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Maintaining the financial health of businesses through Financial Accounting
Synopsis
In today's increasingly competitive business environment, organizations are engaged in a rat race to retain customers,
build up clientele and simultaneously ensure steady growth. Unfortunately, they often get caught in a web of issues
which may not be easily controlled and affect performance. Here comes the play of Financial Accounting. Professional
accountants have a vital role in commercial success by using their valuable knowledge to provide their
organizations/clients a competitive advantage and an accurate picture of their financial position and performance.
Key challenges
Every business organization has a responsibility to define best business practices and support its customers; helping
them to benefit their employers, clients and stakeholders. In all financial related issues, there has to be the conviction
to maintain transparency through balance sheets, profit and loss accounts. Financial accounting has a responsibility to
provide information to parties outside the organization.
Strategy and Solution
Key topics that form part of the strategy approach are:
• Sources of finance - for business start-up as well as growing a business
• Financial records and how to use them - balance sheets, profit and loss accounts
• Setting and monitoring budgets as well as interpreting and analyzing accounts
• Looking at methods of evaluating the viability of the business- ratio analysis, gearing
• Understanding the importance of cash flow to the business
• Using investment appraisal tools to help decide if investment is justified and what outcomes it might deliver
(e.g. break-even, annual rate of return, discounted cash flow, net present value)
It is therefore important to set financial objectives and tools to analyze financial data in every business made available
through clear financial statements to project a valuable insight into the company's strategy and performance.

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Examples….
The popular Cadbury Schweppes, a major international company that manufactures, markets and sells confectionery
and non-alcoholic beverages like Cadbury Dairy Milk, Trident, Halls, Dentyne, Schweppes, Snapple and 7Up to name a
few, have their Head Office accounts team to collect the information to create these statements from the company's
accountants and financial teams around the world. The legal responsibility for producing financial statements that
present an accurate picture of the company's performance over the period lies with the company's directors.
These statements are checked by an external audit, where the company hires a firm of accountants to verify that it
provides a true and fair record and complies with legal requirements in accordance with statutory requirements laid
down.
Cadbury Schweppes floats reports to shareholders on their success in meeting self-set financial goals within their
financial statements: Profit and Loss Account, Balance Sheet and Cash Flow Statement.
Why Financial statements?
Cadbury Schweppes prepares financial statements because they desire to communicate a true and fair picture of the
financial state of the company to its shareowners and external analysts. The company values transparency and honesty
and aims to reflect this through its communications.
The importance of accounting standards-A PricewaterhouseCoopers
This case study explores the role of professional consultancy services in helping companies meet rigorous accounting
standards.
PricewaterhouseCoopers, the world’s largest professional services organization, helps its clients build value, manages
risk and improves their performance. The organization is the result of the continuing growth in the international
economy. Companies are seeking to re-define themselves to thrive in the market-place where mergers and acquisitions
are increasingly important. This service provides a solution to business problems of a phenomenal scale and
complexity.
Until recently, professional services were recognized as distinct areas that were separate entities with little room for
overlap. Now the boundaries between activities such as tax, audit and management consultancy are becoming blurred.
PC provides a fully integrated team to tackle a company’s diverse problems.
Outcome – Financial Accounting
Finance is at the heart of every business; hence financial accountancy forecasts, monitors and controls cash flow in
order to maintain the ongoing financial health of businesses. Importantly, there is a constant demand for the code of
ethics and conduct to be based on the principles of integrity, objectivity, professional compliance, confidentiality and
professional behavior.