Financial Decision Making: Corporate Roles, Growth, and Analysis

This report assesses the financial decision-making process within Panini Ltd, focusing on the roles and responsibilities of accounting and finance functions. It investigates the importance of these functions, explores various financing options available for company growth, and conducts a ratio analysis based on provided financial data. The analysis includes gross profit margin, operating profit margin, return on capital employed, current ratio, quick ratio, inventory turnover days, and receivable collection period. The report interprets these ratios to evaluate the company's financial performance and identify areas for improvement, such as managing liabilities, improving capital resource utilization, and optimizing inventory turnover. The document is available on Desklib, a platform offering AI-based study tools and a wide range of academic resources for students.

FINANCIAL
DECISION
MAKING

Table of ContentsINTRODUCTION.......................................................................................................................3
TASK........................................................................................................................................3
1.1 Investigating the importance of accounting and finance functions, roles, and responsibilities
within a corporation..........................................................................................................................3
1.2 Discuss the many financing options available for growth.............................................................5
TASK 2:....................................................................................................................................6
A. Ratios are calculated in the following way:....................................................................................6
B) Observations based on the above-mentioned ratios:.....................................................................9
CONCLUSION.........................................................................................................................10
REFERENCES...................................................................................................................................11

INTRODUCTION
The report ready as follows to consider the operating and running of Panini ltd, which can aid
within the decision-making process. There are many different monetary tools exist that valuate
the benefits and drawbacks of a definite financial decision (Akgün and Akgün, 2018). Several
business-related decisions, admire finance, investment, and dividend, will function steering in
the close to future for lowering prices whereas also increasing sales and profits. The corporate
chosen is concerned in producing activities such as bread for supermarkets in the United
Kingdom. The ratios are computed with the assistance of given information to live financial
growth of the company. Ratios are effective methodology that helps in higher cognitive process
and prediction of budgets. it's helpful for making relevant funds and finance them for improved
potentialities and growth.
TASK
1.1 Investigating the importance of accounting and finance functions, roles, and responsibilities
within a corporation.
Accounting: Accounting is the manner of recording monetary transactions alongside sorting,
retrieving, summarising, and imparting the outcomes in reviews and analysis. Accounting refers
back to the manner of mixing monetary statistics in order that it's far clean and understood to all
stakeholders and shareholders (Alencastre Cordi, Rossit and Ajís, 2022). Accounting's
predominant intention is to report and record a business's monetary transactions, monetary
performance, and coins flows.
Functions of accounting: There are quite a few capabilities that is probably useful to Panini
ltd. Some are mentioned below:
 Evaluate economic transactions: it's miles essential for Panini ltd. to document
economic transaction nicely in order that it may without problems understood via
way of means of the stakeholder and management. The statistics is beneficial in
growing economic statements which consist of income and loss account and stability
sheet.
 Measuring serve performance: Accounting is beneficial in having a proper research
of Panini ltd Company that could assist the industrial organisation in managing
related existence cycles for a specific time period, which may be beneficial in

preventing a Keeps a track record of financial transactions competitive climate with
inside the near future.
Role of Accounting: It is beneficial to have facts of the roles that a agency serves so you can
carry out its relevant operations on time and in an green and effective manner. Some are stated
below:
 Maintains a record of all financial transactions: It keeps track of how much money the
company invests and how much money maintains a record of all financial transactions
(Amagir and et.al., 2019). This not only helps Panini ltd identify the factors that drive
revenue generation and revenue from related features, but also identifies activities that
need to be regulated to reduce costs incurred while managing and operating the company
Helps to do.
 Assists in making sound decisions: Accounting allows Panini Ltd to choose the best
available alternatives, resulting in more efficient and positive decision-making. It's also
useful for identifying what best suits a related firm's objectives and needs over time, as
well as which strategies would be most efficient in lowering expenses and generating
profits over that time.
Duties of Accounting:
 Forecasting finance-related activities and threats: Accounting-related elements are
responsible for forecasting potential risks and threats to the company's growth in the near
future (Atahau and Cronje, 2020).
 Budget monitoring system: Accounting is a useful tool for budget preparation and
planning. It also aids in identifying places where money is being squandered due to
inexperienced investment.
Finance: Finance is critical to the success of any firm. It moves through all aspects of corporate
operations. It assists in determining how much money should be invested in a company's
connected operations, as well as how cash inflow and outflow should be managed over time.
Functions of finance:
 Specific planning of finances: It indicates that funds that are rare in nature must be
prepared in such a way that they will best serve the purpose and goals set (Bilbao-Terol
and et.al., 2018).

