Accounting Management Decisions - Question 1

Chr. Hansen is one of the leading bioscience company involved in the development of natural ingredient solutions for the nutritional, food, agricultural and pharmaceutical industries. It is headquartered in Denmark. The company has split its operations in 3 major segments: Food cultures and enzymes, natural colors and health and nutrition. It supplies its produce in various niche markets being a specialty ingredients supplier. It attracts high growth opportunities and imposes large entry barriers for the new firms to enter this industry (Annual report, 2019). The business model of the company is primarily focused on improving its innovation competencies, maintaining long term relationship with customers and set up a large scale production level. All this helps the company in maintaining s strong competitive position in the market. It has formulated various sustainable goals that are aligned with Global goals of UN. It has adopted and made bioscience solutions and natural ingredients in order to establish a successive sustainable agriculture, improvise the welfare of humans and animals and elimination of large wastage of food.

It is taking out suitable measures to feed the rapidly growing population by promoting and maintaining efficiency in production of food and sustainable agriculture. Solutions like growing of more crop yields, raising the level of productivity and affordability help in making significant contribution towards UN Global Goal 2 which is concerned with ending hunger and promotion of sustainable agriculture. It considers social responsibility as an integral part of the organization. The company has a vision to maintain and improve the food products and health of current as well as of future generations. It was awarded as the most sustainable company of the world by Corporate Knights in 2019 (Annual report, 2019). Other major sustainability goal of the organization is concerned with improvement of health at the global level. It is accomplishing this goal with the help of probiotic solutions to ensure safer and healthier life of both humans and animals and offer nutritious food products.

By doing this, it is making contributions towards the achievement of UN Global Goal 3 which is concerned with ensuring healthy lives and promotion of well being of every individual and animal of all age groups (Sustainability report, 2020). Moreover, it is making successive efforts towards the reduction of food waste and loss of food and also provides people with the solutions to substitute artificial ingredients. This solutions help in accomplishing UN Global Goal 12 which is concerned with maintaining and enhancing sustainable production and consumption patterns. The overall profitability of the company has been increased from 2018 to 2019. The Board of Directors of the company has decided to pay dividend of EUR 0.84 per share amounting to EUR 110 million.

Accounting Management Decisions - Question 2

Financial statements are considered as an essential report of the company that entails financial information and data of the company for a stipulated period of time. These statements are used by both internal and external stakeholders of the company like employees, investors, management, customers, bankers, suppliers and other key members. The financial statements of the company are prepared as per the requirements of the owners, management, governments and various other regulatory organizations (AASB, 2015). Financial statements comprises of basically 5 statements and 5 major elements. Five statements include:

  • Balance Sheet
  • Income statement
  • Statement of Change in Equity
  • Cash Flow Statement
  • Notes to Financial Statements

These statements help in analyzing the financial performance and position of the company. There are five major elements of financial statements of an organization, namely, assets, liabilities, equities, revenues and expenses.

Assets: Assets are defined as the resources from where the benefits are to be received in the future time period. For example: land, building, machinery, cash, property, etc. These are considered as the significant element o financial statements that are recorded in the balance sheet (AASB, 2015). These are classified as current assets and non-current assets depending on the period.

Liabilities: Liabilities are defined as the obligations to be paid by the firms in the future period of time. This results in the outflow of funds from the business. For example: bank loan, creditors, borrowings, outstanding salaries and wages, etc. Similar to assets, these are categorized into current and non-current liabilities.

Equity: Equity is defined as the residual interest in company’s assets after subtracting all the liabilities. It is calculated as assets minus liabilities. Retained earnings and ordinary share capital form part of the company’s equity. It increases and decreases on the basis of the movement in assets or liabilities of the company. The items that are recorded under equity head are share capital, retained earnings, payment of dividends and revaluation gain.

Revenues: Revenue is defined as the increment in economic benefits in the form of cash inflows or decline in overall liabilities. For example: revenue received from sale of goods and services, interest received ion investments, dividend received from other equity investments, etc.

Expenses: Expenses lead to the decline in economic benefits. For example: payment of salaries leads to the outflow of cash from the company. Similarly other types of expenses are interest expense, repair and maintenance charges, rent and tax expense, depreciation, etc.

Financial statements help the users in achieving important information about the company’s performance to undertake effective decision making process. Users can assess the revenue received by the company from sale of goods and services from the income statement of a particular period. They can also assess the growth and profit potential of the organization from the income statement. It helps the investors in gaining better understanding towards the financial stability of the company as compared to its competitors in the market (AASB, 2015). Financial statements help the investors in making effective decisions with regard to investments by analyzing the future profitability of the company. Moreover, financial leverage can also be assessed from the financial statements to determine the likelihood of returns to the bondholders and shareholders of the company.

References for Accounting Management Decisions

Annual report. (2019). CHR Hansen. Retrieved from

Sustainability report. (2020). Innovating for a sustainable future. Retrieved from

AASB. (2015). Presentation of Financial Statements. Retrieved from

Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Accounting and Finance Assignment Help

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