MODULE: FINANCIAL ANALYSIS AND MANAGEMENT
The need of management
Management is the key to success for a good business. These days management became universal, no matter what country the organisation is located in. The need of management is vital in all types and sizes of organisations. Managers in all types of organisations will plan, organise, lead, control and take strategic decisions. To make best decisions managers need helpful information.
The importance of accounting:
Accounting affects people in their daily lives. When they think of how to spend their wealth, they draw a plan of how much money they have, how much they will spend and how much they can save. Businesses are more affected by accounting. All businesses need to have records of their activities, in order to have easy access to the information they have to be well recorded and organised. This way of classifying information will enable the company to calculate its profit or its loss periodically. This will also help the company to know what they owe and what they are owed. From this recorded data, accountants would know if the company is doing well or running a loss. They can also tell where the company is going wrong and to communicate the company performance to the business owners and to the people who are allowed to have access to the information.
Finally, accounting is considered as a way of recording and communicating information to help to make good decisions.
Accountants and owners of the company are not the only people having access to the accounting information, there are other possible users of a company accounts. The other possible users of accounting information include:
* The business owners: who uses it to know if their business is making profit or not. * A future buyer: he would want to have access to such information in order to see where he is placing his money. * The lenders: they will need this information so they can make decisions about lending money or not. * Inspector of tax: they will want to access the information to find out the amount of the taxes the company needs to pay. * A future partner: he will need to access the information so he can decide whether to become a business partner or not. * Shareholders: they need to access the information to decide if it worth carrying on investing their money in the company or not. (Wood and Sangster, 2002)
Accounting plays a key role for an organisation; it is classified into two categories:
Managerial accounting: this is about the methods used by accountants to inform organization’s internal users.
Financial accounting: This is used to measure the company's business activities and to inform the people who need these measurements in order to make good decisions for the company.
Starbucks the world's leading company
The chosen organisation is Starbucks "The world’s leading coffee" company. Starbucks is the largest coffee shops company in the world. They have shops over 50 countries. Starbucks was established in 1985, they trade their stock on the "NASDAQ" under the name of "SBUX". They are selling a high-quality coffees and teas and many other products to build the best names and to be the most comfortable and loved coffee shops in the world. They are working on introducing more new quality products to their customers. The Starbucks main objective is opening more shops every year all over the world. Starbucks did not get its good reputation by chance, but by its dream and vision supported by actions and hard work. This assignment will be discussing a small part of the financial situation of Starbucks for the financial year 2011.
All organisations need an information system for the support of their business. Nowadays the use of information system is very important for most businesses to...