Management Decision Making Software Solutions Ltd

Question: Discuss about the Management Decision Making for Software Solutions Ltd. Answer: Introduction: Software Solutions Ltd is engaged in selling software products to the accounting and small business entities. The company acquires software packages from the software developers and sells these to the accounting firms and small business entities. Mr. Brad Shelton works for Software Solutions Ltd as consultant and he has been given an authority to analyze and finalize a software package that is the most suitable for cost accounting purpose. In this connection, Jennifer Jolie, who works for Pitt Ltd, a software developer, comes to Mr. Brad Shelton to discuss features of her companys software package. She offers Mr. Brad Shelton a trip to Los Angeles where her companys engineers would help Mr. Brad understand the specialties of the software package offered by the company. Further, for this trip, she also offers Mr. Brad to accompany her wife and children. The entire cost of the trip involving official and non official expenses is to be borne by Pitt Ltd. The analysis of the facts of the case indicates that Mr. Brad Shelton should not take this trip on ethical grounds. This is a clear case of inducement being offered by Pitt Ltd to Mr. Brad Shelton. The company may ask Mr. Brad Shelton to finalize its software package disregardingthe others (BredesonGoree, 2012). The management of the company should be alert to the situations of conflicts of interest by maintaining a proper mechanism to identify the circumstances wherein an employee of the company may prefer his personal interests over the companys overall interest. In the situation outlined in the current case, it is clear that Mr. Brad in may prefer personal gains over the companys overall interest. He has been offered freebees by Pitt Ltd to finalize its software package. Pitt Ltd is offering him a family trip to Los Angeles, the cost of which is to be borne by Pitt Ltd. It is essential to take a view here that Mr. Brad Shelton may finalize the software developed by Pitt Ltd even if it fails on certain parameters. Further, Mr. Brad has alone been assigned the task of finalization of the software, which also gives rise to suspicions that he may earn personal gains at the cost of the company. Thus, overall it could be inferred that Mr. Brad is in a position to breach the ethical principles and hence, the management of Software Solutions Ltd should not allow him to go on the trip offered by Pitt Ltd (BredesonGoree, 2012). The code of conduct is a charter that guides conducts of the individuals working in the company. It provides a set of instructions to the employees to act in the situations when they encounter ethical issues (BredesonGoree, 2012). Framing a code of conduct is crucial for guiding and controlling the human behavior and creating ethical environment, which is necessary for the achievement of the organizational goals. Since, code of conduct is crucial for the achievement of the goals and vision, thus, every organization needs to have it. Software Solution Ltd is no exception and thus, it should also have suitable code of conduct in place. There are various advantages that accrue to the organization by having a code of conduct in place. The most important among them is the positive atmosphere (BredesonGoree, 2012). The code of conduct creates a positive atmosphere among the employees and directs their activities in the best of the organizational interest (BredesonGoree, 2012). Further, it helps to build equalities among the employees, which motivates them to work harder to the fulfillment of the objectives of the entity. Apart from this, maintaining a proper code of conduct is a legal requirement for the companies, thus, it is necessary that a company maintains a code of conduct for legal compliances. Above all, the reputation and goodwill of the company is strengthened to a great extent if the company maintains code of conduct and its working is ethical. Carrying out business ethically is a booster to the companys reputation and goodwill (BredesonGoree, 2012). Although, it is necessary as well as always beneficial to maintain a code of conduct but in some instances it may be frustrating for employees. For example, poorly drafted code of may restrain the employees from raising their voices against wrongdoers, particular, against those who are in the top management. Further, the compliances with the code of conduct may reduce the efficiency of the employees at the workplace (BredesonGoree, 2012). In respect of the companies operating under common control, it is essential for the investors to analyze the financial performance and position taking a consolidated view. For this purpose, the entity having majority interest in others which is called parent company is required to prepare the consolidated profit and loss