Financial Information As A Tool For Management Decision Making

The research is an appraisal of financial information as a tool for management decision making. It provides a conceptual and analytical framework of financial information and its role in management decision making. Champions Breweries, Uyo was selected as the case study for the purpose of this research.

Introduction

1.1 Background of the Study

One of important assumptions in decision making process and improvement economy is existence of quality information. Significant number of this information comes from financial information systems and from financial statements. Financial statements have to provide realistic and objective picture of realistic business condition of certain company. In other words, auditing of financial statements is understandable, by which accuracy is ensured. In context of consideration of financial statements as a function of decision making it is important to emphasize that different users must know how to "read" those statements. "Reading" contents of financial statements provide whole number of different instruments and analyses procedures for understanding business.

A well-established process of management on the basis of the financial statements and financial information is one of the most significant presumptions of the quality business. Decision making process requires information - financial and non-financial information as well. The most important financial information needed in the process of business decision comes from financial.

Therefore, we can say that financial is a service function to management. It, basically, processes or gathers and studies "raw data" and converts them into suitable information in the process of decision making. The basic characteristics of the financial are:

Gathering, processing and presenting financial (financial) information

Information considering company"s business

Those directed towards different interested users

Significant number of this information comes from financial information systems and from financial statements. Financial statements have to provide realistic and objective picture of realistic business condition of certain company. In other words, auditing of financial statements is understandable, by which accuracy is ensured. In context of consideration of financial statements as a function of decision making it is important to emphasize that different users must know how to "read" those statements. "Reading" contents of financial statements provide whole number of different instruments and analyses procedures for understanding business. A well-established process of management on the basis of the financial statements and financial information is one of the most significant presumptions of the quality business. In order to improve the usage of financial information in the context of the decision-making process, we need to analyze financial statements. In that context, we can describe financial statement analysis as the process where we convert data from financial statements into usable information for business quality measurement by different analytical techniques, which is very important in the process of rational management.

Therefore, to know the current level of business quality is very significant in the context of future business management, since we try to ensure company"s development and existence on the market. Financial statement analysis comes before the management process that is before the process of planning which is the component of the management process. Planning is very important for good management. Good financial plan has to consider all company"s strength and weaknesses.

The task of financial statement analysis is to recognize good characteristics of the company so that we could use the most of those advantages, but also to recognize company"s weaknesses in order to take corrective actions. Because of that, we can say that management of the company is the most significant user of financial statement analysis. The research intends to investigate financial information as a tool for management decision making with a case study of Champions Breweries, Uyo.

1.2 Statement of the Problem

The problem confronting this research is to investigate financial information as a tool for management decision making.

1.3 Objective of the Study

To appraise the nature of financial information

To determine the nature of management decision making

To determine the role of financial information in management decision making in Champions Breweries, Uyo.

1.4 Significance of the Study

The study shall analyze the nature and source of financial information.

The study shall provide a framework for the use of financial information in management decision making.

The study shall appraise the role of financial information in management decision making in Champions Breweries, Uyo as a case appraisal.

1.5 Statement of Hypotheses

H0: Financial information is not significant in Champions Breweries, Uyo.
Ha: Financial information is significant in Champions Breweries, Uyo.

H0: The level of financial information in Champions Breweries, Uyo is low.
Ha: The level of financial information in Champions Breweries, Uyo is high.

H0: The impact of financial information in management decision in Champions Breweries, Uyo is low.
Ha: The impact of financial information in management decision in Champions Breweries, Uyo is high.

1.6 Scope of the Study

The study investigates financial information as a tool for management decision making with a case study of Champions Breweries, Uyo.

1.7 Organization of Study

The study is divided into five chapters. Chapter one deals with the study"s introduction and gives a background to the study. Chapter two reviews related and relevant literature. The chapter three gives the research methodology while the chapter four gives the study"s analysis and interpretation of data. The study concludes with chapter five which deals on the summary, conclusion and recommendation.

Summary, Conclusion and Recommendations

5.0 Introduction

So far this study we have seen how financial information is used as a vital tool for management decision making. Also, relevant literatures were reviewed, the methods used for data collection and how the data collected analysis and presented were all discussed in the previous chapters of the project. This chapter therefore, is exclusively meant for summary limitation of study conclusion and making reasonable recommendation pertaining to the subject matter of the research work.

5.1 Summary

The management accountant provides financial information to all levels of management which helps them in their decision-making. He provides information for planning and control purpose, the management accountant knows the problem of an organization, and at the same time the ways of solving these problems. Its relationship with other department is horizontal in nature whereby he advices other departments on how to go about doing things so that set objectives of the organization would be achieved.

The financial information is of two type i.e management and financial information. Management information are those which deals with internal reporting while financial information are those information used by person outside the firm; it involves the financial assets liabilities and ownership interest as well as relevant information which helps the management in decision taking. Financial information should accurately be presented i.e. should be a realistic description of events or transaction that are disclosed in the report. The results of decision or events should not be involved in financial reports unless they can be verified with reasonable confidence. This serves as a check on processing and measurement of errors that might have occurred. The process of generating the information to use should be efficient when the benefit of the information used exceeds the cost of providing it. The financial information must be sufficiently available early. This is so that appropriate change in resources allocation canbe made for its usefulness. The needs and supply of financial information in any organization is determined by the following factors.

