Accounting Information in a Business Decision-Making Process: Evidence from Croatia

Summary

Making proper business decisions comes with the need to have sufficient information about the performance of the entity. The history of performance needs to be known as the point of reference on which the future plans may be based. The objective of the study is to evaluate the important role played by financial statements and financial statement analysis in the decision-making process. The current performance is based on the standards that have already been attained by an organization. The previous successes or failures are the guidelines to oversee the elements of the future performance. The aspects that may have resulted in losses to the entity are avoided to prevent further losses. The choice of operations is hinged on the associated value in reference to the indicators in the financial statements.

There is an improvement in the decision-making process with the reliance on an organization’s accounting data. The frequency of using accounting data and the annual financial statements is akin to important decisions that would be made to reflect the needs of the organization. The findings reveal that out of the subjects included in the study, more than 60% have been showcased to use accounting information as the guiding principle in decision-making. The techniques of financial analysis also allude to the chain of success that would be attained in light of the consistency that emerges (Ježovita, 2015). The use of the standards communicates consistency that would be exhibited in the performance charters. Therefore, the anticipated value of the business would be reflected relative to the standard considerations used to project the state of performance.

The Problem

The problem is clearly stated as the need for improvement of decision-making in the organizational setup using financial information as the benchmark for reference. Examining the importance of financial statements and using financial analysis alludes to the success that would be realized in the organizational setup as conditioned by the consistency in making decisions. The problem is practically important due to the influence it bears on the performance of an organization. The continued use of accounting data in making decisions in the organization would yield consistency in the performance setting relative to the replication of beneficial decisions (Pearlson, Saunders, & Galletta, 2016). The aspects that have been confirmed to perpetually yield value would be embraced. The identified hypothesis of the study is the importance of information in determining the business quality depending on the characteristics of the company. The keywords used as the focus of the research have been defined. The words were essential in putting the study into perspective, and included: financial statements analysis, decision-making process, financial ratios, and accounting information.

 

Review of Literature

The sources cited are pertinent to the study as conditioned by the established relationship between organizational performance and the use of data as the guiding principle to yield the sought values of performance. The review is broad; thus, adequate in meeting the expectations of performance relative to the improvements needed in the business setting. All the components of organizational performance have been highlighted as the key to the success in attaining the pre-determined objectives. The references are recent, the study having been conducted in 2015. The context of application of the principles, therefore, meets the valuation of the needs of the entity and the performance standards that should be met continually. There is no evidence of bias in the study and literature review as a conditioned by the sources used meeting the criteria stipulated in the keywords being included.

Design and Procedures

The research methodology used was survey to determine the extent of use of financial information as the guideline for decision-making in a company setting. For the companies included in the study, the extent of reliance on financial information was tested to ascertain the popularity of the approach. The study is original, and not a replica as conditioned by the direct approach of going to the field to collect data that matches the needs of the research. The measurement tool used was the questionnaire designed with a list of questions to directly address the focus of the research. Both open-ended and yes/no questions were included in the research. A Likert scale was also used to test the popularity of some of the financial-based decision making approaches among the managers of the organizations included in the study (Ježovita, 2015). There is no evidence of a pilot study being conducted as the preliminary approach to planning for staging the study. The procedures were structured in the context of the stepwise engagement of the respondents so that the responses reflected the pre-determined list of expectations to be evaluated. The dependent variable is decision-making and the independent variable is the use of financial information. Nominal variables have also been included. The sampling was random to include any companies that met the criteria for evaluation.

Data Analysis and Presentation

The method used for analyzing data gathered from empirical research was the adjustment to two types of variables formed as questions and statements. Statistical methods were also used in the analysis to meet the pre-determined criteria. The data in the study were qualitative and quantitative due to the observations using the Likert scale and the numerical data collected to determine the capacity of use of the financial information as the basis for decision-making. The findings support the hypothesis and research question. It has been confirmed that the majority of managers rely on the use of financial information in making decisions that would oversee the perceived progress of the entity. There is no highlight of the weaknesses or limitations of the study

Conclusions and Implications

The conclusions of the study relate to the original purpose. Accounting information has been established to be an essential source of guidance in decision-making. The ratios and tools of analysis detail the likely scope of performance to be realized in the organizational setting, an implication of the potential that the expectations of business performance would be realized. The implications of the study results have been discussed as the potential improvement in business excellence (Collier, 2015). The common challenges faced by the business would be resolved using data as the vital reference. The results and conclusions affect the internal community of the organization. The managers would be expected to keep up the standard of using data as the determinant decision-making as conditioned by the consistency that it would yield. The role of employees in decision-making would be diminished as the general management would benefit from the value associated with the use of evidence (Ježovita, 2015). The recommendations made in the end highlight the value of using financial data to aid decision-making in light of the consistency in performance that it accords.

Overall Assessment

The study is sufficient in meeting all the pre-determined objectives. All the essential components of research have been included. The introduction matches the background of the research question. The methodology is ideal, and the presentation of the results reflect the analysis conducted. The elimination of bias has been essential in yielding dependable results that may be applied to a larger population focus and used for making deductions essential for the improvement objectives of organizational management. The article is well structured and matches the objectives identified at the initial stages. The layout is scholarly, and the publisher reputable. The findings are valid and reliable, an implication that the generalizability would be practical to meet the expectations of a larger population.