A form of accountancy that is often overlooked is that of managerial or management accountancy
Management accountants do not just look after a company’s accounts. They advise managers about any economic implications of upcoming business decisions that might aid or impede the growth, and ultimately, the profits of the company. The principal functions of management accounting or at least the four elemental functions are planning, organising, controlling and decision-making. This type of accounting plays more than a pivotal role in these managerial functions, and the responsibilities of the managers include financial statements, budgets and preparing reports.
The tools and tactics of this field of accountancy include, but are not restricted to:
A costing procedure that pinpoints activities and attaches a cost to each of them.
Lifecycle cost analysis
A tool used to ascertain the most financially efficient option among the alternatives, when each is equally fitting for a purpose.
A financial forecast is a tool that offers information based on past, present and the projected future financial circumstances. It helps to identify any future monetary trends that may have an immediate or long-term impact on the operations of the company.
The process implemented where business decisions are analysed. Any benefits of a situation or business action are calculated, and then the costs connected with taking that action are removed. Occasionally, analysts also put a monetary value on intangibles, such as the costs associated with living in a certain town.
Supermarkets are well-known users of data mining techniques. Loyalty cards are offered to customers to give them access to reduced prices or to accrue points to spend in store. The cards serve as tracking devices to track who is buying what, when they are buying and at what price. The supermarkets then use this analysed data for a multitude of purposes, such as offering customers targeted vouchers and also deciding when to put items on special offer.
Rate of return
This refers to the gains or losses on an investment over a specified time period. A rate of return can be applied to any investment mechanism, from property to stocks and bonds, through to fine art. Investments are, in part, assessed based on previously recorded rates of return, which are then compared against assets of the same type in order to determine which investments are the most attractive.
Contact the team at Highwoods & Associates today to learn more about our management accounts and information services.