Financial Decision Making: A Case Study of Unilever

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Financial decision making

Table of Contents
Introduction......................................................................................................................................3
TASK 1............................................................................................................................................4
Conclusion.......................................................................................................................................7
References........................................................................................................................................8

Introduction
Accounting is a method of recording in which a company records a financial transaction that is
related to the activities of the business. The accounting records the financial transaction of a
company than classify them into different heads than summarize and interpret critically. Finance
is a term which is mostly used in the money management and most of the companies are
concerned about money so the fiancé is quite important for a company and a company must opt
towards finance from appropriate source so that they can maximize their return and minimize
interest. The Unilever Company is taking as a case study to briefly explain accounting and
finance, Unilever Company is a British based company and which is deals with food
manufacturing product and many other products.

TASK 1
Accounting and finance are the two most important component of any company because most of
the business activates of a company is dependent on accounting and finance. The accounting is
quite useful for recording financial transactions, it’s quite difficult for a company to totally
amounts without proper accounting records so these records provide a complete view about the
assets and liabilities of a company. The finance is also an important component of any company
because without proper finance a company cannot run their operations successful, so it’s
important for a company to take finance on minimum interest and use a mixture of debt and
equity in overall finance of a company (Neves et. Al., 2013).
These are some important functions of accounting.
 Identification: the identification of monetary transactions of a company is the prime
function of accounting, in this function the accounting manager carefully monitors
business transactions than identifies the nature of transactions than classify those
transactions in different heads so that a proper record of transactions prepared.
 Recording: the recording of transactions is also quite important for a company, in this
method a company is to make a proper record of monetary transactions.
 Classification: in this function of accounting, the accountant is classifying monetary
transaction into the different head of accounts like – income statement, balance sheet and
cash flow (Polzin et. Al., 2016).
 Transactions summarization: the summarization of transactions is also quite an important
function of accounting, in which a company is summarizing their accounting statements.
 Results: it’s necessary for a company to provide accounting results to the management;
the results are consisting in the form of the balance sheet, income statement and cash
flows.
 Define financial position: financial position always remains an important part of any
company and accounting reports are define the financial position of a company in various
units of the business with the help from the income statement, balance sheet and cash
flow system (Mundy and Menashy, 2012).

 Communication of data interpretation: this is also a prime function of accounting, in
which its necessary for a company to communicate accounting results with the
management of the company so that they can make effective decisions on the behalf of
financial data interpretation.
These are some functions of finance.
 Fund safety: the safety of the fund is the most prime function of finance, in this
function a company ensures proper record of financial activates because misconduct
and fraudulent in the financial accounts of a company can happen any time so it's
important for a company to provide proper safety to fund. The misuse of the fund is
also happening in many companies like – if the accountant of a company is
misrepresenting some financial transactions than that can create a big financial issue
for the company (Bushman and Wittenberg‐moerman, 2012).
 Optimum fund at a minimum rate: it's quite important for a company to get enough
funds to run their operations and it's also necessary that the fund is must not create
any kind of cost burden for the company. If a company is taking finance on high
interest than that can increase the cost of the company so it's better to take finance on
the minimum interest rate.
 Proper utilization of funds: the fund is always remaining a most important part of a
company and it's necessary for a company to use the proper funds. A company is
must allocate their fund according to the requirement of the activates so if a company
is an overuse some fund on business activates than that can sharply increase the cost
of the company so it's better to use the fund in a proper way.
So these are some important functions of accounting and finance which play an important role in
a company because these functions are entirely dependent on the financial activates of a
company and which is quite important for overall profitability (Bushman and Wittenberg‐
moerman, 2012).
The accounting plays an important role in the operational activities of Unilever limited company,
the Unilever Company is deal in many food products such as mayonnaise, ice creams, dressings,
and side dishes, all these products are manufactured in the production facilities of Unilever

limited company. The manufacturing of above all products is require raw material and chemicals
so when Unilever company is purchase these items from contractors than they make a proper
record of all the payments made towards the supplier. The record of all the payments plays an
important role in the company because without making a proper record of payments, it remains
quite difficult for the company to make payments (Mundy and Menashy, 2012).
The finance department of Unilever is quite strong too as compare to other food manufacturing
companies because Unilever Company is deal in many products so for making more products
they need more investment. The finance department of Unilever Company is providing proper
financial to the operation through which the production department of the Unilever company
feels safe so finance is paly a crucial role in the development and growth of the Unilever
company. The Unilever Company is also expanding its market through proper finance because
through investment they can introduce new products in the market which ultimately increases
profitability of the company (Smallridge et. Al., 2012).
The accounts department is always responsible for the taxes payments, its mandatory for the
Unilever company is pay taxes on time so Unilever company is paying their taxes through
accounts department because accounts department is entirely responsible for calculating tax
amount and its mandatory for a company to pay taxes so that a company cannot come in the eyes
of government.
The preparation of accounts is quite useful for a company to control their cost because
accounting department is made proper record through which a company is making a proper
control on their monetary transactions without proper accounting reports, its remain quite
difficult for a company to control their cost (Mundy and Menashy, 2012).
The finance department is always play an important role in the Unilever Company because when
Unilever company want to increase their product variations or product portfolio than its
important for them to get the best finance so that cost can be reduced if a company is getting
finance from best source to fund their operations than definitely that increase productivity and
profitability of the company.

So the above-mentioned points are clearly defined importance and role of accounting and finance
in a company, the Unilever company is using these two components wisely through that
profitability of the company is continuous increases.
Conclusion
The above study is providing a complete view of accounting and finance, this study had provided
a brief explanation about the function of account ting and functions of finance. The role of
accounting in the Unilever Company was also briefly explained in this study and the role of
finance in the Unilever Company was also briefly explained in this study. The accounting and
finance both are playing an important role in the market expansion, growth and development of a
company so it's important for a company to use accounting and finance is a wise manner because
if a company cannot use these two components wisely than they can suffer from heavy loss so
it's better to record transaction properly and get finance from the best source.

References
 Bushman, R.M. and Wittenberg‐Moerman, R., 2012. The role of bank reputation in
“certifying” future performance implications of borrowers’ accounting numbers. Journal
of Accounting Research, 50(4), pp.883-930.
 Mundy, K. and Menashy, F., 2012. The role of the International Finance Corporation in
the promotion of public-private partnerships for educational development. Public-private
partnerships in education: New actors and modes of governance in a globalizing world,
pp.81-103.
 Neves, A.M.A., Ferreira, A.J.M., Carrera, E., Cinefra, M., Roque, C.M.C., Jorge, R.M.N.
and Soares, C.M.M., 2013. Free vibration analysis of functionally graded shells by a
higher-order shear deformation theory and radial basis functions collocation, accounting
for through-the-thickness deformations. European Journal of Mechanics-A/Solids, 37,
pp.24-34.
 Polzin, F., von Flotow, P. and Klerkx, L., 2016. Addressing barriers to eco-innovation:
Exploring the finance mobilization functions of institutional innovation
intermediaries. Technological Forecasting and Social Change, 103, pp.34-46.
 Smallridge, D., Buchner, B., Trabacchi, C., Netto, M., Gomes Lorenzo, J.J. and Serra, L.,
2012. The Role of National Development Banks in Intermediating International Climate
Finance to Scale Up Private Sector Investments. Inter-American Development Bank.