Define management accounting and discuss how this is important for planning, control and decision making within an organisation.

Assignment task

The assignment requires a written report that addresses key aspects in relation to Business Finance and Economics taught in the module, such as the economic factors that determine the competitive environment of an organisation, the role and importance of accounting and financial reporting in terms of planning, control and decision-making. In addition, the report requires a numerical element that offers a solution to a set of key financial ratios and demonstrates an understanding of these in terms of organisational performance. The report must include relevant theories, concepts and formulas from which a solution will be offered. This assignment has been designed to provide you with an opportunity to demonstrate your achievement of the following module learning outcomes:

LO 1 Explain how micro- and macroeconomics impact on the competitive environment of an organisation;

LO 2 Demonstrate knowledge of the role of accounting within the organisation with respect to both reporting and decision-making aspects;

LO 3 Explain the structure and terms used within the main financial statements;

LO 4 Interpret management accounting techniques for planning, control and decision-making within the organisation;

LO 5 Calculate the main accounting ratios and explain their significance in terms of organisational performance.

Business Finance and Economics Task requirements

OVERVIEW

Written assignment, 2,500 words Following the Assignment Brief and Guide, address each of the 5 questions / elements of the assignment and use appropriate theories, concepts and formulas to demonstrate your understanding of the key concepts involved.

DESCRIPTION OF THE TASK ± WHAT YOU ARE BEING ASKED TO DO? Written assignment – 2,500 word document 100% weighting Address the following five questions / elements within the specified word limit: 1) Outline the external and internal determinants of business performance and distinguish whether these are micro- or macroeconomic. (500 words) 2) Explain the role and importance of accounting with respect to decision-making within an organisation. (500 words) 3) Distinguish between the major financial statements and explain the layout and terms used within each Statement. (450 words) 4) Using the information from the statements of financial position (balance sheets) and income statements (profit & loss accounts) below, calculate and interpret the following ratios for XYZ Plc for the years ended March 31 2019 and 2020, respectively: (400 words) a) Operating Profit Margin b) Gross Profit margin c) Current Ratio d) Acid Test Ratio e) EPS (Earnings Per Share) Assignment Brief Academic Year 2021-22 3 Business Finance and Economics XYZ Plc – Statements of financial position (Balance Sheets) as at 31 March 2019 2020 £m £m ASSETS Non-current assets Property, plant & equipment (at cost less depreciation) Land & buildings 386 430 Fixtures & fittings 134 170 520 600 Current assets Inventories 350 410 Trade receivables 240 280 Cash at bank 5 – 595 690 Total assets 1115 1290 EQUITY & LIABILITIES Equity £0.50 ordinary shares 400 400 Retained earnings 275 245 675 645 Non-current liabilities Borrowings – 9% loan notes (secured) 250 350 Current liabilities Trade payables 165 200 Taxation 22 4 Short-term borrowings (all bank overdraft) 3 91 190 295 Total equity & liabilities 1115 1290 Income Statements (Profit & Loss Accounts) for the year ended 31 March 2019 2020 £m £m Revenue 2500 2750 Cost of sales (1850) (2375) Gross profit 650 375 Operating expenses (410) (340) Operating profit 240 35 Interest Payable (18) (20) Profit before taxation 222 15 Taxation (55) (3) Profit for the year 167 12 Assignment Brief Academic Year 2021-22 4 Business Finance and Economics Notes relating to the above Statements: i. The market value of the shares of the business at the end of the reporting period was £3.00 for 2019 and £2.00 for 2020. ii. All sales and purchases are made on credit. iii. At 1 April 2018, the trade receivables stood at £250 million and the trade payables at £210 million. iv. A dividend of £40 million had been paid to the shareholders in respect of each of the years. v. The business employed 14,000 staff at 31 March 2019 and 18,628 at 31 March 2020. vi. The business expanded its capacity during 2020 by setting up a new warehouse and distribution centre. vii. At 1 April 2018, the total of equity stood at £450 million and the total of equity and non-current liabilities stood at £650 million. 5) Define management accounting and discuss how this is important for planning, control and decision making within an organisation. (500 words) You must reference all information used in the written assignment, using the Harvard Referencing Guide.