Decision Making For Business Assignment Sample

Introduction Of Descriptive Statistics And Impact On Management Information Systems Assignment

Get free written samples from expert assignment writers and academic writing services in UK.

1.1: Assumptions 

In order to conduct a suitable descriptive statistic, the dataset for a renowned food company is being selected which is considered to be KITCHEN CRAZE Plc. Hence, a dataset of five consecutive years has been considered ranging from October 2017 to September 2022 (uk.finance.yahoo.com, 2022).

1.2: Descriptive Statistics 

<td "> 

Descriptive Statistics for Adjusted Close		Descriptive Statistics for Returns
Mean	2105.984711	Mean	-0.010663894
Standard Error	43.98675903	Standard Error	0.010953513
Median	2173.56836	Median	-0.020377072
Mode	#N/A	Mode	#N/A
Standard Deviation	340.7199704	Standard Deviation	0.084845545
Sample Variance	116090.0982	Sample Variance	0.007198767
Kurtosis	-0.61693692	Kurtosis	0.724670607
Skewness	-0.318655919	Skewness	0.579151459
Range	1433.425293	Range	0.438569881
Minimum	1324.5	Minimum	-0.195565408
Maximum	2757.925293	Maximum	0.243004473
Sum	126359.0826	Sum	-0.639833614
Count	60	Count	60

Table 1: Descriptive Statistics 

(Source: Created by Learner)

As per the above table of descriptive statistics, the variables selected for the statistical study consists of adjusted close and return values of KITCHEN CRAZE Plc Plc. As per the above table of descriptive statistics, mean value for adjusted close has been calculated as 2105, while the median has been calculated as 2173 respectively. 

Hence, it can be determined that the range of adjusted close values lies between 2150 to 2175, while the standard deviation of the variable adjusted close has been calculated as 340. On the other hand, the mean and median for the variable returns has been calculated as -0.01 and -0.02 respectively, thereby portraying negative returns for the vast majority of the duration in the five years. The descriptive statistics for this variable also imply a relatively lower standard deviation of 0.08, which further ascertains that the scattering and distribution of the return figures is minimal and marginal. As per narrations and explanations of Zhang et al. (2021), descriptive statistics is often deemed to be a valuable tool, where it can easily forecast necessary summaries of the dataset.

1.3: Impact of Management Information Systems on Organisations 

The management information systems are further deemed to be curricula financial and auditory control measures that help to regulate and stimulate the overall flow of financial activities occurring in an organisation. As per narrations and illustrations of Yalcin, Kilic and Delen (2022), management information systems can be further determined as a viable tool to propagate the useful decision-making prospects for an organisation to empower a long-run business durability and sustainability. Following is a detailed synopsis of the various impacts possessed by the management information systems on organisations.

1.3.1: Reduction in Transaction and Agency Costs 

The first major impact of management information systems on organisations can be considered as enabling swift reduction in transaction and agency costs. Sniazhko (2019), explained and opined that reduction in transaction and agency costs are a vital consideration to propagate growth and financial stability of an organisation in the near and foreseeable future. Hence, the role of management information systems is further deemed to be crucial as management information systems further benefit to identify the actual financial control procedures needed to be followed for encouraging a large-scale reduction in transaction and agency costs. The reduction of these costs is further deemed to be necessary in the long-run as profit and revenue maximisation could be facilitated in a substantial manner. 

1.3.2: Providing adequate impetus to cater essential work parameters 

The second important impact associated with the implementation of management information systems can be considered as providing adequate impetus to cater essential work parameters. The catering of essential work parameters is deemed to be a significant area of consideration as it enables an organisation to comply with the requisite standards and guidelines as per inscriptions of the concerned legislative body and regulatory framework. Moreover, the impact of MIS can also be associated with disarraying the entire work division, centralisation and decentralisation of an organisation to cater prolonged functional excellence. Hence, job structure shuffling could potentially happen on a mass scale leading to indifferent productivity and efficiency parameters of employees and workforce in an organisation. 

1.3.3: Helps in Stimulating the Business Function

The third important aspect and impact of the implementation of management information systems can be closely associated with helping in stimulating the relevant and significant business functions. As per narrations and explanations of Corea and Delfmann (2018), MIS is also deemed to be an essential tool to understand the important facets of business functionality with respect to performance evaluation as compared to competitors. However, the negative side of implementing MIS on a large-scale and grandeur basis can be considered as generating higher involvement in scrutinising the daily activity flow in a business organisation. Hence, maintaining an appropriate balance with regards to tolerance of MIS in an organisation needs to be determined by the concerned loggerhead of an organisation. 

