewis & partners company, 2019). Under the project report importance ofaccounting and finance is mentioned. MAIN BODYTASK 1Evaluation of role of accounting and finance within any organisation.The accounting and finance are very crucial in aspect of management of all kind offinancial resources and transactions in an effective manner. It becomes possible because by helpof various kind of accounting techniques companies get able to manage and allocate theirfinancial resources. In the aspect of above John Lewis company, they are using a wide range ofmanagement accounting techniques which are helping them in keeping up to date their financialactivities. Herein , below some types of management accounting techniques are mentioned thatare as follows such as:Standard costing- This can be defined as a kind of costing technique in which cost ofvarious kind of activities is estimated (Rosemary Williams DBA, 2015). It is being usedby companies to compare actual amount of cost with estimated targets. Such as in theaspect of above John Lewis company, they are using this costing technique for comparingactual cost. Budgetary control- It may be defined as a kind of technique of management accountingwhich is associated with managing financial and non financial performance by help of awide range of budgets. In broad sense, under this technique budgets are prepared and

compared with actual outcomes. For example in the aspect of above respective company,John Lewis they are using this technique in order to comparing actual income & expenseswith budgeted income & expenses.Financial planning- Another technique of management accounting is related with makingplan of financial resources (Chenet, Thomä, 2015). In other words, under this techniquefuture need of cash is estimated and on the basis of it planning of funds is done. Such aswhich types of sources will be needed to accomplish goals and objectives. Like in theaspect of above company, they are using this technique in order to making plan of theirfinancial resources. Analysis of financial statements – This technique is linked with process of analysis offinancial statements in a detailed manner. Due to it, companies can be able to assess theiractual financial position and on the basis of this make future plans. Like in the aspect ofabove John Lewis company, their managers take many crucial decisions as per properanalysis of their financial statements. Marginal costing- It can be defined as a kind of accounting technique which is linkedwith process of assigning both fixed and variable cost in different manner (Ambuehl,Ersoy and Harris, 2017). In other words, under this costing method fixed cost is taken asperiodic cost while variable cost is taken as unit cost. The above company is using thistechnique for preparation of their income statements and considers both costs in differentmanner.Cash flow statement- Under this statement, a wide range of information about inflow andoutflow of cash is provided. By utilization of this information from cash flow statementscompanies take future decision about acquiring loans from external sources. Like in theaspect of above selected company, John Lewis they are preparing this statement formanagement of their activities regarding to management of cash.Historical cost accounting- It can be defined as a kind of accounting method which isassociated with using in accounting of assets (Cox, Brounen and Neuteboom, 2015).This is widely used by above John Lewis company for effective implementation of assetsincluding fixed and current assets. In addition, it is important to know that under thisaccounting all the principles are included as per the generally accepted accountingprinciples.

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
Financial Decision-Making Process Assignment
|11
|3428
|121

Financial Decision Making
|11
|3766
|36

Management Accounting Techniques and Financial Statements
|14
|3389
|46

Financial Decision Making: Role of Accounting and Finance in Managing Company's Financial Activities
|13
|3549
|93

Financial Decision Making: Role of Accounting and Finance Department
|17
|3707
|60

Effective Planning Tools for Managing Accounts
|10
|1016
|85