Different accounts are useful to different people; some accounts may only be made for a specified audience or person to view. Examples of this are;
- The Inland Revenue, they confirm that a business has paid the right amount of tax or how much tax the business owes
- Suppliers can see whether the business is able to pay them/debts
- Shareholders can make a judgement on whether its worth investing in the business
- Banks they can see whether its worth them giving the company or business a load or overdraft because that may not be able to repay them
Paying employees wages and salaries
Wages and salaries (monthly pay) involve the finance department organising employees wages from calculating how much they are owed and distributing the money to them. Some of the activities are;
- The business has to take away income tax and national insurance from employees pay
- The company may be required to have a pension scheme for its employee’s
- It will need to keep thorough and accurate record of wages and salaries so that not money is lost through paying mistakes
Getting hold of capital and other resources
All company’s and businesses need some sort of start up costs or resources and costs while its running. To buy the resources or to pay for these costs, businesses might need to raise money in order to do this aka capital.
A business has 2 main sources of capital;
Load: this is by borrowing money from either a bank, building society or another business, but you have to pay them back, you are usually penalised with interest over a period of time
Retained profits: if the business has previously been profitable, it may of kept some of the profits to invest into resources which they may need later
Also companies or businesses can sell shares to raise more money (capital). The people who buy these shares give me in order to have a part of owning it.
Other functions of the finance department
The running of the finance department affects other parts of the business. For example:
- Places orders, processes them and pays bills for other departments within the company
- Gives advice to other departments to their expenditure e.g. money to buy office resources
- Helps senior managers make decisions financially which could affect the whole business
Finance, Cadbury Schweppes
As the table above shows it shows That Cadburys has been able to sustain a reasonable amount trading profit from 2000 and carry it to 2001. Also its shows big profit increases from 1999 to 2000. The marketing expenditure backs up the point I made up marketing Cadbury Schweppes earlier on, marketing increased by just over 40%. Also the employment figures are shown, some reason there is a drop of employment from 1999 to 2000 where figures have dropped possibly due to the change the way Cadbury Schweppes manufactures its products thus needing less human resources.
Finance, McDonalds
As the graph shows above, it shows that in the previous 3 years that McDonalds has struggled in every aspect, from sales, to income, this could be a reflective representation of the hard time that McDonalds faced before it revamped its image due to the competitiveness of its industry with competitors such as subway opting for healthier options to give to their customers. The figures of increasing operating costs and expenses could be due to McDonalds having to invest more money into research and development to strategise and see what they can do to increase their profit and see what’s going wrong with their current business strategy.
Also in the table and graph above, this shows McDonalds share prices from early September 2003 to now, early September 2004. Shares prices above have shown drastic falls and rises, possibly due to shares being reduced due to poor business within the McDonalds Company, which could possibly be reflective in what’s shown above.