2: Differences between Financial and Management Accounting 

Financial as well as management accounting are considered to be vital branches of accounting which could be feasibly implemented by an organisation to cater long-term business sustainability and durability prospects. Hence, the role of both is deemed to be important in the financial parlance of industries and markets. Following is the suitable discussion and distinction of both financial and management accounting.

2.1: Financial Accounting 

Financial accounting is considered to be the primary branch of accounting which deals with recording of transactions and bookkeeping for all financing activities happening on an organisation on a daily basis. As per narrations and explanations of Calabrese et al. (2018), financial accounting is primarily substantiated by the preparation of journal entries which record all the primary nature of financial transactions happening within an organisation on a daily basis. The functional description of financial accounting can be further ascertained as an integrated and coherent process of summarising, interpretation and presentation of all relevant financial activities based on a particular timeline. The journal entries are further followed by the preparation of ledger accounts, where individual account balances are being registered and recorded. 

Trial balance is the next step where a primary synopsis of all accounting activities is presented without considering any major adjustments. The final steps involve preparation of income statement, statement of financial position and the cash flow statements. The major difference identified between financial and management accounting can be considered as financial accounting acts as a key marker to enable understanding of all the relevant organisational information from the point of view of internal and external stakeholders. Kunigami, Kikuchi and Terano (2018), idealised and viewed that internal stakeholders consist of employees, supervisors and managers, while external stakeholders consist of suppliers, customers, investors and governmental bodies. 

2.2: Management Accounting 

In accordance with financial accounting, management accounting is further considered to be an important branch of accounting, where information of an organisation is obtained with respect to available operational credentials. As per narrations and explanations of Aydiner et al. (2019), the main difference between management accounting and financial accounting is considered to be related with areas of interest. Management accounting is considered to be mostly inclined with possessing information for internal organisational purposes, whereas financial accounting accommodates both internal and external stakeholders of an organisation. Management accounting is further considered to be a credible indicator to ascertain the future potential profit seeking prospects in the industry and the markets.

3: Preparation and Discussion of a Cash Budget 

3.1: Assumptions 

In order to prepare a suitable cash budget for Kitchen Craze, the following assumptions are being proposed with respect to ascertaining overall net movement of cash in the regular business flows. The preparation of the cash budget shall be further substantiated based on considering the overall movements for a span of twelve consecutive months. 

Assumption 1: Cash Inflows: 

The cash inflows are assumed to be uniform from January to July containing a numerical value of GBP 30,000. However, post July cash inflow is expected to rise by 5% which shall remain uniform throughout the rest of the year. Major sources of cash inflow are considered to be cash sales and collections from debtors is expected to happen from November which shall contain numerical expressions of GBP 14000. 

Assumption 2: Cash Outflows: 

The cash outflows are expected to be divided based on operational and financial outflows. Core operational outflows shall consist of elements including general expenses, manufacturing costs which are considered to be valued as GBP 2000 and 4000 respectively. Financial outflows shall further include rent and salaries, which are expected to contain values as GBP 1000 and GBP 6000 respectively. Manufacturing costs are further expected to increase by 10% from July onward till the month of Christmas and the winter season in December month.

