Strategic Utilization of Management Accounting

Introduction

Managing accounting is appropriate for the multinational corporate firms as well as small and medium sized corporations to utilise the organisational data and information in order to develop the financial reports in the company, so that the managements can review the data and develop effective strategic planning for enhancing organisational performance (Otley, 2016). The study aims at reviewing the different management accounting system as well as the planning tools, through which the organisations try to develop financial report and review the data and information for further analysis and development of the strategic planning for the business success. For students who are seeking business dissertation help, understanding all these systems and tools is critical for conducting comprehensive research. In addition to this, the study is helpful to apply the managing accounting system in the organisation Golf England Ltd, in order to review their cash flows and income generation in a particular year by utilising different management accounting system. The company Golf England Ltd produces the products in golf industry and it is efficient to serve better to all the customers in the market. Through utilising the management accounting system and planning tools, it is possible to have greater provision of the organisational data and information of the Golf England Ltd and utilise the data for the successful organisational development in near future.

Understanding management accounting system

Managing accounting is effective for the organisations to identify the organisational financial data and information in order to develop effective strategic planning for the firm so that the leader and the management team can expand the business by developing effective strategic planning. Through the managing accounting system, the organisations try to review their sales volume and profitability in the market in a particular year, so that the managers can review the cash flows and inventory and stock in the company and develop effective planning to improve their sales volume and develop financial statement to forecast the future financial performance of the company. Hereby, in this studies, it can be stated that, the financial statement and the managing accounting is beneficial for the organisation to develop effective strategic planning to run the operational activities efficiently and generate more revenue and profitability in near future (Höglund et al., 2016). Managing accounting is hereby advantageous for the organisation Golf England Ltd in order to review the organisational and data and financial performance in order to develop effective planning for the organisation to improve their performance in the market. There are different managing accounting technique such as product costing, cost analysis, cash flow analysis, profit analysis and trend analysis and forecast, which are beneficial for Golf England Ltd to understand their performance in order to develop further planning of maximising the organisational objectives. In this regard, the cash flow analysis, inventory turnover rate and the income statement are also necessary technique for managing accounting in the organisation, through which it is possible to review the organisational data and information as well as it would be effective for the managers to develop effective planning and strategies to run the organisational activities more innovatively to generate profitability and enhance their sales volume.

Inventory turnover rate is effective for the organisation to be calculated in order to understand the amount of inventory and the stock of the company in the organisation. A lower inventory rate indicates that the company conducts more stock in their warehouse and there is less sales volume as compared to other competitive firms (Cooper, Ezzamel and Qu, 2017). Apart from that, if the product sales are faster, the inventory rate is higher and thus it is necessary to calculate the inventory turnover rate in order to identify the product restock and product sales activities of Golf England Ltd. The organisation Golf England Ltd can forecast the financial activities in future through analysing the inventory turnover rate, where the firms can calculate the inventory and the product restock amount by analysing the cost of the products and services in the organisation. In addition to this, managing safety of the stock and the old inventory can be possible through calculating the inventory turnover rate, where the manager of the firm can review the stock of the products and manage the products efficiently. Proper analysis of the product sales and the high sales of the product category can be reviewed well in the organisation (Maas, Schaltegger and Crutzen, 2016). In addition to this, the inventory turnover rate is effective for the organisations in order to manage the customer’s orders and restock the items as per the market trend and customer’s preferences. Hereby, calculating the inventory turnover rate is effective for the organisations to review the product restock and product availability in the company as well as evaluate the product sales volume so that the company can develop further tactics to improve their sales volume by managing their operations.

On the other hand, the income statement is effective for Golf England Ltd to identify the total ale volume and the revenue of the organisation. Through calculating the total cost of the company in producing the products, it is easy to calculate the net income by subtracting the cost from the total sales amount of the company (Hopper and Bui, 2016). It is also effective for the organisation to utilise the technique of income statement by reviewing total sales volume, cost of the production and the net income of the organisation in a particular year. apart from that, cash flows analysis is also effective for the organisations in order to identify the flows of cash in a particular year by considering the financial activities such as total cash flows, cash in the end of the year, cash in the beginning of the year, decrease in long term borrowing, purchase of property, dividend paid, tax paid, interest paid, case generated from operations and net earnings. The organisations can utilise both the technique of income statement and the cash flow activities in order to understand the financial activities in a particular year (Schaltegger and Burritt, 2017). Through the income statement and cash flow analysis, the managers can review the data and financial performance of the brand in the market as well as it further influence the leaders and the managers to develop effective planning to develop proper tactics for the company to perform efficiently in the market in order to maximise their profitability and enhance their sales volume in the next year.

