Management Accounting Report: Financial Strategies for Unicorn Company

This management accounting report examines the application of various financial tools within the context of Unicorn, a financial services company. It begins by defining management accounting and its role in internal planning and control, focusing on budgetary control as a key planning tool. The report analyzes the advantages and disadvantages of zero-base budgeting and cash flow budgeting. It then explores the use of SWOT and PESTLE analyses in forecasting, highlighting how these tools help in anticipating and mitigating financial risks. Furthermore, the report discusses how Unicorn can adopt management accounting systems such as benchmarking, balance scorecards, and variance analysis to address financial problems and achieve sustainable growth. The conclusion emphasizes the significance of management accounting in strategic decision-making and financial goal attainment, summarizing the application of these techniques to enhance financial performance.

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P 4- budgetary control planning tool and its advantages and disadvantages ........................1
M 3 Application for preparing forecasting budget ................................................................2
P5-Unicorn adopt management accounting system respond financial problem....................4
M 4 Management accounting system to respond financial problem......................................4
CONCLUSION................................................................................................................................5
REFERENCES ...............................................................................................................................6

INTRODUCTION
Management accounting is a significant tool of accounting that provide important
information to manager which is used in planning, decision making and controlling of activities
in such way so they can achieve goals and objectives of the company. This accounting always
used for internal purpose and not regulated by any rules and regulatio. It helps in maximising the
profit.(Dierynck and Labro, 2018)
Present report based on Unicorn company which is a privately held company that provide
financial services to public. This report includes budgetary control planning tool and its
advantages and disadvantages and also mention about planning tool application used in
forecasting budget. Further, explain about company adopt management accounting report for
respond financial problem of the company.
TASK 1
P 4- budgetary control planning tool and its advantages and disadvantages
Budget - Budget is a quantified financial planning tool which is used to forecasting revenue and
expenditure on a specific period. Unicorn enable to measure actual operation by comparing
budget.
Budgetary control - budgetary control is process which is used for comparing actual performance
and standard performance if any deviation found then manager can take action for solve problem
and improve performance of the company. it is significant for enhance profitability by
improving performance (Marín Reyes, 2019).
Planning tool of budgetary control and its advantages and disadvantages
Zero base budget - This budget prepare from the zero level of the new financial year . all
expenditure and revenue identify from the start point according to current situation of the
company. Unicorn do not require any previous year data while preparing zero base budget. This
budget also known as DE NOVA BUDGETING. Unicorn can analyse needs and cost require
into particular function department through Zero based budget. ZBB used in prepare strategies
for enhance operation efficiency that helps in minimised the cost and increase the profitability. it
usually used in non profit organisation and service organisation.
Advantages
 Unicorn company can allocate resources in effective manner through Zero Based budget
that helps in reducing cost and increasing the profits of the company.
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 this budget helps to coordinate and communicate among all department so that employees
of the company can make effective decision. This helps to achieve goals and objective of
the company (Soares and et.al.,2019).
Disadvantages
 zero base budgeting is expensive and complex process to Unicorn company because they
require manpower for analysis and research from the ground level and this budget not
based on previous year data.
Cash budget- Unicorn company prepare cash budget that helps to estimate cash receipt and
cash disbursement within a specific time. With the help of cash budgeting company can
controlling the expenditure and enhance the cash receipt. Cash flow budget provide financial
information that helps to take decision regarding investment money. If Unicorn income is higher
than expenditure that show positive position because that time company have sufficient profits to
meet out its debt and improve financial position. It is been used to know about the company's
current cash position.
Advantages
 Unicorn can make plan to optimum utilisation of cash by investing money, reducing debt
that helps to improve financial position. company identify that they have sufficient profits
to meet out its obligations.
Disadvantage
 Cash budgeting not provide realistic picture because cash receive and expenditure
estimate on the basis of market situation.
M 3 Application for preparing forecasting budget
SWOT Analysis
Strength
 High brand image
 High customer satisfaction
 Strong customer base
 Global presence
Weaknesses
 Reduced market shares due to high competition
Opportunities
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 Strategic alliance with other leading firms
 Cost leadership
Threat
 Competitors
 Political instability in different regions
Advantages
It helps in analysing the future opportunities
Disadvantages
It is less reliable method
Unicorn adopt Pestle for analysis application for preparing budget and forecasting budget
that helps to controlling factor which indirectly impact on business activities.
P(political)- manager prepare forecasting budget that helps to prepare strategy for reducing
losses due to change in government policies, tax rate etc. (Nuta and Nuta, 2018).
E(Economical )- manager forecast those economic factor that impact on profitability of the
