Financial Decision-Making Report: SKANSKA PLC Analysis

This report provides an in-depth analysis of financial decision-making within SKANSKA PLC, a major construction company. It begins by defining the roles and responsibilities of accounting and finance departments, emphasizing their importance in financial reporting, planning, and management. The report then delves into the specific functions of the accounting and finance departments, including bookkeeping, billings, collections, and financial report planning. It examines key aspects like investment, funding, and dividend functions, as well as working capital management. The report also covers management accounting techniques such as cash settlement and review of financial reports, highlighting the importance of these techniques in achieving organizational goals. Overall, the report offers a comprehensive overview of how SKANSKA PLC manages its finances to achieve its strategic objectives.

Financial
Decision-Making

Contents
INTRODUCTION...........................................................................................................................3
Task 1...............................................................................................................................................3
TASK 2............................................................................................................................................8
Conclusion.....................................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
In any organisation accounting and finance is considered as the key components as it provide all
necessary financial information. Financial reports, accounting information, and various
performance assessment methodologies make up the majority of it are effectively used by an
organisation in the financial role of company is related to the retail sector (Rogošić and Ramljak,
2012). It isgenerally associated related to the day to day activities of an organisation, while
finance is related to the kind of documents which are used in relation to the potential growth and
achieving higher opportunities through adopting appropriate technique and also assist in
reducing cost for company. SKANSKA PLC is one of the largest construction companies in the
world. As a result, the Accounting and Finance division of SKANSKA PLC, as well as its
position, functions, and responsibilities in the organisation, will be examined in this article.
Other than this report will include a ratio review which is utilized for achieving the higher
growth and success of an organisation.
Task 1
Overview
Accounting refers to a process which assist an organisation in effectively tracking and maintain
the various day to day business activities in the books of accounts, while finance refer to the
process which define the money inflow and outflow in an organisation. Both the accounting and
finance are responsible for effectively run the business operations and long-term development of
an organisation. As a construction firm, SKANSKA PLC requires a big capital commitment and
a significant investor base to function properly. As because of this it is analysis that this segment
is not suitable for the company overall growth & development, It is critical to manage a
company's assets in a way that will benefit the company in the long run. In order for a firm to
achieve financial and non-financial goals, multiple parties in the organisation play a critical role
in finance and accounting difficulties (Albelda, 2011).
Department of finance and Accounting
This department is considering as the centre of organisation, As a result, it is in charge of
ensuring that everything runs well. It also ensures accurate financial reporting and control of
financial matters, as well as taking the necessary steps to ensure that all corporate activities run
smoothly. An organisation is not able to effectively run its various business operations without

funding’s sources. For successfully run a business they will require a sufficient source of funds
& accurate reporting. Financial reporting planning, general ledger administration, payment
processing, consumer bill planning, accounting, and other duties are all responsibilities of a
company's financial department. In other words, they are in charge of the company's overall
financial planning, whereas a financial manager is in charge of organising funds for the
company, managing finances within the corporation, and arranging how monies will be used on
various assets. Financial management and accounting are two distinct professions that are
frequently confused. Finance refers to the discipline of carefully managing a company's financial
resources. It is the art of recording and disseminating financial transactions. Finance and
economics are frequently bundled together since they both deal with the handling of a company's
money. Companies may find it tough to survive in the long run if they do not have adequate
financial and accounting management (Jamil et al 2015).
Department of Accounting
It refers to a department in an organisation which will record all financial transactions for
effectively use it for later purpose and manage the cash flow budget in an organisation for
achieving higher efficiency and better performance with in a specific period of time.
Financial Management is a branch of accounting concerned with analysing, reporting, and
summarising revenue data for use by administrators in making final decisions. Various financing
accounts provide cash balance statements, ratios, and other accounting reporting. It is very
important for the growth of any organisation. Main objective of financial management is to
provide an accurate and correct financial position of an organisation (Angelakis, Theriou and
Floropoulos, 2010).
Financial and non-financial data used to aid administrators in making final decisions are referred
to as management accounting. It focuses on reminding executives of financial records so that
they may make informed decisions about the company's overall performance. It aids in the
management of a company's cost structure and profitability.
Tax function: It is very important feature for every organisation to effectively focus on the tax
related aspects of an organisation. It will include all type of tax related to an organisation
weather it is direct or indirect tax. It involves tax administration as well as adherence to various
regulations. It focuses on increasing a company's global activity leverage.