Applying management accounting technique

The above mentioned managing accounting technique by inventory turnover rate and the income statement, cash flow analysis are effective for the organisation Golf England Ltd to review the financial performable and data in the company in a particular financial year and it further influence the mangers to develop effective tactics to develop strategic planning for the company Golf England Ltd for enhancing their performance in the market. As per the managing accounting technique, it is necessary to identify the total cost of the organisation in a particular year in order to identify its net income or revenue generation of the company Golf England Ltd in that year.

Cost statement:

The total cost as per the calculations in a particular year is £680000.

Inventory turnover rate:

The inventory turnover rate is effective to be calculated for the company Golf England Ltd so that it is possible to understand d the product sales and the inventory in the company in a particular financial year. As per the management accounting, the normal inventory turnover rate is 4 to 6, which indicates that there is adequate amount of products, sold in the market and the remaining products are stocked in the company warehouse. The turnover rate of the company Golf England Ltd. in that particular year is 3.45 (approx). The rate indicates that, there is lack of product sales in the market, and the company has the capability to raise their sales volume as there is high stock of products in the company warehouse. In this regard, the calculation of inventory turnover rate would be effective for the managers of Golf England Ltd. to develop effective strategic planning to improve their sales volume and maximising the profitability of the firm in near future.

Income statement:

As per the income statement, the revenue or the net income generated in that particular year in the company Golf England Ltd is £1320000, where the total cost are subtracted from the total sales volume to identify the net income of the brand.

Cash flows from the operations:

Cash flow analysis is also effective for the organisation Golf England Ltd in order to understand the cash flows in a particular year and as per the analysis, there is £1983000 cash flows, which is positive for the brand to run their business sustainably and secure future development in the market (Messner, 2016). Hereby, the managing accounting system is effective for the organisation Golf England Ltd. to develop effective strategic planning in order to develop further strategic tactics to run their organisational activities efficiently and maximising their profitability and sales volume in near future.

Planning tools in management accounting

There are different planning tools which are effective for the organisation to analyse the financial performance of the organisation and develop effective tactics in near future (Bromwich and Scapens, 2016). The three planning tools in managing accounting will be discussed further.

Budgetary control:

Budgetary control is the planning tool in management accounting system, where the organisation can plan and control the organisational product and manufacturing, sales of products and services (Renz and Herman, 2016). The budgetary planning ensures the organisation to maximise the future sustainable goal and organisational objective through enhancing cooperation and communication among the organisational departments in order to run the organisations successfully. The advantages and disadvantages of budgetary control are,

Pricing strategy:

Pricing strategy is another planning tool in the management accounting, where it helps to value the products and services of the organisation and set complex calculations, research and understanding in setting the appropriate price for the organisational products and services (Granlund and Lukka, 2017). The advantages and disadvantages of pricing strategy are,

Cost volume profit analysis:

The planning tool of cost volume profit analysis is an effective managerial accounting procedure to analyse the effective of sales volume and the product cost in the operating profit of the company (Honggowati eta l., 2017). The advantages and the disadvantage of the planning tool are,

Comparing the organisational managing accounting system

There are other organisations like Nike and Reebok, which are utilising effective management accounting technique in order to manage their financial performance and develop financial reports for future. In this regard, Nike utilises budgetary control mechanism and the Reebok utilises income statement, which are effective to review the financial performance of the company (Pelz, 2019). The budget control strategy in effective in Nike to manage the financial problems so that the budget can be controlled and it would be possible to manage cost of production and distribution to generate future profitability. Both are companies are established and efficient for delivering quality products including shows and other sport related accessories to the customers (Holopainen, Niskanen and Rissanen, 2019). The management accounting tools are effective for both the companies to review their performance, sales volume and cost and budget and develop further strategic planning after analysis and forecast of the financial report and it is also beneficial for Golf England Ltd. In this study, the technique of income statement and the inventory turnover arte and cash flows analysis are hereby beneficial for the organisation Golf England to manage their financial issues and reallocate the organisational resource to maximise their profitability and sales volume.

Conclusion

It can be concluded that, the management accounting practice is effective for the organisational managers to review the financial performance and develop financial report in a particular year. It further influences the manager of the company to develop effective strategic planning for the organisation to enhance their financial performance and maximise profitability of the firm. Hereby, the management accounting technique and the planning tools are effective for developing appropriate strategic planning for the Golf England Ltd to enhance their sales volume and maximise their profitability by producing at a large volume, improving innovation and creativity of the firm and retaining the customers by best pricing policy.

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