company. manger should daily aware about the interest rate, inflation rate and employment rate.
example - if interest rate will increase then they have to reduce borrowing amount that leads to
increase profitability amount.
S(social)- with the help of forecasting budget manage analysis culture trend and life style so
they can provide goods and services as per customers’ needs and preference. it helps to meet out
the demand and increase profitability.
T(Technology)- Manager must adopt new or advance technology for improve the operation
of business. budget helps to determine that they have sufficient amount or not for buying the
technology and also determine impact of technology in the business.
L(legal)- manager prepare and maintain accurate policies according to law and legislature of
the government like human right law , welfare act etc that are impact on business actives. budget
provide accurate salary and wages to employees as per law.
E(Environment)- when the budget of the company is efficient, company can view it for
upliftment of society by doing corporate social responsibility as well as introducing effective
campaigns for environment (Maher, Fakhar and Karimi, 2018).
Advantages
Helps in realising potential threats to organization
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Disadvantage
These factors can not be controlled by the firms
P5-Unicorn adopt management accounting system respond financial problem
Company can adopt benchmarking, balance scorecard and variance analysis which is
used to solve financial problems that helps to sustainable growth of the company.
Benchmarking - benchmarking is the process of measuring performance of the company by
comparing actual performance and set benchmarking that helps to take corrective action for
improving the performance. manager set benchmark with the help of previous year data, current
situation of the market. It helps in improving debt equity ratio and price earning ratio is
impeoved. it is useful management accounting system that helps to increase efficiency of
business and financial problem can be solved by benchmarking. it helps to improve financial
problems increase profitability, effective utilisation of resources sop cost can be minimised and
enhance market per share that will increase shareholder value and also increase customer
retention.
M 4 Management accounting system to respond financial problem
balance scorecard- Unicorn company adopt this managerial accounting system to solve financial
problems. it is the matrix tool which is used in strategic management that helps to achieve
predetermine goals and objective of the company. Often it provides feedback to organisation that
use to improve performance. balance scorecard focus on four aspects these are-
customer perspective- manager provide goods and services according to customer needs and
preference at the reasonable price for enhancing customer satisfaction that would help to increase
probabilities (Balanced Scorecard Basics .2017).
business process- it focus on management operational activities that helps to provide goods and
services without any delay. Efficiency operational management increase profitability so financial
problem can easily be solved by manager.
financial data - It focus on analysing financial ratios, increase sales and income and reducing
expenditure that helps to improving financial problem of the company.
learning and growth- balance score card improve performance of the company by providing
training and induction that helps to improve performance with existing resource so company can
achieve goals and objective within a specific time period. It will improve financial crisis of
company.
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variance analysis- Unicorn adopt variance analysis which helps in comparing standard
performance and actual performance and if any variance found then manager have to take
corrective action to solving problems. variance analysis helps to analysis material variance, price
variance and overhead variance which used to improve performance by and overcoming the
problems by reducing cost per product (Dierynck and Labro, 2018). manager can utilisation of
resources in such way so cost can be minimised and efficiency of performance will increase that
helps to increase profitability and reducing the wasting of cost and material.
CONCLUSION
Above report summarised that managerial accounting is significant tool which provide
necessary information to manager that helps to prepare strategies and decision for achieving the
goals and objectives of the company. Unicorn company prepare zero base budgeting and cash
flow budgeting which use to evaluate actual performance and standard performance so that
corrective action can be taken at the right time. this report also concluded that PESTLE have
application in forecasting budget. Unicorn company adopt management accounting report to
respond financial problem that helps to accomplish financial goals and sustainable growth.
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REFERENCES
Books and journal
Dierynck, B. and Labro, E., 2018. Management Accounting Information Properties and
Operations Management. Foundations and Trends® in Technology, Information and
Operations Management. 12(1). pp.1-114.
Maher, M.H., Fakhar, M.S. and Karimi, Z., 2018. The relationship between budget emphasis,
budget planning models and performance. Journal of Health Management and
Informatics.5(1). pp.16-20.
Marín Reyes, R., 2019. Budgetary control. Stages, elements and activities at its processes
development. Infodir (Revista de Información para la Dirección en Salud).15(28). pp.127-
133.
Nuta, A.C. and Nuta, F., 2018. Management of Objectives and Budgetary
Planning. EuroEconomica.37(3).
Soares, T.C. and et.al.,2019. Budget and strategy: beyond budgeting as a tool for planning and
budgetary control in a graduation course. Iberoamerican Journal of Strategic Management
(IJSM). 18(1). pp.126-138.
online
Balanced Scorecard Basics .2017.[online].Available through:
.<https://www.balancedscorecard.org/BSC-Basics/About-the-Balanced-Scorecard>
Management Accounting – Meaning, Advantages & Functions.2019.[online].Available
through.<https://cleartax.in/s/management-accounting>
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