Financial Decision Making Assignment Help (GC01360)

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.

3.1 Calculate the following 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

Finance is the broader in the organization which analysis different factors through ratio analysis and financial statement analysis and at the last makes interpretation for having an idea about the current business condition to make better decisions in the future. To make financial decisions management of the organization needs to focus on few things or factors such as income statements, balance sheet statements, cash flow statements, and ratio analysis by depending on managers come to a solution and states whether the company holds a good position or not. If not then financial managers have to perform their duty by making appropriate and effective decisions for the management of the organization. Before making any financial decisions the management must need to find out financial considerations first and then need to analyze the previous capital used, variances to find out whether the company makes an effective budget compare to the actual one or not. Alpha Ltd is one of the renowned manufacturing companies in the UK operating their business since 1954 and under this assignment how they participate in making financial decisions is being discussed with proper explanation.

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

According to (Acklom, 2015), Accounting has to perform different kinds of activities in the organization along with finance. The roles and responsibilities of accounting and finance are essential for managing organizational activities properly and effectively. The role of Accounting is to assess the company’s income statement, balance sheet and cash flow statement where finance must need to calculate the ratio from the financial statements and from the ratio they have to take decisions relating to the accounting data for the betterment of their future.

The basic role of accounting:

The primary role of accounting and finance is given below-

• Planning: The need to plan for the future first so that they can increase the number of sales of the organization. To do so the accounting makes a budget plan to formulate the budget for upcoming years based on the current and previous number of data. Planning is the first and foremost role of accounting which needs to be achieved effectively before implementing any new project. It’s just a picture of where the company wants to go in the future and what is their main achievement target. For example, Alpha ltd makes planning to expand their business in the other parts of the UK within the next ten years of time table.
• Organizing: The next role of accounting is to organize the above planning according to the picture which is being drawn by the management in the first role. It is one kind of representation of design that is being designed by the accounting for the future and under the second role; they are responsible for organizing the design as per their planning. For example: To execute the plan of Alpha Ltd for expanding their business in other parts of the UK they need to organize their planning by collecting all the data need to analyze the needs of additional parts in the UK. The data need to be organized first to assess whether their decision is effective or not.
• Controlling: The third basic role of accounting is to control the organized activities which are being organized by them according to the planned design made by the management. To control the system and process the accounting needs to meet the goals first and due to this reason, they just need to have a proper idea about what is their goal. The existing goal of Alpha Ltd is to expand their business area and after organizing the plan they need to control the additional expenditures which they have to incur for operating business activities.
• Motivating: According to (Adam, 2016), the most important role of a is to motivate the employees for doing the activities done in an effective way. To motivate employees use different kinds of motivational theories so that they can do the work done by the management. Maslow’s Hierarchy theory, Herzberg’s two-factor theory are the most useful and common motivational theories to motivate organizational employees in a proper way. For example, Alpha ltd uses Maslow’s Hierarchy theory by fulfilling their employee’s basic needs first and after meeting the first stage of need they go for meeting the next need. Like- their employees first need good work then they need rewards, incentives, recognition from the company to do better work. On the other hand, Herzberg’s two-factor theory states that there are two types of factors one is a satisfactory factor and another one is a dissatisfactory factor. If an employee of Alpha wants a promotion and to get recognition for their target achievement and they get it then they will meet satisfactory factors and if not then it will become a dissatisfactory factor which is not good for them.
• Communicating: The most important role performs by accounting is communicating with their employees properly (Alford, 2013). For example, Alpha ltd communicates with their employees in a very flexible way which encourages them to share any kind of problems and opinions with the senior management to have a positive outcome from the organization.

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