3.2: Calculation of a Cash Budget 

Particulars	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec	Total
Cash Receipts
Cash Sales	£ 30,000.00	£ 30,000.00	£ 30,000.00	£ 30,000.00	£ 30,000.00	£ 30,000.00	£ 31,500.00	£ 31,500.00	£ 31,500.00	£ 31,500.00	£ 31,500.00	£ 31,500.00	£ 3,69,000.00
Cash Received from Debtors											£ 14,000.00	£ 14,000.00	£ 28,000.00
Total Cash Collections and Receipts	£ 30,000.00	£ 30,000.00	£ 30,000.00	£ 30,000.00	£ 30,000.00	£ 30,000.00	£ 31,500.00	£ 31,500.00	£ 31,500.00	£ 31,500.00	£ 45,500.00	£ 45,500.00	£ 3,97,000.00
Cash Payments
Operational Costs
General and Administrative Expenses	£ 2,000.00	£ 2,000.00	£ 2,000.00	£ 2,000.00	£ 2,000.00	£ 2,000.00	£ 2,000.00	£ 2,000.00	£ 2,000.00	£ 2,000.00	£ 2,000.00	£ 2,000.00	£ 24,000.00
Manufacturing Costs	£ 4,000.00	£ 4,000.00	£ 4,000.00	£ 4,000.00	£ 4,000.00	£ 4,000.00	£ 4,400.00	£ 4,400.00	£ 4,400.00	£ 4,400.00	£ 4,400.00	£ 4,400.00	£ 50,400.00
Financial Costs
Rent	£ 1,000.00	£ 1,000.00	£ 1,000.00	£ 1,000.00	£ 1,000.00	£ 1,000.00	£ 1,000.00	£ 1,000.00	£ 1,000.00	£ 1,000.00	£ 1,000.00	£ 1,000.00	£ 12,000.00
Salaries	£ 6,000.00	£ 6,000.00	£ 6,000.00	£ 6,000.00	£ 6,000.00	£ 6,000.00	£ 6,000.00	£ 6,000.00	£ 6,000.00	£ 6,000.00	£ 6,000.00	£ 6,000.00	£ 72,000.00
Total Cash Payments	£ 13,000.00	£ 13,000.00	£ 13,000.00	£ 13,000.00	£ 13,000.00	£ 13,000.00	£ 13,400.00	£ 13,400.00	£ 13,400.00	£ 13,400.00	£ 13,400.00	£ 13,400.00	£ 1,58,400.00
Net Cash Flow	£ 17,000.00	£ 17,000.00	£ 17,000.00	£ 17,000.00	£ 17,000.00	£ 17,000.00	£ 18,100.00	£ 18,100.00	£ 18,100.00	£ 18,100.00	£ 32,100.00	£ 32,100.00	£ 2,38,600.00

Table 2: Preparation and Presentation of a Cash Budget 

(Source: Created by Leaner)

3.3: Discussion of Results 

As per the above determined cash budget for Kitchen Craze, it can be determined that the total cash receipts expected throughout the year is considered to be £ 3,97,000.00. The aggregate total for cash payments throughout the year is considered to be £ 1,58,400.00, while the arrived values of net cash inflow consist of numerical expressions £ 2,38,600.00. Hence, it can be determined that the proportion of cash inflow in the organisation during the first year of business is considered to be highly valued. Therefore, adherence to incorporating more areas of revenue and cash maximisation are needed to be addressed by Peter and Lois Griffin to attain higher aesthetics of cash generation. As per narrations and explanations of Canco, Kruja and Lance (2021), the possibility of generating a higher cash value also leads to higher prospects of inviting a fresh plethora of investments in the market and industry. Suitable amendments could be further made in incorporating more cost items in the cash budget when the business attains a higher degree of market and industry sustainability. 

4: Preparation and Discussion of Ratio Analysis 

4.1: Assumptions 

The main assumptions considered to feasibly calculate the ratio analysis for Kitchen Craze consists of the following aspects. 

Assumption 1: Sales, Cost of Sales, Interest and Taxes: 

In order to calculate the ratios, the sales value considered is GBP 280000 for the entire year, while cost of sales is considered to be 40% of the sales value. Interest value is expected to be GBP 1500, while a tax rate of 20% is slated to be charged. 

Assumption 2: Assets Side of Balance Sheet: 

The assets side of the balance sheet is considered to be divided based on both fixed and current assets respectively. Valuation of total fixed assets is considered to be GBP 40000 0 while the valuation of current assets is considered to be GBP 260000. Inventory valuation is considered to be GBP 4800, while cash valuation is needed to be considered from the cash budget prepared in table 1. 

Assumption 3: Liabilities Side of Balance Sheet: 

The liabilities side of the balance sheet is further needed to be substantiated based on ascertaining current liabilities as GBP 210000 and non-current liabilities as GBP 230000 respectively, while the valuation of equity is considered to be GBP 220000.

4.2: Preparation of Ratio Analysis 

4.2.1: Profitability Ratios 

Gross Profit Ratio	Formula	Amount	Ratio
Gross Profit	(Gross Profit/Sales) *100	£ 1,68,000.00	60.00%
Sales		£ 2,80,000.00
Operating Profit Ratio	Formula	Amount	Ratio
Operating Profit	(Operating Profit/Sales) *100	£ 9,600.00	3.43%
Sales		£ 2,80,000.00
Net Profit Ratio	Formula	Amount	Ratio
Net Profit	(Net Profit/Sales) *100	£ 6,180.00	2.21%
Sales		£ 2,80,000.00
Return on Equity	Formula	Amount	Ratio
Net Profit	(Net Profit/Equity) *100	£ 6,180.00	2.81%
Equity		£ 2,20,000.00

Table 3: Profitability Ratios 

(Source: Created by Leaner)

