Financial uses to an organisation

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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
    • 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


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