The information needed for individual manager reflecting their responsibilities.

The work specification

The organization structure of the company,

The prevailing management styles.

The management information arrived at after pressing is presented to the management inform of reports; the report will contain certain things like reference to the problem to be solved, the investigation procedure adopted, the interpretation placed upon the information conclusions drawn on the problem, and the necessary recommendations.

Management decision making requires cost estimation of cash flows for each alternative course under consideration which is made easier if the behaviour of cost items can be identified these types of cost behaviour are categorized as variable costs, fixed costs and semi variable cost. Variable cost varies more or less directly with changes in the level of actively fixed cost and unaffected by changes in the level of actively while semi variable cost partially with the level of actively and at the same time are partially fixed the purpose of cost estimate is to estimate the fixed amount of a variable cost amount for various actively levels of the total cost.

Management performance is usually judge on the basis of the company"s success in generating profit. The criterion for many of the management"s decision therefore, is the increments affect various alternative plans on profits. The cost volume profit model is a useful tool for analyzing the relationship between revenues, cost or expenses activity level short run operating decision. Financial information can play an important role in cost volume profit analysis by providing management various products the probable effect of change in selling price and other variables.

5.2 Conclusion

The project has proved the importance of financial information in a firm as regards to decision making. The tools used by financial staff in any company will make sense only if the application of the financial principles and techniques discussed in chapter two are used in various aspects of the problem to be solved when making decision. Financial information makes a significant contribution of the decision making in an organization. The application of financial information in a business concern is capable finding solution to management problem in terms of decision making.

Financial information needs to work together with the management so that the company can achieve its set objectives. The information provided by the management accountant should be used by the managers, and then the management accountant should make sure that they provide the needed information at the right time.

5.3 Limitations of the Study

The researchers experience some problems which could be attributed to the Nigerian factors, both humanly and non-human in nature.

This could be summarized as below.

Uncooperative tendency of most respondents who are skeptical of disclosing some certain information concerning the projects research semester work load of the institution is not always in favors of students carrying out research work.

Unavailability of relevant research materials at school library greatly contributed to limitation of the study.

5.4 Recommendation

The usefulness of financial report is jointly determined by its constants and the user"s skill of interpreting it, the account department should therefore help management to understand the meaning and proper use of the information prepared and submitted to them. The researcher has examined the importance of financial information as a vital tool for management decision making and come up with the following recommendation.

Relevant information should be prepared and present decision makers so as to influence the management decision processes. The financial information must be sufficiently available early so that important information is not rendered useless when delayed. Management should be able to compare alternative, objectives, actions and events from the financial information supplied to them and the financial reports should be made in such a way that alternative can be compared and a decision made. Financial information should be compared in such a way that it could be verified i.e. the results of decision or events should not be included in financial reports unless they can be verified with reasonable confidence.

Financial information must be brief and straight to the point it should be complete and include all information that are important. This will ensure that a busy manage obtains the information he needs quickly having read through unnecessary materials.

Preliminary Page(s)

Title

Declaration

Approval

Dedication

Acknowledgement

Abstract

Table of Content

Chapter One:

Introduction

1.1 Background of the study

1.2 Problem statement

1.3 Purpose of the study

1.4 Significance of the study

1.5 Study hypotheses

1.6 Scope and Limitations of the Study

1.7 Organization of Study

Chapter Two:

Review Of Related And Relevant Literature

2.1 Introduction

2.2 Conceptual Review

2.3 Theoretical Framework

2.4 Empirical Studies

Chapter Three:

Research Methodology

3.0 Introduction

3.1 Research Design

3.2 Sources of data collection

3.3 Determination of Population

3.4 Determination of sample size

3.5 Instrumentation

3.6 Instrument Validation

3.7 Adopted Method of Analysis

Chapter Four:

Data Presentation, Analysis And Interpretation

4.1 Introduction

4.2 Data Presentation

4.3 Data analysis

4.4 Data Interpretation

Chapter Five:

Conclusion, Summary, Recommendation

5.1 Introduction

5.2 Conclusion and Findings

5.3 Summary of the Study

5.4 Recommendation

Bibliography

• Financial Information System For Gas Company
• Extent Of Reliance On Financial Accounting Information For Effective Business And Financial Decision In Corporate Organization
• Assessment Of Management Information System In Achieving Corporate Financial Goal
• Accounting Information And Performance Of Financial Institutions In The 21st Century Business Environment In Nigeria
• Accounting Information System And Financial Performance Of Banking Area
• Impact Of Financial Information On The Profitability Of Business Organization In Nigeria
• Effect Of Misrepresentation Of Information In A Financial Statement

• Accounting Project Topics and Materials