4.2.2: Liquidity Ratios 

Current Ratio	Formula	Amount	Ratio
Current Assets	(Current Assets/ Current Liabilities)	£ 2,60,000.00	1.24
Current Liabilities		£ 2,10,000.00
Quick Ratio	Formula	Amount	Ratio
Current Assets- Inventories	(Current Assets - Inventories / Current Liabilities)	£ 2,55,200.00	1.22
Current Liabilities		£ 2,10,000.00
Net Working Capital Ratio	Formula	Amount	Ratio
Net Working Capital	(Net Working Capital/ Total Assets)	£ 50,000.00	0.08
Total Assets		£ 6,60,000.00
Cash Ratio	Formula	Amount	Ratio
Cash	(Cash/ Current Liabilities)	£ 2,38,600.00	1.14
Current Liabilities		£ 2,10,000.00

Table 4: Liquidity Ratios 

(Source: Created by Leaner)

4.2.3: Solvency Ratios 

Debt to Equity Ratio	Formula	Amount	Ratio
Debt	(Debt/ Equity)	£ 2,30,000.00	1.05
Equity		£ 2,20,000.00
Debt Ratio	Formula	Amount	Ratio
Debt	(Debt/ Total Assets)	£ 2,30,000.00	0.35
Total Assets		£ 6,60,000.00
Proprietary Ratio	Formula	Amount	Ratio
Equity	(Equity/ Total Assets)	£ 2,20,000.00	0.33
Total Assets		£ 6,60,000.00
Interest Coverage Ratio	Formula	Amount	Ratio
Profit Before Taxes	(Profit Before Taxes/ Interest)	£ 1,500.00	0.16
Interest		£ 9,600.00

Table 5: Solvency Ratios 

(Source: Created by Leaner)

4.2.4: Efficiency Ratios 

Inventory Turnover Ratio	Formula	Amount	Ratio
Cost of Sales	(Cost of Sales/ Inventory)	£ 1,12,000.00	23.33
Inventory		£ 4,800.00
Assets Turnover Ratio	Formula	Amount	Ratio
Sales	(Sales/ Total Assets)	£ 2,80,000.00	0.42
Total Assets		£ 6,60,000.00
Fixed Assets Turnover Ratio	Formula	Amount	Ratio
Sales	(Sales/ Fixed Assets)	£ 2,80,000.00	0.70
Fixed Assets		£ 4,00,000.00
Working Capital Turnover Ratio	Formula	Amount	Ratio
Sales	(Sales/ Working Capital)	£ 2,80,000.00	5.60
Working Capital		£ 50,000.00

Table 6: Efficiency Ratios 

(Source: Created by Leaner)

4.3: Discussion on Financial Performances 

4.3.1: Profitability 

As per the above table of profitability ratios, it can be witnessed that the gross profit and net profit ratios have been calculated as 3.43% and 2.81% respectively. Hence, the profitability prospects are considered to be lower than the stipulated industry average (Calabrese et al. 2018). 

4.3.2: Liquidity 

As per liquidity ratios, it can be witnessed that the quick ratios of 1.22 are considered to be higher than the prescribed industry standards. 

4.3.3: Solvency 

As per solvency ratios, it can be witnessed that the debt to equity ratio of 1.05 is mostly considered to be at par with the industry standards (Corea and Delfmann, 2018). 

4.3.4: Turnover 

As per the calculation of turnover ratios, it can be witnessed that a higher inventory turnover ratio for Kitchen Craze is deemed to be a positive financial indicator. 

5: Calculation and Explanation of Cost-Volume Profit, Net Present Value and Payback Period 

5.1: Assumptions 

In order to successfully calculate the cost-volume profit, net present value and payback period, following assumptions are being made. 

Assumption 1: Cash Inflow and Cash Outflow: 

The figures of cash inflow and cash outflow are considered to be GBP 238600 and GBP 400000. The project lifespan and the cost of capital is deemed to be considered as 8 years and 10% respectively. 

Assumption 2: Sales, Costs and Outputs:

In order to calculate the cost volume profit analysis, the value of selling price per unit is considered to be GBP 4.5, while the cost per unit is considered to be GBP 2.1 per unit. An estimated total number of 15000 units of kitchen dining sets are being assumed to be sold during the entire year. 

