final assignment

MANAGERIAL FINANCE Table of content 14134692 Page MANAGERIAL FINANCE Question 1: TESCO PLC – Report To: Tesco Board of Directors From: Financial Analyst Subject: Financial Performance Analysis 2009 – 2013 Date: 23rd February 2014 According to Board of Directors request, this report will discuss on the financial assessment of the Tesco PLC in the period of 2009 – 2013 There is a report included within this report analysis such as the commentary on the performance analysis is undertaken, summarized and interpreted It is performed to analyse financial ratios in order to interpret some aspects of financial position and performance, including profitability, efficiency, liquidity, and gearing All calculated analysis data is attached in appendices Financial Ratio Analysis Calculating and analyzing the ratios is the most effective ways to evaluate the relative performance and financial position of a company such as 1.1 Profitability The Return on Capital Employed (ROCE) ratio is the best measure of profitability for evaluating the overall performance of the business It is used to indicate the percentage of return on capital employed and show how well the company can generate cash from its total capital From the appendix 1, we can see that the ROCE of Tesco PLC is fluctuation There was increased from 2009 to 2012 from 10.71% to 13.77% However, there was decreased in 2013 at 7.71% By calculating this ratio, we can evaluate whether the profitability of the company is increase or not because 14134692 Page MANAGERIAL FINANCE the higher the return on capital employed means the more efficient that company using its funds Gross profit ratio is used as one indicator of a business's financial health It shows how efficiently a business is using its materials and labours in the production process and gives an indication of the pricing, cost structure, and production efficiency of your business It was fluctuated during the five years The highest percentage of the gross profit was recorded in 2011 with 8.30% and the lowest one was in 2013 with 8.24%, corresponding with 6.96% in 2009, 7.51% in 2010 and 8.24% in 2012 respectively Net profit is used to pay for interest, tax and distribution to the owners It shows a fall from 2009 to 2013 In addition, the ratio is in the average return of the CIMA (3 – 10) with 5.88% in 2009, 6.07% in 2010, 6.48% in 2011, 6,54% in 2012 and the lowest return is 3.38% in 2013 Return on assets (ROA) gives an idea as to how efficient management is at using its assets to generate earnings It illustrates a less efficient using in assets between 2009 with 7.45% and it is worse in 2013 with 4.83%, while other three years showed a slight higher in this ratio 8.16% in 2010 and 8.74% in 2011 and 8.76% in 2012 Assets turnover this ratio is calculated to show how well the assets of the company are being used to generate its sales In this case, the net asset turnover of Tesco Ltd was the slightly increase from 2009 to 2013 That means the company created 1.18% in 2009, 1.24% in 2010, 1.28% in 2011, 1.26% in 2012 and 1.29% in 2013 in revenue As a result, the assets turnover ratio reflects that Tesco Ltd has used capital and assets effectively 14134692 Page MANAGERIAL FINANCE 1.2 Liquidity Working Capital measures company’s ability to pay off its current liabilities with current assets In this case, it has been a high risk by standard CIMA benchmarking (1 – 1.5) over the five periods, indicating the short-term solvency of Tesco Ltd is not good enough Acid Test ratio measures a company’s ability to meet its short-term obligations with its most liquid assets Generally, it is stabilize over the period time, and this ratio lays in the high risk corresponding with the average risk of CIMA (0.75% to 1.25%) This means that company faced the difficulty in the quick liquidity such as lack of cash or trade receivable In others words, the Tesco PLC group may be unable to invest their money in effective way 1.3 Efficiency Debtors (receivable) collection period is the approximate amount of time that it takes for a business to receive payments owed, in terms of receivables, from its customers and clients Overall, there is a considerable fall over the five years (from 12 days to 15 days) This ratio is a significant high compared to the CIMA average benchmarks, which is 55-85 days This means Tesco PLC can collect the debt quickly Payables/creditors period the days of average CIMA benchmark (45-60 days) over the period time, which is 63.62 days in 2009, 65.89 days in 2010, 69,16 days in 2009, 70.07 days in 2012 and 66.67 days in 2013 These figures