account (Pwc, 2011). The consolidated profit and loss account is prepared by combining the results of the operations of the parent with its subsidiary companies. In the current case, Greencross Limited is the parent company and therefore it prepares consolidated profit and loss account and consolidated balance sheet for the financial year 2016. Te consolidated profit and loss account presented by parent company shows the financial performance for the group as a whole (Pwc, 2011). S.No. Item As at 30 June 2016 $000 Classification with reason i. Cash and cash equivalents 62,583 Asset: An asset is a resource controlled by an origination and cash is certainly a resource owned and controlled by the entity, thus, it is classified as asset. ii. Marketing cost 17,821 Expense: an item of cost is termed as an expense when its benefits have accrued to the entity. iii. Occupancy costs 10,880 Expense: an item of cost is termed as an expense when its benefits have accrued to the entity. iv. Cost of goods sold 324,949 Expense: cost of goods sold comprises the items the benefits of which have accrued to the entity, thus, it is charged to the profit and loss account in the period in which it is incurred. v. Provisions 10,118 (5,601+4,517) Liability: Liability is an item that results in future payout. Provision is made for possibility to pay in future, thus, it is classified as liability. vi. Inventories 92,002 Asset: Inventories are the items that are used in production process or sold in normal course of business. The entity earns economic benefits by selling the inventory, thus, these are classified as asset. vii. Property, plant and equipment 156,867 Asset: Property, plant and equipment forms part of non- current assets because these are used in business for longer time period. Item 2016 2015 % Change Summary (what this means for Greencross Ltd) Gross margin percentage 55.73% 54.42% 1.31% Gross profit margin has increased by 1.31%, which indicates that Greencross has secured savings in the cost of goods sold. Operating expenses 339,404.00 302,219.00 12.30% Operational expenses have risen by 12.30%, which indicates managements operational inefficiencies (Bohm, 2008). Revenue Growth 734,009.00 (Greencross, 2016) 645,016.00 13.80% Growth in revenues by 13.80% is indicativeof enhancement in the demand and customer base of the company (Bohm, 2008). NPAT 54,649.00 35,723.00 52.98% Substantial increase in NPAT indicates improvement in the profitability of the company. Finance cost 15,986.00 13,580.00 17.72% Increase in finance cost reflects addition in the borrowings. Non-current assets 726,404.00 682,509.00 6.43% The non-current assets have increased by 6.43%, which is quite substantial. The non-current assets largely represent property, plant and equipment and increase in property, plant and equipment represents expansion of the business (Bohm, 2008). Number of stores and veterinary clinics at the end of the year 440= (220 stores+120 clinics) 332= (200 stores+132 clinics) 108 Increase in no of stores and veterinary clinic is a clear indication of growth and expansion of the business of the company. Cash flow from operating activities 78,636.00 14,691.00 435.27% The operating activities are primary activities of the business. Thus, increase in cash from operations indicates operational efficiency as well as superior liquidity state. As per most of the financial reporting frameworks prevailing in the world, the companies are required to present comparative figures in the financial statements. Comparative figures mean the figures in relation to the items of the financial statements of the preceding years (Bohm, 2008). The primary purpose behind presenting the comparative figures is to inform the investors and other users of the financial statements about the trend. The information as regards trend is essential for the investors to take investment decisions. The analysis oftrend gives understanding of the directions to which the companys financial progress is headed, which is crucial for the investors to base their future investment decisions. In respect of Greencross Limited, it could be observed that the company has presented comparative figures for the financial year 2015 in the financial statements of the year 2016. From this information, the investors of Greencross Limited would be able to analyze and evaluate the value of their investments and take decision for future course of action (Bohm, 2008). References Bohm, A. (2008). Interpretation of key figures in financial analysis. GRIN Verlag. Bredeson, D. Goree, K. (2012).Ethics in the Workplace.Cengage Learning. Greencross.(2016). Annual report of Greencross Limited. Retrieved November 22, 2016, from https://www.greencrosslimited.com.au/Docs/2045-GXL0002-_Greencross-Annual-Report-2016.pdf Pwc. (2011).Illustrative IFRS Corporate Consolidated Financial Statements for 2011 Year Ends. AC Black.