The auditing component focuses on detecting and preventing fraud and anomalies in the
statement of financial situation. It is mostly related to effectively analysing the financial accounts
so that any kind of mistakes and frauds in it will effectively identify. In context of selected
company, they will effectively follow the auditing procedure & protocols so that they will better
detect the mistake and also provide the honest financial statements to their stakeholders (Yalcin,
2012).
Roles and Duties
BOOKKEEPING: This requires keeping track of, examining, and interpreting a company's
accounting processes on a regular basis. This function is typically filled by a bookkeeper in small
businesses, but as the company grows and expands, it can be complemented by more
professional accounts receivable and payables clerks. As a result, SKANSKA PLC has created
an effective general ledger system to assist in the more effective and efficient management of
business records (Ahmad, 2012).
BILLINGS: A company's billings department will effectively collect the data from distributes &
customers department so that they will produce a recipe for their customers. In context of
selected company, it is consider as a semi finance department which is emphasize according to
the requirement of selected business.
COLLECTION: The financial department of an organisation is responsible to effectively collect
past due fees from their customers with the help of using various tools of collection. In context of
selected company, their account number is regularly monitor and maintain a proper record of
debtor payment which help an organisation in successfully managing their liquid assets.
Value: A group, led by an experienced inspector, is required to assess the organization's overall
profit every day and pay annual duty to the specialists. The expenditure association offers
government forms with a variety of frameworks for establishment charge, personal assessment,
use duty, and local charge. Company must deal with the interaction productively for Skanska Plc
(Wu and Boateng, 2010).
Planning Financial Reports: At the end of each drilling period, the department's audit team
coordinates the department's unique financial report for the correct accounting system, identifies
payroll advertisements, and creates new handwritten notes to distribute the towing budget. .In
context of selected company, their financial structure is satisfactory which help in effectively
managing the various corporate affairs fo a long period of time.

Finance Department
This department will perform the responsibility of effectively managing the funding’s for
organisation, distributing dividend, lending, manging working capital operations in the most
effective and efficient manner. In context of selected company, various role of financial
departments are mention below:
Functions
Investment function- It will include all those factors which directly and indirectly
influence the investment capacity of an organisation related to the proposed strategy of
investment. So it’s very important for the financial team of selected company to effectively
handle all these consideration.
Funding function- It will define all those elements which are necessary for global brands
for effectively align the corporate finance entry. In context of selected company, they effectively
outline the various channel from where company will access sufficient funding’s for enlarging
their business activities more rapidly.
Dividend function- It refers to the allocation of company profit to different number of
owners who will buy the share of company. At that play the role of finance department is to
effectively distribute the whole profit so that there is conflicts and disputes are arise. In context
of selected company, their will fulfilling all rules & regulation related to this function which
maintains their good organisation culture (Al and McLellan, 2011).
Working capital function- It will play an essential role in effectively performing the day
to day business operation of an organisation and for success of any organisation it is very
important to timely handle the daily expenditure in order to a cost effective manner. In context of
selected company, their financial department will effectively perform this function so that their
business will run smoothly.
Roles and Duties
• Planning and forecasting. The PSA collaborates extensively with management to determine
how the organization is used and to provide significant recommendations. This data is utilized to