indicate that company cannot payable quickly 14134692 Page MANAGERIAL FINANCE Inventory turnover is a ratio that measures how long the goods are inventory in company Overall, inventory of goods were remain stable from 2009 to 2013 (from19.04 days to 22.50 days) This mean the company had a slow sale in goods Operating cash cycle is defined as the number of days it takes to sell goods and subsequently collect the cash As calculated, the overall cash cycle of the company still maintains a negative result over the five years In this case, the company is getting payments from the clients before any payment is made to the suppliers 1.4 Gearing As can be seen from the financial ratio analysis, most of all ratios witnessed a decreased trend from 2009 to 2013 This ratio underwent a significant down from 56.39% to 41.28% (2009, 2013 respectively) This ratio is in an average level compared to the CIMA benchmark (33- 47) This show an average risk in using the long term loans and short term loans of Tesco’s business 14134692 Page MANAGERIAL FINANCE Year Interest cover (times) Operating profit /loss finance costs 2013 2012 2011 2010 2009 7.76 17.80 11.76 11.01 8.75 £2188m /£459m £4182m /£411m £3917m /£483m £3457m /£579m £3169m /£478m Financial – Share Price The share price originally fell rapidly at nd February 2015 that is only 84.40% compared to 2009 That arises from the reported decrease profits and decrease significant in comparison with the FTSE 100 Index However, it also increase with 136.08% in 2010, 122% in 2011, 109.61% in 2012, 132.75% in 2013 and 107.02% in 2014 Company Share Price Trend Movement and FTSE100 Trend Conclusion There are many ways to assess the performance of a business; however, if we want to refer an accurate result, it had better to use and analysis its financial statement Relying on the information listed in income statement, balance sheet and cash flow statement, manager, investor and other decision makers can evaluate the performance of the business during the period of time 14134692 Page MANAGERIAL FINANCE Different types of business can use different formats of statement Whatever the formats used, it has to represent the company’s financial position and inform to the users the information needs Because each of financial statement has connection with others, when there is any change, the data and result in income statement, balance sheet and cash flow statement is also modified Appendix 1: Financial Ratio Analysis Ratio Formulate Metric 2013 2012 2011 2010 2009 Overall ROCE % 7.71 13.77 13.72 11.97 10.7 Return on assets (ROA) % 4.36 8.24 8.30 7.51 6.96 X 1.29 1.26 1.28 1.24 1.18 % 3.38 6.54 6.48 6.07 5.88 Gross profit margin % 6.31 8.44 8.48 8.10 7.76 Working capital X:1 0.70 0.67 0.68 0.73 0.77 Quick/Acid ratio X:1 0.50 0.48 0.50 0.56 0.61 Receivables (editors) collection period days 14.22 15.17 14.07 12.11 12.3 Payables (creditors) period days 66.67 70.07 69.16 65.89 63.6 Inventories turnover days 22.50 22.44 20.86 19.04 19.6 41.28 41.38 41.78 49.16 56.3 Assets turnover Net profit margin % Gearing Appendix 2: Tesco PLC Statement of comprehensive income Vertical Trend Analysis 14134692 Page MANAGERIAL FINANCE 2013 2012 2011 2010 2009 % % % % % 8.70 9.09 9.19 9.08 8.95 49.61 50.63 51.68 52.59 50.81 3.99 3.92 3.95 3.76 3.38 associates 0.99 0.83 0.67 0.33 0.14 Other investments 1.63 3.01 1.99 1.88 0.57 Loans and advances to customers 4.92 3.74 4.51 4.01 3.23 Derivative financial instruments 3.92 3.40 2.41 2.72 3.24 Deferred tax assets 0.12 0.05 0.10 0.08 0.11 73.88 74.67 74.50 74.44 70.42 Inventories 7.47 7.09 6.70 5.93 5.86 Trade and other receivables 5.04 5.23 4.94 4.10 3.99 Non-Current Assets Goodwill and other intangible assets Property, plant and equipment Investment property Investments in joint ventures and Total Non-Current Assets Current Assets 14134692 Page MANAGERIAL FINANCE Loans 6.17 4.93 5.33 5.24 7.59 Financial instruments 0.12 0.08 0.31 0.49 0.84 Tax assets 0.02 0.01 0.01 0.01 0.02 Investments 1.04 2.45 2.16 2.86 2.71 Cash and cash equivalents 5.01 4.54 5.14 6.13 7.70 Assets held for re-sale 1.26 1.00 0.91 0.81 0.87 Total Current Assets 26.12 25.33 25.50 25.56 29.58 TOTAL ASSETS Equity and Liabilities Equity Share capital –ordinary shares 5p nominal Share premium Reserves Retained earnings Minority interests Total equity Non-Current Liabilities Borrowings Financial instruments Post-employment benefit obligations Deferred tax 14134692 100.00 100.00 100.00 100.00 100.00 0.80 10.01 1.37 21.02 0.04 33.24 0.00 0.00 20.08 1.51 4.74 2.01 Page 0.79 9.78 0.48 23.95 0.05 35.05 0.00 0.00 19.52 1.35 3.69 2.28 0.85 10.37 0.08 23.72 