Strategy illustration Strategy theory

Financial information and decision making

The finance department of a company generates a variety of financial information that is helpful in decision making, including:

Profit and Loss accounts providing details of whether the business is making efficient use of financial resources.

  • Balance Sheet information providing details of a businesses assets and liabilities, as well as the liquidity of the business.
  • Sales and purchases information setting out particular types of trading and accounts with particular customers and suppliers.
  • Information about the purchase of assets and liabilities.
  • Information about the wages paid out by a business.
  • Information about costs.

By providing a steady and up-to-date flow of information, a business is able to make appropriate decisions about:

  • how to reduce costs
  • how to increase sales
  • how to raise profitability
  • when to purchase new capital assets
  • the best sources of finance, and duration, etc.

Financial statements

Budgets are plans for the future. Managers are able to monitor budgets in order to spot variances and make ongoing adjustments to plans. Financial statements such as the profit and loss account and the balance sheet provide information about past performance. These statements can be compared with the results achieved by similar companies or in previous time periods to identify areas for improvement. For example, if a firm spots that its cost of sales is higher than those of a rival it may seek to switch to an alternative supplier, or take other actions such as reducing direct costs.

Financial information provides invaluable statistics and evidence on which managers can make informed decisions and plans.

Supporting Documents

These downloads will help to put strategy theory into context using real world examples from real businesses.

Innovation in infant nutrition
Cow & Gate logo

Learn how Cow & Gate used strategy theory to thrive in the food & drink industry by downloading our premium case study.

Leading a revolution in banking
Intelligent finance logo

Learn how Intelligent finance employed strategy theory to succeed in the financial services industry by downloading our premium case study.

Entering a new market with a new product
Experian logo

Discover how Experian employed strategy theory to thrive in the financial services industry by downloading our premium case study.

Using the marketing mix in the fashion industry
Ben Sherman logo

Learn how Ben Sherman applied strategy theory to thrive in the fashion industry by downloading our premium case study.

Sponsorship as part of the marketing mix
Ford logo

Learn how Ford employed strategy theory to succeed in the automotive industry by downloading our premium case study.

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