5.2: Calculations 

5.2.1: Cost-Volume Profit

Cost-Volume Profit Analysis
Particulars	Per Unit Cost/ Price	Units	Total
Sales	£ 4.5	15000	£ 67500
Costs	£ 2.1	15000	£ 31500
Profits	£ 2.4		£ 36000

Table 7: Cost Volume Profit Analysis 

(Source: Created by Leaner)

5.2.2: Net Present Value 

Investment Appraisal for Kitchen Craze
Years	Cash Flow	Discounting Factor @ 10%	Discounted Cash Flow	Cumulative Cash Flow
0	-£ 4,00,000.00	1	-£ 4,00,000.00	-£ 4,00,000.00
1	£ 2,38,600.00	0.91	£ 2,16,909.09	-£ 1,83,090.91
2	£ 2,38,600.00	0.83	£ 1,97,190.08	£ 14,099.17
3	£ 2,38,600.00	0.75	£ 1,79,263.71	£ 1,93,362.89
4	£ 2,38,600.00	0.68	£ 1,62,967.01	£ 3,56,329.90
5	£ 2,38,600.00	0.62	£ 1,48,151.83	£ 5,04,481.72
6	£ 2,38,600.00	0.56	£ 1,34,683.48	£ 6,39,165.20
7	£ 2,38,600.00	0.51	£ 1,22,439.53	£ 7,61,604.73
8	£ 2,38,600.00	0.47	£ 1,11,308.66	£ 8,72,913.39
Net Present Value			£ 8,72,913.39

Table 8: Calculation of Net Present Value 

(Source: Created by Leaner)

5.2.3: Payback Period 

Investment Appraisal for Kitchen Craze
Years	Cumulative Cash Flow	Payback
0	-£ 4,00,000.00
1	-£ 1,83,090.91
2	£ 14,099.17	2.07
3	£ 1,93,362.89
4	£ 3,56,329.90
5	£ 5,04,481.72
6	£ 6,39,165.20
7	£ 7,61,604.73
8	£ 8,72,913.39
Net Present Value

Table 9: Calculation of Payback Period

(Source: Created by Leaner)

5.3: Explanations and Discussions 

5.3.1: Cost-Volume Profit

According to the above table of cost volume profit analysis, it is expected that the company can ascertain a total profitability of £ 36000 by selling an overall output of 15000 units of kitchen dining items.

5.3.2: Net Present Value 

As per the above table of net present value, it can be determined that the expected NPV of the project is considered to be valued as £ 8,72,913.39. Hence, according to the Net Present Value analysis, the project should be accepted. 

5.3.3: Payback Period 

As per the above table of payback period, the project is expected to recover its initial costs by 2.07 years. 

References

Journals

Aydiner, A.S., Tatoglu, E., Bayraktar, E. and Zaim, S., 2019. Information system capabilities and firm performance: Opening the black box through decision-making performance and business-process performance. International Journal of Information Management, 47, pp.168-182.

Calabrese, M., Iandolo, F., Caputo, F. and Sarno, D., 2018. From mechanical to cognitive view: The changes of decision making in business environment. In Social Dynamics in a Systems Perspective (pp. 223-240). Springer, Cham.

Canco, I., Kruja, D. and Iancu, T., 2021. AHP, a Reliable Method for Quality Decision Making: A Case Study in Business. Sustainability, 13(24), p.13932.

Corea, C. and Delfmann, P., 2018. A Tool to Monitor Consistent Decision-Making in Business Process Execution. BPM (Dissertation/Demos/Industry), 2196, pp.76-80.

Kunigami, M., Kikuchi, T. and Terano, T., 2018, April. A formal model of managerial decision making for business case description. In General Conference on Emerging Arts of Research on Management and Administration (pp. 21-26). Springer, Singapore.

Sniazhko, S., 2019. Uncertainty in decision-making: A review of the international business literature. Cogent Business & Management, 6(1), p.1650692.

Yalcin, A.S., Kilic, H.S. and Delen, D., 2022. The use of multi-criteria decision-making methods in business analytics: A comprehensive literature review. Technological Forecasting and Social Change, 174, p.121193.

Zhang, H., Veltri, A., Calvo-Amodio, J. and Haapala, K.R., 2021. Making the business case for sustainable manufacturing in small and medium-sized manufacturing enterprises: A systems decision making approach. Journal of Cleaner Production, 287, p.125038.

Websites

uk.finance.yahoo.com, 2022, Dataset for KITCHEN CRAZE Plc [online], Available at: https://uk.finance.yahoo.com/quote/ABF.L/history?period1=1506816000&period2=1663372800&interval=1mo&filter=history&frequency=1mo&includeAdjustedClose=true [Accessed on: 16.09.2022]