0.19 35.21 0.00 0.00 20.52 1.27 2.87 2.32 0.87 10.43 0.09 20.33 0.18 31.90 0.00 0.00 25.52 1.69 4.00 1.73 0.87 10.18 0.09 17.07 0.13 28.32 0.00 0.00 27.19 0.66 3.28 1.48 MANAGERIAL FINANCE Liabilities of assets held for resale Provisions Total Non-Current Liabilities Current Liabilities Trade and other payables Borrowings Financial instruments Customer deposits and deposits by banks Current tax liabilities Provisions Total current Liabilities Total Liabilities TOTAL EQUITY AND LIABILITIES 14134692 0.56 0.54 29.45 0.14 0.20 27.18 0.24 27.23 0.37 33.30 0.44 33.06 22.13 1.53 0.24 22.12 3.62 0.25 22.21 2.94 0.54 20.52 3.32 0.32 19.02 7.62 1.15 12.00 1.04 0.38 37.31 10.76 0.82 0.19 37.77 10.82 0.92 0.14 37.56 9.53 1.03 0.08 34.80 10.01 0.79 0.02 38.62 66.76 64.95 64.79 68.10 71.68 100.00 100.00 100.00 100.00 100.00 Page 10 MANAGERIAL FINANCE Equity and Liabilities Equity Share capital –ordinary shares 5p nominal Share premium Reserves Retained earnings Minority interests Total equity 102.03 108.24 1712.50 135.48 31.58 129.09 101.77 107.03 612.50 156.43 45.61 137.93 101.77 105.56 100.00 143.99 154.39 128.80 101.01 103.51 100.00 120.32 149.12 113.75 100.00 100.00 100.00 100.00 100.00 100.00 81.25 251.32 159.17 148.82 79.99 227.81 125.30 171.60 78.19 198.68 90.76 161.83 94.78 256.95 123.16 117.60 100.00 100.00 100.00 100.00 136.00 98.02 50.00 91.62 56.50 85.32 86.00 101.75 100.00 100.00 128.03 22.07 23.05 129.65 52.95 24.38 120.99 39.93 48.57 108.97 44.05 27.81 100.00 100.00 100.00 131.85 143.37 1880.00 106.30 119.79 114.92 990.00 109.01 112.01 119.34 640.00 100.77 96.16 130.39 390.00 91.02 100.00 100.00 100.00 100.00 Total Liabilities 102.48 100.99 93.65 95.97 100.00 TOTAL EQUITY AND LIABILITIES 110.02 111.45 103.60 101.01 100.00 Non-Current Liabilities Borrowings Financial instruments Post-employment benefit obligations Deferred tax Liabilities of assets held for resale Provisions Total Non-Current Liabilities Current Liabilities Trade and other payables Borrowings Financial instruments Customer deposits and deposits by banks Current tax liabilities Provisions Total current Liabilities 14134692 Page 12 MANAGERIAL FINANCE Appendix 4: Tesco PLC Statement of comprehensive income Vertical Trend Analysis Revenue 2013 2012 2011 2010 2009 % % % % % 100 100 100 100 100 Cost of sales -93.69 -91.56 -91.52 -91.90 -92.24 Gross profit 6.31 8.44 8.48 8.10 7.76 Expenses -2.41 -2.52 -2.71 -2.68 -2.32 Property disposals -0.52 0.62 0.71 0.66 0.44 Operating profits 3.38 6.54 6.48 6.07 5.88 Joint venture profits 0.08 0.14 0.09 0.06 0.20 Finance income 0.27 0.28 0.25 0.47 0.22 -0.71 -0.64 -0.80 -1.02 -0.89 3.02 6.32 6.02 5.58 5.41 -0.89 -1.37 -1.43 -1.48 -1.45 2.14 4.95 4.59 4.10 3.97 -1.95 -0.55 -0.18 0.19 4.40 4.42 4.10 3.97 Distribution & Administrative Finance costs Profit before tax Taxation Profit from continuing operations Losses from discontinued operations Profit for the year 14134692 Page 13 MANAGERIAL FINANCE Appendix 5: Tesco PLC Statement of comprehensive income Horizontal Trend Analysis Revenue 2013 2012 2011 2010 2009 % % % % % 120.28 118.59 112.17 105.59 100.00 Cost of sales 122.18 117.71 111.30 105.21 100.00 Gross profit 97.71 128.96 122.46 110.08 100.00 Expenses 124.76 128.75 130.99 121.96 100.00 Property disposals 143.64 168.22 183.05 159.75 100.00 Operating profits 69.04 131.97 123.60 109.09 100.00 Joint venture profits 49.09 82.73 51.82 30.00 100.00 152.59 151.72 129.31 228.45 100.00 Finance costs 96.03 85.98 101.05 121.13 100.00 Profit before tax 67.19 138.43 124.82 108.88 100.00 Taxation 73.68 112.20 110.91 107.83 100.00 Profit from continuing operations 64.83 147.99 129.89 109.26 100.00 5.61 131.62 124.93 109.26 100.00 Distribution & Administrative Finance income Losses from discontinued operations Profit for the year 14134692 Page 14 MANAGERIAL FINANCE Question The aim of business whereas making capital investment decisions is maximizing the wealth of the shareholder by purchasing assets and yielding profit Therefore, if you are the owner of your business, you should to find out and determine the objective of project based on your organisation’s demand such as the company want to invest on projects that guarantee for prompt returns or a project which growth in a long term However, capital investment decisions commonly are regulated by the procedure of rating and evaluation of the company’s capital investments because of the company need to make sure the highest value which they can get their investment back in the best possible returns According to Bulter et al (1991) claims that “The complexity and uncertainty surrounding strategic capital