 Raising funds: Finance focuses on areas that will contribute to the creation of cash and
earnings that will be beneficial to the operations of the organisation.
Role of finance:
 Managing business's external functions: This section focuses on managing the external
environment, which cannot be controlled but may be mitigated to some extent via proper
planning and execution (Jean-Louis, 2021).
 Using pre-planned decisions: When a company develops and implements a strategy, it
need finances to determine how much money it will require to carry out associated duties
in the interim, all of which will aid the firm in delivering exceptional results.
Duties of finance:
 Providing strategic direction: Finance is responsible for ensuring that plans and policies
are established and developed in a way that satisfies demand and requirements. It also
assists in determining which insurance is ideal for a certain company.
 Planning ahead of time for tax and associated events: Taxation has a big influence on
brand image and environmental competition. It's critical to figure out whether or not the
firm can function and thrive in a comparable setting (Kaffash, Kazemi Matin and Tajik,
2018).
1.2 Discuss the many financing options available for growth.
Organizations can create money in a variety of ways in order to expand and grow their
company operations and activities. The only goal of Panini ltd is to expand its activities
internationally and on a greater scale. It would also assist in the firm's long-term development
and operation. Here are some tools that you might find useful:
 Equity: Individuals from the environment who wish to become shareholders in the firm
and exercise the powers granted to them at the time can do so with the help of such
shares. It aids the organisation in producing income that may be invested in relevant areas
for improved operations and performance.
 Debts: It is a method of getting cash for investment objectives, such as debentures and
borrowings from banks and financial institutions. It is money that earns interest and must
be paid back over a certain length of time. It might be utilised as a fundraising source.
 Retained earnings: Retained profits are also a preferable alternative for carrying out
financial operations since they may be used in an emergency to aid with development and

expansion. It is also seen to be the most effective approach for generating possibilities
since it excludes any loans or borrowings that must be repaid (Kofman and Payne, 2021).
TASK 2:
A. Ratios are calculated in the following way:
1. Gross profit margin: The gross profit margin is the difference between the
revenue and the cost of products sold (COGS) (Kurode, 2018).
Gross profit/ Net sales * 100
2018: 3500/ 10000 * 100 = 35%
2019: 3265/ 11500 * 100 = 28.39%
Analysis: Increasing Panini ltd Company's selling expenditures, leading in a reduction in the
linked business's gross profit margin. Another factor contributing to the drop might be Panini ltd
Company's current price policy. Reducing prices connected to the rate of products and services
without reducing the business's cost of goods might be a factor in the company's diminishing
profit margin.
2. Operating profit margin: The operational margin is a measurement of a
company's ability to earn from its core operations (Zhang, Zhao and Feng,
2019).
Operating profit/ Net sales * 100
2018: 2765/ 10000* 100 = 27.65%
2019: 2305/ 11500* 100 = 20.04%
Analysis: The volume and size of expenditures incurred in operational activities have increased,
resulting in a fall in profit margin, according to the corporation. One of the causes for the
company's poor sales performance in a competitive market is a decline in sales volume. When it
comes to operational profit, this means a decrease in the margin.
3. Return on capital employed: The return on capital employed (ROCE) is a
financial measure that evaluates a company's financial performance in relation
of most of its capital (Kusairi and et.al., 2019).

Earnings before interest and tax/ Share equity + Long term liabilities *
100
2018: 2765/ 6755 * 100 = 40.93%
2019: 2305/ 8111* 100 = 28.41%
Analysis: Increasing liabilities is a problem that occurs when the company's debts and
obligations grow as a result of a poor return on capital used. It's also a good idea for the
corporation to look into issues that impact efficiency and effectiveness. The utilisation of capital
resources is inefficient and ineffective. As a result, the return on invested capital is lower. In
order to get the best results and outputs, organisations must also understand how to distribute
scarce resources to the best available alternatives and places.
4. Current Ratio: The current ratio is a metric that examines the current assets
and liabilities of a business. Cash assets or assets that will be turned into cash
in a year or shorter, as well as obligations that will be settled in a year or less,
are considered short-term assets (Lucey, 2019).
Current assets/ Current liabilities
2018: 1175/ 970 = 1.211: 1
2019: 2110/ 512 = 4.12: 1
Analysis: The fact that the organization's receivables and payables have been managed
appropriately for more than two years might be linked to a rise in the current ratio. It would also
aid in the growth and expansion of businesses, as well as the development of a strong brand
image. The company's obligations and liabilities must have been wiped down and cleared on
schedule, as evidenced by the rising current ratio. As a result, the firm would be in a better
position.
5. Quick Ratio: The quick ratio measures a company's capacity to satisfy
financial obligations without selling assets or borrowing money(O'Connor and
Kabadayi, 2020).
Current assets – Inventory / Current liabilities
2018: 1175 – 350/ 970 = 0.85: 1
2019: 2110 – 675/ 512 = 2.80: 1

