The Use of Managerial and Financial Accounting Information: Costo in Focus
Information is one thing which is necessary in everybody’s life. When it comes to management and accounting, information is the backbone of the processes involved in making the aspects of business smooth. Managerial and financial accounting information is very important to the various stakeholders of a business entity. This is because it guides in decision making regarding the possible options in the business environment.
Looking at the case of Costco, there are other forms of managerial and financial accounting information that may be useful in learning more about it. One of the useful information would be related to financial ratios. In financial accounting, financial statements are usually very important in organizing the information in a better way. The financial statements are usually broken down through various ways of analysis. Financial ratio analysis is one of the many ways of ensuring that a company’s financial performance is understood better. With the financial ratios of Costco being analyzed, the stakeholders would be in a good position to understand better the company’s state of affairs. Another form of managerial and financial accounting information that would apply to Costco is the balance sheet. This is necessary in ensuring that the worth of a company is known. With the balance sheet of Costco being brought out, it would be very easy to understand the ranking of the company in terms of stability against that of other players in the industry. This would be made better by the fact that a balance sheet will make clear definitions regarding the company’s specific assets and capital components. Additionally, availing the management accounts of Costco would be very reasonable. The management accounts of a company are usually very useful in ensuring that a company’s management is able to make the best decisions for the benefit of the company (Gupta, 2008). This is necessary since it breaks down the complexity associated with the much available company information. The information concerned with trend analysis of Costco would also apply in understanding the company better. A company’s financial trend analysis usually tries to reflect a company’s change in terms of its various financial components. A company’s trend analysis is usually very useful in showing the percentage changes of the various components of the financial statements (Gupta, 2008). This is usually very good in analyzing the specific changes in the various inputs of the financial statements. It is important to note that the trend analysis of a company is very useful in determining the strong and weak points of an organization. With Costco Wholesale Corp. applying trend analysis, it will be very easy to learn the movement of the company’s various components of the managerial and financial information. This will be useful in making decisions regarding the required control. This will be able to give the company an opportunity to maximize on the strong areas while finding ways of improving the weaker ones.
Managerial and financial accounting information is required by the various stakeholders in dealing with Costco Wholesale Corp. These stakeholders include the owners, investors, employees, customers and the management among others. As a manager of Costo, I might need different kinds of information than an outside investor who is considering lending money to the company or investing in common stock. Firstly, I might need information related to the share prices of Costo. This would be necessary so as to be able to communicate with precision regarding the value of the company. The external investor would require guidance from me regarding the behavior of the company’s shares in the market. I would also need to obtain the company’s information regarding the competition level in the market. It is worth noting that while looking at a business entity’s competition figures, this can be classified as managerial information. As a manager, I might also need different kinds of information than an outside investor who is considering lending money to the company or investing in common stock because I need to give advice to the whole management as to how to improve the overall performance of the company. The outside investor is only concerned with what he or she will derive from a given investment. As a manager, I have to be widely focused since the various aspects of the business are under my care. I have to obtain different managerial and financial accounting information so that I may be able to use it well in driving the company in the right direction. This is evidenced by the fact that a manager is usually in charge of creating efficiency in the way a business operates.
It is important for people to get more acquainted with managerial and financial accounting information. This is because managerial and financial accounting information comes in many forms. Each of the many information forms has a given indication regarding the state of affairs of an organization. With proper use of the available managerial and financial accounting information, an individual or business entity should be able to succeed and gain competitive edge.
Gupta, A. (2008). Financial Accounting for Management: An Analytical Perspective, Pearson Education India.