Managing Finance and information
Exercise 1
It is important that managers understand how to examine financial and accounting information. A manager does not necessarily need to be an accountant, but having a good understanding of financial and accounting information enables the manager to work more efficiently and effectively. (Dyson, 2001 p8) With a good understanding of accounts a manager can use them in decision making and planning strategy of which direction they want to take the company for a period, and then use the accounts to check back and ensure that the business is heading in the right direction. Managers need to know their legal requirements when it comes to accounting information. Whilst preparing the accounts may be down to an accountant, it is the manager’s responsibility to make sure they comply with the laws. Some companies are required by law to disclose publicly information about their activities. (Dyson, 2001 p8)
It is beneficial that a manager also knows a range of financial ratios. A manager can use ratios to work out how well the business is doing, what it owes, and how much is owed to it. So the manager can then relay the information on to the company directors, or any shareholders that would be interested. (Dyson, 2001 p168)
A manager can also use a range of financial ratios to compare position and performance with previous years, but must take in to account any conditions or inflation levels that could take effect. (Atrill and McLaney, 2011 p189) In the case of limited companies where there is a legal obligation to make their financial statement available to the public, a manager can you financial ratios to compare its performance to business in the same industry. (Atrill and McLaney, 2011 p 190)
This paper will look to examine how financial and accounting information can illustrate the nature of competition and performance between two public limited companies, and how the information extracted can support decision making. The first company is J D Wetherspoon
It is important that managers understand how to examine financial and accounting information. A manager does not necessarily need to be an accountant, but having a good understanding of financial and accounting information enables the manager to work more efficiently and effectively. (Dyson, 2001 p8) With a good understanding of accounts a manager can use them in decision making and planning strategy of which direction they want to take the company for a period, and then use the accounts to check back and ensure that the business is heading in the right direction. Managers need to know their legal requirements when it comes to accounting information. Whilst preparing the accounts may be down to an accountant, it is the manager’s responsibility to make sure they comply with the laws. Some companies are required by law to disclose publicly information about their activities. (Dyson, 2001 p8)
It is beneficial that a manager also knows a range of financial ratios. A manager can use ratios to work out how well the business is doing, what it owes, and how much is owed to it. So the manager can then relay the information on to the company directors, or any shareholders that would be interested. (Dyson, 2001 p168)
A manager can also use a range of financial ratios to compare position and performance with previous years, but must take in to account any conditions or inflation levels that could take effect. (Atrill and McLaney, 2011 p189) In the case of limited companies where there is a legal obligation to make their financial statement available to the public, a manager can you financial ratios to compare its performance to business in the same industry. (Atrill and McLaney, 2011 p 190)
This paper will look to examine how financial and accounting information can illustrate the nature of competition and performance between two public limited companies, and how the information extracted can support decision making. The first company is J D Wetherspoon
References: J. R. Dyson. Accounting for Non-Accounting Students. (2001) Fifth Edition. Peter Atrill. Eddie McLaney. Accounting and Finance for Non-Specialists. (2011) Seventh Edition. Monthly labour review. April 2011 Crush, Peter. Human Resources (09648380). Jun2010, p36-38. 3p. www.telegraph.co.uk/finance/recession/4283250/Record-six-pubs-closing-every-day-due-to-economic-downturn.html