investment projects present particular challenges to management accountants charged with their evaluation” due to the fact that most of the investment project which are strategic have problems which are ill structured, calling for an approach which might never have been ever put to use before so the complexity, newness, irreversibility and uncertainty characterize these capital investment before making decision projects There are many ways to measure which give an estimate of the company can return over several investment projects In specific, the company can determine the project’s values through three most common used methods are Payback method, Net Present Value (NPV) or Internal Rate of Return (IRR) methods Besides, the process of capital investment making decision includes these steps follow: 14134692 Page 15 MANAGERIAL FINANCE Identification stage is differentiate which types of capital expenditure projects are necessary to achieve Search stage is explore alternative capital investments that will gain the company’s goals Information acquisition stage is the consideration step about the expected costs and benefit of alternative capital investments Selection stage is choose project for implementation Financing stage to obtain project funding Implementation and control stage to get projects underway and monitor their performance Especially, when the capital investment is not right way which will affect to the final business performance so capital investment before making decision is extremely important for the success or failure of the company For the reason that is the relation between capital investment and the opportunities which are created by technological changes, cash flow budget, market forecast or competitive advantage These motives would explain more clearly for this relationship are: Expansion is increasing the operation levels It means the company can buy plant facilities and property, which ensure a good investment and capital investment balancing in turn Replacement: that is the maturity period when the growth of a company slows down or the assets expired 14134692 Page 16 MANAGERIAL FINANCE Renewal is the increase stage by replacing, rebuilding or retrofitting the company’s asset In practice, the calculation for four values of the investment proposal which are important for business as below Selling price n = Selling Price 0* 1.03n (£/per unit) Variable cost n = Variable cost * 1.04n (£/per unit) Fix cost n = Fix cost * 1.04n (£/ year) Selling price (£/per unit) Sales volume (units) Variable cost (£/per unit) Fixed cost (£) 2015 2016 2017 2018 2019 20.00 20.60 21.22 21.85 22.51 60000.00 70000.00 120000.00 45000.00 8.32 8.65 9.00 9.36 8.00 170000.00 176800.00 183872.00 191226.88 198875.96 Net Relevant Cash Flows are: Variable cost = Variable cost per unit * demand in units Operating cash flows = sales revenue – Variable cost – Fixed cost Net relevant cash flows = Operating cash flows – Capital cost 2015 £ Sales revenue 2016 £ 1236000.0 2017 £ 1485260.0 Variable cost 499200.00 605696.00 14134692 Page 17 2018 £ 2622544.8 1079869.4 2019 £ 1012957.93 421149.08 MANAGERIAL FINANCE Fixed cost Operating cash flows 170000.00 Capital cost Net relevant cash flows 2000000.00 14134692 -2000000.00 176800.00 183872.00 560000.00 695692.00 191226.88 1351448.4 560000.00 695692.00 1351448.4 Page 18 198875.96 392932.89 392932.89 MANAGERIAL FINANCE a NPV and Profitability Index Present value = Net relevant cash flows * Discount rate (10%) NPV1 = ∑ NPV0-n = -2000000 + 509090.91 + 574952.07 + 1015363.25 + 268378.45 = 367784.67 2015 £ Net relevant cash flows Discount rate (10%) Present value NPV1 -2000000.00 1.00 -2000000.00 2016 £ 2017 £ 560000.00 695692.00 0.91 0.83 509090.91 574952.07 2018 £ 1351448.4 2019 £ 392932.89 0.75 0.68 1015363.2 268378.45 367784.67 Profitability Index = 100*���/(������� ����������) = 100*367784.67/2000000 = 18.389% b Accounting Rate of Return Profit over the life of product: 560000 + 695692 +1351448.48 +392932.89 2000000 = 1000073.37 (£) Average Annual Profit = 1000073.37/4 = 250018.34 (£) Average Investment = 2000000/2 = 1000000 (£) The ARR of the investment = 100* Average Annual Profit / Average Investment = 250018.34 / 1000000 = 25.00 (%) 14134692 Page 19 MANAGERIAL FINANCE c.Internal rate of return The NPV2 at discount rate of 20%: Present value = Net relevant cash flows * Discount rate (20%) NPV2 = ∑ NPV0-n = -2000000 + 466666.67 + 483119.44 + 782088.24 + 189493.10 = -78632.55 Therefore the IRR is somewhere between 10% and 20% IRR = r1 + (r2-r1)* NPV1 / (NPV1+NPV2) = 10 + (20-10) * 367784.67 / (367784.67 + 78632.55) = 18.24 (%) Net relevant cash flows Discount rate (20%) Present value NPV2 2015 £ 2016 £ 2017 £ 2018 £ 2019 £ -2000000.00 560000.00 0.833333333 -2000000 78632.54813 466666.6667 695692.00 0.69444444 483119.4444 1351448.48 0.57870370 782088.2407 392932.89 0.4822530 189493.1 d Discounted payback The cumulative discounted cash flows (present value) are: 2015 NPV 10% 14134692 2000000.0 2016 2017 2018 2019 £ £ £ £ 509090.91 574952.0 1015363.2 268378.45 Page 20 MANAGERIAL FINANCE Cumulative cash flows 2000000.0 1490909.0 915957.0 99406.22 367784.67 Thus, the discounted payback will occur after: 2+ 915957.02 / 1015363.25 = 2.902 (years) = years + 10.824 months As calculated earlier, it can be seen that NPV of the project is positive (£367784.67) and considerably high, which accounts for 18.389% of the initial investment Besides that, the IRR of the project is higher than the discount rate set by the company (18.21% > 10%) Therefore, the project may be accepted and can gain the value to the firm, and it will take the company years 11 months to break even from undertaking the initial expenditure Therefore, the company can invest for this project which can bring the benefit to company in the future Question In today market economy, globalization increases significantly, beside, multinational companies invest amount of money for developing their business It plays an important role in the economy as well as their social responsibility Corporate Social Reporting (CSR) has been a highly contemporary and contextual issue to all stakeholders which mean that CSR as achieving commercial success in ways that honors ethical values and respect people, communities, and the environment by corporate accountability, transparency, sustainability and the role of accounting in their business decision making According to Hines (1988) claimed that the act of accounting, that is the production of reports purporting to represent the activities undertaken by an 14134692 Page 21 MANAGERIAL FINANCE organisation, is a human practice that holds itself out as providing authoritative information upon which a variety of people can make decisions Thus it has the ability to arbitrate the way people view the world, to affect their understanding, and influence their decision-making Therefore, this essay will discuss how producing CSR reports enhances corporate accountability, transparency and sustainability and the role of accounting in their business process First of all, corporate accountability can be defined as the act of being accountable to the stakeholder who may include shareholders, employees, suppliers, customers and the community members by a corporation to control that corporation’s operations (business dictionary, 2014) This concept is demands fundamental from environmental and social duties being placed on director to counterbalance their existing duties on financial matters and legal rights for local communities to seek compensation based on voluntary CSR It means the organisation needs to establish minimum social, labor, environmental standards for corporate activities such as duties and liability from the company into social The company will be required to guarantee legal rights for citizens In case of business’s organisation, they have many aims to pursue their social responsibility include ethics and business, public relation and environment responsibility For society: the company’s service bring to that have many benefit for the society such as: they create stable financial situation for Vietnam market, monetary market stabilization and the state budget… on the other hand, organisaton’s image has appeared in areas affected by floods and natural disasters, on “green days”, in poor areas, in charity programs which has an effect and has increasingly become closer to public 14134692 Page 22 MANAGERIAL FINANCE For consumer: the organisation has affirmed its position leading as the leading wholesale bank Besides that, they create many better services for the consumer such as e-banking, money transfer, SMS banking, Internet-banking, Visa Debit, etc The application of technology into products in the best way of firm want to make satisfy for customer’s needs quickly and effectively Secondly, corporate transparency is assurance which can be used to describe high quality of financial statements Transparency has become a key driver of corporate reputation in business world According to Edkins and Smyth (2006) said that “Trust is a disposition and attitude concerning the willingness to rely upon the actions of or be vulnerable towards another party, under circumstances of contractual and