Table of Contents

1.0      Introduction.

2.0      The role of accounting and finance within an organization in your choice with appropriate examples

3.0 Ratio calculation and their evaluation.

3.1 Calculate the five ratios for each of the two years for ALPHA LTD.

3.2 Comment on the performance of ALPHA LTD’s ratio results and position between the two years, mentioning possible causes and effects for the changes.

4.0 Conclusion.

References.

1.0  Introduction

Ingersoll (2016) said that financial decision is the process that is mainly responsible for different financial issues related to the liabilities and stakeholder equity of an organization. As McLean (2017) notes, finance is the broader term in a business organization that analysis a number of financial factors through different ratio analysis as well as the financial statement analysis to evaluate the performance of a company and also evaluates to if the company is doing better or not in future. There are mainly three kinds of financial management decisions including capital structure, working capital management and capital budgeting. Hampton (2017) said that the key aim of financial decision making to increase business profits, reduce the cost expenses and increase the market share. The chosen organization for this paper is ALPHA Ltd where ALPHA is one of the manufacturing companies of the UK which is planning to expand its business operations in other parts of the UK within ten years. This paper first describes the roles of accounting and finance of an organization including ALPHA. Then, this paper calculates and evaluates the five ratios such as ROCE, net profit margin, current ratio, average receivable days and average payable days for ALPHA for two years. Finally, these papers analyze the performance of ALPHA by focusing on the ratio results and describes the possible causes for the changes ratio results in two years.

2.0  The role of accounting and finance within an organization in your choice with appropriate examples

Accounting and finance are key factors for any kind of business organization. In terms of accounting, the key purpose of accounting of an organization is to give financial information to different stakeholders including management, creditors and investors (Wood, 2015). In addition, accounting measures a company’s activities and evaluates the management results.

The key roles of accounting in a business are described as follows:

Budgeting: As Gowthorpe (2016) notes, the key role of accounting of a business organization is to budgeting for the organization and its different departments. It is a very difficult task to unite different departments’ tasks, especially when they begin to depart in their own individual goals, and it is good to have the center body of an organization that takes care of the financial issues in an impartial manner that has interests of the company in mind (Wood, 2015). For example, the accounting section of ALPHA budgets for different financial plans that help this organization to use its assets effectively.

Investments: By focusing on a company’s work, external investments may be a significant factor in the accounting roles. The accounting of a company easily understands as well as manages how to balance a company’s activities and its investors effectively (Siegel, 2018). On the other hand, accounting maintains a good relationship between the investors and the company’s activities. For example, ALPHA’s accounting section invests in different company activities. Thus, to expand its business operations in other parts of the UK, accounting plays a significant role by investing the proper amount in different activities.

Controlling: The other role of accounting is controlling the organizational activities. Hussey (2016) said that to control the organizational processes and activities, accounting has to achieve the business goals, and accounting also has to gain the proper knowledge on business goals. For example, the manufacturing company ALPHA Ltd has to expand its business in other parts of the UK within the next ten years. Thus, the role of the accounting section of ALPHA is to understand the goals why it tries to expand its business and what should be the outcome. For this, accounting controls different organizational activities to expand its business in other parts of the UK.

High Planning: The accounting of a business organization plays a significant role to plan any organizational activities and make strategic decisions for the company. Wood (2015) stated that accounting makes successful planning and high-level planning for a business organization to run the business successfully. On the other hand, high-level planning accounting offers good opportunities to the business. Successfully planning to account helps the company to make growth which can ultimately improve the financial situation of a company. For example, ALPHA Ltd.’s accounting plays a significant role to make plans to expand its business operations in other parts of the UK in the next ten years.

Communicating: Tracy (2015) stated that the other role of accounting is communicating with its employees and other stakeholders appropriately.  Proper communication with the employees helps business organizations to identify different problems and make solutions. For example, Alpha Ltd wants to expand its business operations in other parts of the UK. Thus, this company should communicate with its employees properly to share ideas about expanding its business operations in other parts of the UK and discusses the possible problems related to this future plan with senior management. This helps ALPHA to achieve a better outcome.

On the other hand, McLaney (2017) said that finance is a significant part of making any kind of business decision such as budgeting or planning and managing the cash flow control the risks and costs of a business organization………………….

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