Financial uses to an organisation
- Created by: aidan
- Created on: 04-03-14 20:48
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- Financial uses to an organisation
- To Control Costs and Expenditure
- This financial information allows managers where costs/expenses have been increased and help them take corrective action
- To Monitor Cash Flow
- A business may be profitable but have poor cash flow resulting in poor liquidity and business failure, close attention is paid that enough funds are coming in to pay bills
- Producing cash budgets assists with this
- A business may be profitable but have poor cash flow resulting in poor liquidity and business failure, close attention is paid that enough funds are coming in to pay bills
- To Forecast Trends
- Managers analyse the firms annual accounts over several years to help them plan likely future costs, revenue and profits
- To Monitor Performance
- They use annual accounts to assess how the firm has compared to previous years and competitors. This allows corrective action to be taken if problems are spotted
- To Inform Decision Making
- Financial information allows budgets to be prepared for internal uses. They assist with decision-making and planning. Using ratio analysis shows an organisation to decide where improvements need to be made
- To Control Costs and Expenditure
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