Analyzing Management Accounting for Merlin Entertainment Plc Decisions

This report examines the application of management accounting within Merlin Entertainment Plc (MEP). It details the various types of management accounting information used by the company, including financial statements (profit and loss account, balance sheet, statement of changes in shareholder's equity, and cash flow statement), budgets, variance analysis, and management information systems (MIS). The report further analyzes how MEP utilizes this information to make key business decisions, such as comparing budgeted and actual data, making investment choices, forecasting financial data, addressing current shortfalls, and determining the need for raising capital. The analysis underscores the importance of management accounting as a tool for informed decision-making within the company, particularly in the tourism sector. The report references financial statements, budgeting, and variance analysis as critical components of the company’s financial strategy. The report also discusses the role of MIS in facilitating smooth business management and achieving organizational objectives, particularly for middle-level managers.

FINANCE AND
FUNDING
TASK 2

2.1 Explanation of various management
accounting (MA) information which used in
Merlin Plc
 Management accounting is the system by which various kind of internal
business decisions are taken by the firm.
 Further, each and every kind of strategies also can be framed properly with
the help of this particular accounting method to improve its performance.
 The information which used by the Merlin Entertainment Plc in the
workplace related to management accounting are discussed below:

Financial statements
 The company prepares different types of financial accounts which
is supportive to know its financial position at the end of fiscal
year.
 In this basically four statements included which are like profit and
loss account, balance sheet, statement of changes in shareholder's
equity and cash flow statement.
 The Merlin Entertainment uses such management accounting
method to assess its position and performance in the industry in
terms of financials at the fiscal period ending.
 Moreover, profitability as well as liquidity position of the firm is
also analysed properly with the use of P&L and balance sheet.

Budgets
 Other information of MA used by the selected firm is
budget in which future financial data are estimated.
 Along with this, upcoming business performance in the
TTM industry is also predetermined by the
management.
 To frame budgets in the company, past financial
accounts are taken as a base.
 Through this method, MEP able to make future
strategies to meet with the agreed objectives and goals.

Variance analysis
 The method in which two data i.e. expected and actual are once
compared and then analysed is known as variance analysis.
 It is widely used approach of the management accounting by
several companies for deriving its performance in the operating
industry.
 Merlin company uses this information to know that whether it
able to meet the estimated figures or not.

Management information system (MIS)
 The framework which shows reports of the management
oriented to the company is known as management information
system.
 This is used by cited enterprise in order to take those decisions
which are related with the management of company.
 Further, it basically works for the middle level of managers
and workforce in the firm.
 In addition to this, control on business management and make
it smooth for achieving its objectives the MIS used by chosen
company.

2.2 Analysing use of management accounting
information in order to take business decisions
within Merlin company
 Management accounting is one of the best
supporting tool for the business organisation in
order to make effective business decisions.
 Further, decisions which are taken properly with the
help of MA are stated below:

Comparing with the data
 According to this, the values are compared in the company
which are such as budgeted and actual.
 If the MEP firm able to meet with budgeted data at the end
of year then it can be said that, company performs well in the
tourism sector.
 On the other side, if the company unable to meet the
expected values then decisions for improvement are taken.

Investment decisions
 In the workplace different number of projects
are available in order to undertake and make
investments.
 Further, with the help of management
accounting, it can be properly decided that,
which project is the most profitable for
investment.
 Hence, decisions of investing money within
MEP are easily taken by this.

Forecasting
 Under this, financial data estimated for the next accounting
period after preparing budget statements.
 Wide range of values are forecasted at here which are like
sales, cash, production, material etc.
 On the basis of the estimation of financials, business
decisions within Merlin firm made fruitfully.

Current shortfalls
 When the financial statements are analysed by the Merlin Plc
then it can know about its business performance.
 Moreover, problems and issues of financials are also highly
assessed through management accounting information.
 Therefore, those shortfalls and obstacles come into
consideration like cost increasing, profit declining etc. easily
determined.
 On the basis of this, further fruitful business decisions taken
by the MEP management.

Raising capital
 From the cash flow statement analysis, the management of
cited firm can know level of cash position along with
incomes and outflows at the fiscal period ending.
 If the company needs capital for further financial period then
through cash flow analysis it can be known properly.
 If the management of MEP founds that, adequate cash is
available at the workplace then will not raise fund.
 Hence, it can be said that, management accounting is used
by the TTM enterprise for making decision of raise fund.

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