satisfy each office's budgetary needs, decide the percentage of business instructors, plan
acquisitions, and upgrade resources as they become scarce.
• Cash flow monitoring: The finance department tracks all source revenue in and out of the
company and ensures that multiple assets are available to suit the company's daily needs. This
section also explains how to file a partnership claim, which ensures that customers and lenders
receive adequate and prompt reimbursement in the same way that genuine businesses do.
• Asset Management: The accounting department reliably maintains ongoing resources inside the
organization, in addition to reviewing and auditing acquisitions. In addition to capital
speculation, the accounting department at SKANSKA PLC is in charge of human resource
management. Since an organisation will effectively manage its operating resources in order to
achieve maximum profit as compare to the amount spend on resources, it will directly affect the
liquidity of an organisation rather than its fixed assets (Gunarathne and Alahakoon, 2016).
• BUDGETING: It refers to a statement which help an organisation in effectively plan their
future expenditure related to their business for the next year such as the amount of money is
invested in capital and so on.
• PAYROLL: The account office receives representative hours worked or rate nuances from HR,
calculates charge as well as various exclusions from worker pay, and distributes all pay
aggregates to workers in cash, checks, pay cards, or cash orders.
Explanation of structures and terms
Accounts payable: sums owed to providers of products or services for installation, often known
as exchange lenders.
Accounts: sums due from clients, who are also known as holders of exchange accounts.
Accounting period: A financial grace period is established toward the conclusion of a period to
represent the advantage of bad luck or the time and financial condition at the end of the term
(Gullkvist, 2013).
Budget summaries are created on an accruals basis throughout this time (e.g. month, quarter, and
year).
The effects of various trades and times when they happen (and not as money or equivalent to go
or paid) are noticed and viably recorded in the books of records, which is announced in the
assessment proclamations as per the time.

Deterioration is a term used to portray an interaction like debilitation that is applied to a
theoretical fixed resource.
Articles of Association: An archive that diagrams the overall advantages of restricted obligation
organization financial backers.
Resources are things that a firm claims or uses, for example, instruments or brand name rights
(Gichaaga, 2014).
Application of management accounting techniques
Money settlement
The main motivation behind any association is to promote benefits and this is achieved by
accepting an appropriate or reliable monetary arrangement. In this way, cash benefits are seen as
the best tool for achieving your organization's goals.
Review of financial reports
In all companies, the payroll and accounting report is the key tax summary that mirrors the
organization's spending plan. The tests are divided into different periods. This type of study
helps leaders see how quickly physical anxiety develops. It involves an audit through an
evaluation form, standard dimensions and profit analysis.
Assessor
Cost support provides data on visualization, measurement, office savings, fingerprinting and
that's just the tip of the iceberg. Cost data is treated as a factor and a pre-order. Two financial
disagreements separate these costs to help companies choose the best causes (Nuhu, Baird and
Appuhami, 2016).
Lower costs
Minimum costing methods are used to determine bid costs, select the best deal, take advantage of
limited raw materials or resources, and differentiate or eliminate vague and obscure offers.
Task 2
Ratio analysis
It is consider as the most critical concept of financial accounting in an organisation. It will define
the effective and efficient performance tool which is widely used by many organisation for
analysing the long term success of their business. It will include various financial and non-
financial ration which are used by an organisation for effectively analysing the financial position
of an organisation during a specific period of time. In context of selected company, they will use

various types of matrices which are useful in analysing in the financial input of business as the
selected business is consider as one of the largest construction organisation in UK at a period of
time (Heong et al 2013). It will use various statistics for a specific reason which are discussed
below:
Ratio Formula 2018 2019
ROCE OP/TA-CL *100 15.69% 11.54%
Net profit margin NP/Sales*100 12.50% 11.25%
Current Ratio CA/CL 2.35 0.93
Average receivable
days Receivables/Sales *365 68.44 days 73 days
Average Payable
days Payables/Purchases * 365 77 days
160
days
Performance Evaluation of selected company
Return on capital employed: It refers to a type of financial ration which is used by an
organisation in effectively analysing their profit margin & the capacity of productivity, so that
they can effectively determine the current potential of generating profit. This tool is widely used
by many organisation in order to better assessment of their performance. Many business also use
this tool for quickly managing their business process for achieving higher profit. In context of
selected company, in 2018 the invested capital of business is recorded as 15.69% while in 2019 it
was 11.54%. It demonstrates that the company's resource productivity and overall productivity
aren't up to par. It has a declining sales form, which will make it difficult for the organisation to
expand its activities because it will not be able to generate sufficient returns on its capital
structure (Santos, Gomes and Arroteia, 2010).
Net profit margin:It define the amount which is obtained from the sales of business products
during normal functions & techniques of a business. It is consider as one of the most appropriate
Metrix which is used by an organisation for analysing their overall financial stability. It will
define the raise and decrease in the profitability of an organisation and conversely. It will also
assist investors in evaluating better investment prospects for their future. In context of selected
company, it is analysis that company portfolio is fall till from 2018 to 2019. The equivalent
profit margin in 2018 was 12.50 percent, while it was 11.25 percent in 2019. The shift toward net

