Accounting and Finance for Manager

Question: Analyse the financial accounting of the company. Answer: Introduction Financial accounting is one of the most important aspects of a company. It is the financial accounting that provides the information about the performance of the company in the financial aspect. With the proper understanding of the financial accounting, it is possible to understand and assess the fact as to whether the company is making profits or losses (Berk and DeMarzo, 2007). In the given case, the financial accounting of Kenya power lighting system will help to determine the performance of the company. Kenya power owns and is responsible for the operation of most of the electricity transmission and the distribution system of the country. The organization is responsible for selling electricity more than 26 lakh customers (Eckbo, 2007). The main objective of the company is to plan for the generation as well as supply of enough electrical power. The government is the owner of 50.1% of the shares while 49.9% of the shares are privately owned. This study will help to shed light how t he financial condition is used to assess the performance of the company. Scope The study helps to provide an in-depth analysis of the financial accounting of the company. The financial accounting will provide the knowledge about the performance of the company (Holton, 2012). With the help of the financial accounting the financial conditions of the company are assessed and understood. Aims and Objectives The primary aim of the project is To understand how the financial accounting that will help to understand the performance of the company. To determine the key roles of financial accounting in assessing the performance of the company (Kew and Watson, 2012). To calculate the key financial ratios of the company. To determine and evaluate the financial position of the company. Accounting function Kenya power and lighting company limited operates electricity transmission and engaged in the retail and distribution of electricity in bulk. The company basically operates in four regions: Mount Kenya, West Kenya, Coast and Nairobi. The interconnected networks of distribution and transmission lines cover around 57,879 kilometres (Kieso, Weygandt and Warfield, 2007). The key mandate of the company is to plan for maximum transmission capacity and electricity generation to meet the demand and maintain the distribution of power and retailing and transmission network of electricity. The principle shareholder of the organization is government of Kenya. The government has the stake of 50.1% and it is listed on Nairobi Securities Exchange (Kieso, Weygandt and Warfield, 2011). The key resource of the company is to provide quality services to their customers and providing maximum profit to their shareholders. The board of trustees of the company is accountable to the members to ensure that the fund accumulates with highest standard and law of business ethics and corporate governance. The board ensures that the fund is used in the interest of members and shareholders (Warren, Reeve and Duchac, 2007). The corporate governance is significant for the appropriate operations of the company. The accounting plays a important role in the preparation and presentation of financial statements. The income statement shows the income, expense, profit or loss of the company. Therefore, it helps to determine and analyse the financial position of the company (Wolf, 2008). The financial ratios are calculated on the basis of the accounting information. The managerial accounting helps to deal with the operational reports that distributed within the company. On the other hand, financial accountings comply with different accounting standards and providing information to the stakeholders of the company. Financial accounting analysis The financial accounting analysis helps to determine and evaluate the financial position of Kenya power and lighting company. The financial statement of a company includes income statement, cash flow statement and balance sheet. The income statement demonstrates income, profit or loss, expense of the organization, balance sheet demonstrates the assets and liabilities and cash flow statement demonstrates the inflow and outflow of cash (Berk and DeMarzo, 2007). The working capital management helps to determine the funds required for operating day to day operations. It ensures that the company is able to continue all its operations and ability of the company to satisfy operational expense and short term debts. Financial accounting helps in recording the monetary transactions as well as in providing the reports of the transactions when required. There are three main types of financial reports that help the users in deciding the financial position of the firm as well as help the users in taking essential financial decisions (Eckbo, 2007). These are balance sheet, income statement and cash flow statement. The balance sheet provide the information of the asset and liability of the firm, income statement give the information about the profit and loss of the firm during the financial year. Furthermore, the cash flow statement help in recognizing the inflow and out flow of cash during the financial year. The financial ratios help to determine and evaluate the profitability, efficiency and liquidity level of the company. The profitability ratios show the profit margin, efficiency ratios shows the efficiency and liquidity ratios shows the liquidity of the company (Holton, 2012). The ratios and facts and figures will help to compare with the competitors in the market. The auditors play an important role in the preparation and presentation of financial reports fairly and accurately. The corporate social responsibility states that the business operations should be favourable to environment, society and stakeholders. The financial reports help to determine and analyse the financial position of the company as well as future development. It is the responsibility of the management to take appropriate steps for the development of the company. Financial management analysis The Financial management analysis helps to determine and evaluate the financial statements of the company in the given accounting year. The analysis shows the key items and trend lines of profit margin, debt, account receivable, cash availability, liabilities, assets, equity and other key items (Holton, 2012). The financial management strategies help to allocate the resources appropriately and capital budgeting determines the long term investments of the company. The investment planning is important for the development of an organization. The capital budgeting shows the annual budget of the company and its investment strategies. Milestone Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Main Activities/ Stages Selection of the topic Preparation of the research proposal Preparation of accounting function in the organization Preparation of financial accounting analysis of the organization Preparation of management accounting analysis of the organization Preparation of financial management analysis of the organization Conclusions and SWOT analysis Comparing findings and discussions Final analysis of research Conclusion and recommendations Submission of the research study Conclusions and SWOT analysis The financial management analysis helps to determine and evaluate the financial condition of Kenya power and lighting company. The financial condition shows the long term development and future planning of the company (Warren, Reeve and Duchac, 2007). The SWOT analysis of the company will help to determine the strength, weakness, opportunities and threats in the current market environment. References Berk, J. and DeMarzo, P. (2007).Corporate finance. Boston: Pearson Addison Wesley. Eckbo, B. (2007).Handbook of Corporate Finance. Burlington: Elsevier. Holton, R. (2012).Global finance. Abingdon, Oxon: Routledge. Kew, J. and Watson, A. (2012).Financial accounting. Cape Town: Oxford University Press. Kieso, D., Weygandt, J. and Warfield, T. (2007).Intermediate accounting. Hoboken, NJ: Wiley. Kieso, D., Weygandt, J. and Warfield, T. (2011).Intermediate accounting. Hoboken, NJ: John Wiley Sons. Warren, C., Reeve, J. and Duchac, J. (2007).Accounting. Mason, OH: Thomson/South-Western. Wolf, M. (2008).Fixing global finance. Baltimore, Md.: Johns Hopkins University Press.