Analysis: • One of the reasons for raising fast ratios in connected business is effective
management of inventories and merchandise available with the company for a specified length of
time. Processing raw resources into finished items and enhancing the quality of commercial
goods and services necessitate inventory and stock. Increased sales lead to a rise in the
company's quick ratio, which might be due to more sales being recorded and seen in the
company. Every organisation must concentrate on initiatives that will assist boost the profit
margin of the associated company. Improving quantity or quality will help to boost consumer
interest in the firm, which is important in the long term.
6. Inventory turnover days: The number of times a company's sold inventory may
be replaced in a certain time frame is referred to as inventory turnover (Natoli,
2018).
Inventory / Cost of goods sold * 365
2018: 350 / 6500 * 365 = 19.65 days
2019: 674 / 8235 * 365 = 29.87 days
Analysis: Inventory turnover days have increased, which might be attributed to improved
management of production-related activities and operations. If at all practicable, the firm should
decrease or eliminate the use and adoption of out-dated or obsolete machinery and inventories. It
would assist the organisation in reducing unneeded fees and expenses. It is also said that the
company's operating and running must have modest expenditures and associated dangers. It
contributes to a higher number of inventory turnover days.
7. Receivable collection period: The collection period refers to how long it takes
a business to collect its receivables. The average collection period is used by
businesses to guarantee that they have enough cash to meet their financial
obligations (SAVARD and Cavalcante., 2021).
Average account receivables / Net credit sales * 365 days
2018: 760 / 10000* 365 = 27.74 Days
2019: 1340 / 11500* 365 = 42.53 Days
Analysis: The absence of management of lending plans and policies followed by organisations in
the current competition is the reason for the observed growing receivable collection duration.

The lack of effort put forth in sorting and collecting money is another issue that may be
attributed for the prolonged receivable collection period. It depicts a situation in which the delay
for collecting receivables appears to be lengthening.
8. Payable payment period: The payable payment period is used to calculate the
average number of days it takes a company to pay its bills and obligations.
Companies with a long due payment period might postpone payments and
utilise the extra funds to make short-term investments or boost working capital
and cash flow (Tuffour, Amoako and Amartey., 2020).
Average account payable/ Cost of goods sold * 365 days
2018: 920 / 6500 * 365 = 51.661 Days
2019: 495 / 8235 * 365 = 6.010 Days
Analysis: The primary reasons of shorter due payment times and unfavourable financial
situations over a two-year period include poor financial conditions. As a result, the payable
payment amount is reported as decreasing. When payments to suppliers are late or delayed, it has
been claimed that this might lead to decreased payable payment periods. In comparison to the
previous year, Panini ltd converted their inventories into sales more efficiently. It also assists in
the finding of related reasons that can help with the treatment of such disorders. The term of
payable payments is shortening as a result of the delayed procedure.
B) Observations based on the above-mentioned ratios:
According to the financial parameters computed above, the ability to pay short solvency
health is strong compared to the previous year. The current and quick ratios for the year
2019 reveal that the company's performance in managing its current assets and liabilities is
good and efficient. Panini ltd is more reliant on long-term debt, which is not favourable for
the company's future prospects. To preserve long-term financial stability, the corporation
must expand its capital. In comparison to the previous year, the company is able to collect
its credit sales on time and make timely payments to its creditors, increasing the firm's
market worth.

CONCLUSION
According to the above research, what linked measures should be considered when predicting
Panini ltd's present and future performance. This paper looked at the issues and risks that a
company faces in order to preserve its market position. To give assistance for Panini ltd, the
aforesaid paper includes discusses function, duties, and responsibilities. Financial ratios are also
computed over a two-year period to assist in establishing the cause of differences between
organisations. This report gives an overview of the company's market performance.

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(Atahau and Cronje, 2020)(Bilbao-Terol and et.al., 2018)(Jean-Louis, 2021)(Kaffash, Kazemi

Matin and Tajik, 2018)(Kofman and Payne, 2021)(Kurode, 2018)(Kusairi and et.al., 2019)
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(Tuffour, Amoako and Amartey., 2020) (Zhang, Zhao and Feng, 2019)