social obligations, with the potential for collaboration” In business, almost of companies want to publish a good financial report to attract the investors because of quality financial reports allow for effective to invest project of investors However, some organisations are designed to hide or make financial report rather than better Therefore, in case of lack of transparency in business, investor should dodge investment to reduce risk and less valuable investment at the minimum For business: they required employees must be honest and loyal in working Every employees and from senior management on down are required to be trained on the Company’s Worldwide Business Conduct Manual For employees: every employee can be trained including specific skill, communication skill with a dynamic environment and high technology to help them know how to work with CSR rule 14134692 Page 23 MANAGERIAL FINANCE Thirdly, the organisations will base on their daily activities in business to make a report that published include economic, environmental and social (Manetti et al, 2009) The company can measure, understand and communicate their economic, environmental, social and governance performance such as experiences, set objective, manage and measure the impacts which be affected to business in positive and negative sides by sustainability report Furthermore, when the company wants to product a regular sustainability report, organisations set up a reporting cycle – a program data collection, communication, and responses This mean they need to monitor their sustainability performance on an ongoing basis in a period as one time per month Those data will be provided to senior decision makers to set up a business strategy and policy effectively As a result, sustainability report is a vital resource for managing business performance in general and combines long term profitability with ethical behavior, social justice and environmental care which be required by CSR Finally, the importance of accounting in business is the core factor for any organisations because accountant will provide financial information to stakeholders such as sale revenue, the cost and benefit or receivable, payable to make financial decision for business In case of management, accounting provides all detail information which we need to know when the company have money to burn or must save On the other hands, accounting will support for company complete their responsibility as CSR required For example, taxes are a part of money which needs to pay for government on business’s income If you get the amounts wrong, the government will fine your company so accountant will tell you to fill out to meet your obligations to avoid the loss in minimum level Besides that, a good accountant can spot warning signs which gone wrong They 14134692 Page 24 MANAGERIAL FINANCE will help your organisation control your money to avoid fraud in internal process From my perspective, the best role of accounting is business decision External parties may decides to invest in your company based on financial statement but the company also can use this financial statement of cash flows to make sure the collection of money are due day and right way This essay has been able to identify the impact of corporate social reporting on business society In specific case of corporate of accountability, corporate of transparency, corporate of sustainability and role of accounting We can see social obligation business concerns owe their stakeholders, local community, general public and the government in the course of operating their legitimate business such that CSR should be included in the law and enforced the company must follow during business run References Business Dictionary (2014) Corporate accountability [Online] Available at:http://www.businessdictionary.com/definition/corporate-accountability.html [Accessed 23 March 2015] Butler and R Butler (1991) Strategic investment decision-making: complexities, politics and processes Journal of Management Studies, (28) (1991), pp 395–415 Dando, N and Swift, T (2003), “Transparency and assurance: minding the credibility gap”, Journal of Business Ethics, Vol 44 Nos 2/3, pp 195-200 14134692 Page 25 ... their performance Especially, when the capital investment is not right way which will affect to the final business performance so capital investment before making decision is extremely important for... profitability with ethical behavior, social justice and environmental care which be required by CSR Finally, the importance of accounting in business is the core factor for any organisations because