profit margins has slowed, demonstrating the need for businesses to improve their long-term
overall sales capability. Successful management policies should also ensure that revenue targets
are met (Sunarni, 2015).
Current Ratio: This is the combination of existing assets and current liabilities that determines a
company's capacity to pay short-term contractual obligations effectively. If a company's current
ratio is less than one, it's likely that it won't be able to meet short-term business obligations
within the specified time frame. This strategy is consider as one of the best and most successful
strategy which is used for determine the operating cash flow of an organisation and also help in
effectively meet the requirements of an organisation. In context of selected company, in 2018 its
current ratio is 2.35 which is consider as effective in repaying its short term debits. In contrast to
last year, when more improvisation was required to recover existing loans, the current ratio in
2019 was 0.93. To allow SKANSKA PLC to grow without debt and generate sufficient revenues
for a longer period of time, reasonable sums of money are required (Modell, 2014).
Average receivables days: It will define the specific time in which an organisation is tried to
settle their loan from their debtors. It will represent the creditworthiness of an organisation and
the ability of collecting the funds. It is analysis that for maintain the sustainability of an
organisation it’s important to consider a short duration time frame for effectively managing the
liquidity of organisation. For achieving a reliable performance for a long period of time it is
important that a company will provide appropriate receivable collection cycle. When the bad
debts are increased for company it will show that the credit worthiness of company is not good
which will impact the productivity of an organisation (McLellan, 2014). The shorter the
collection time, the better for organisational growth; on the other hand, the longer the collection
time, the worse for organisational growth. SKANSKA PLC had 68.44 days in 2018 and 73 days
in 2019, which are significant differences that must be addressed in order to retain the company's
growth potential. It is also critical to improve statement collection so that the business'
productivity can be improved and its activities can be expanded further (Bell, Hoque and Arroyo,
2012).
Average payable days:It refers to a specific time frame during which an organisation is require
to repay its all debt which are taking from creditors. For providing an effective collection of
services an enterprise such as its liquidity will be sustain for long-term period, so it is very
important for an organisation to have ideal payable days. It is analysis that for a business leader

payable period is best while on the other hand the smaller payable period is consider as
counterproductive. According to the current situation, selected company will has 77 days payable
duration period in 2018. While in 2019 it is include 160 days which is consider as long term
liquidity. In order to properly enhance the productivity of company activities, the best payable
idea is critical. Furthermore, if the company cannot repay its debts for an extended period of
time, the brand name is expected to fade away, affecting the final market development. As a
result, in order for the company to function efficiently for a longer period of time, a balanced
payment cycle should be defined (Ashfaq et al 2014).
Conclusion
From the above discussed report it is concluded that both the accounting & finance play an
essential role in the growth and success of an organisation. It is analysis that accounting &
finance will assist an organisation by providing an effective budget and financial statement
related to the performance of an organisation and ensure that all business activity are run
smoothly. Both finance and account will play an essential role in effectively managing the work
of organisation. From this article it is analysis that Skanska plc. Is a market leader in building
industry. This report will also include the financial & accounting department with the help of this
the correct financial position of selected company is analysis. A ratio assessment of the company
is also performed in order to examine the financial state of the company. In order to increase its
profitability in the future, SKANSKA PLC will need to restructure its financial framework in
order to build more efficient and effective growth strategies. The corporation is also asked to
take action to alter its current plans and procedures in order to boost its long-term business
operations.

REFERENCES
Books and Journals