Financial Versus Non-Financial
The recent purchase made in the company is the Purchase of Furniture of $20,000 in the company. Financial factors that went into the purchase are an outflow of cash as well as increasing the assets in the business. The non-financial factors that made into the business that affect the recent purchase made into the company of purchasing equipment of $20,000 is that firm size is increasing and labor in the company is also increasing due to increase in production.
Ranking of factors include that-
- Requirement of equipment
- Availability of cash
No, the financial and non-financial factors do not contribute equally to the decision-making of purchasing equipment, because financial factors are contributing more due to the Availability of cash and requirement of equipment. The decision was made into the business of purchasing equipment was made the final decision due to the requirement of furniture in the business as it will help the business to expand their business and set up the business properly and increase more business opportunities (Ptak-Chmielewska, et al., 2018).
All the financial and non-financial factors of the business are important for the business to make decisions in the business regularly, as well as they know the accounting principles(Ptak-Chmielewska, et al., 2018).
Ptak-Chmielewska, A., &Matuszyk, A. (2018). The importance of financial and non-financial ratios in SMEs bankruptcy prediction. Bank ikredyt, 49(1), 45-62.https://www.researchgate.net/profile/Aneta-Ptak-Chmielewska/publication/323581950_The_importance_of_financial_and_non-financial_ratios_in_SMEs_bankruptcy_prediction/links/5aa12bb70f7e9badd9a4227d/The-importance-of-financial-and-non-financial-ratios-in-SMEs-bankruptcy-prediction.pdf