Business Decision of River's Dance School Essay

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Business Decision of River's Dance School

When making a drastic business decision such as the one proposed by River’s Dance School, it is important to go about making the decision in the appropriate manner, through the use of a formal decision-making model process. This should be done with the aid of relevant information generated in the accounting process and through an evaluation of the effectiveness of the dance school’s ownership structure.

When deciding whether or not to close the River’s Dance School, it is in the best interests for Dana and David to follow a formal decision making process such as the CACE decision making model.

CLARIFY.

The first step is to clarify the dance
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Having established the problem, Dana and David now need to gather any information relevant to the problem that may aid them in making a decision.

This step in the CACE decision-making model is where the accounting process plays a vital part. The final step of the accounting process in which final reports are prepared provides Dana and David with the opportunity to analyse and interpret these reports, calculate ratios and compare these with the industry average – providing them with necessary information regarding the profitability of Rivers Dance School. These reports include a statement of financial performance, which shows revenue earned and expenses incurred - calculating the businesses profit and loss. Other statements prepared in this part of the accounting process are also necessary as they may enable Dana and David to see what the business may have done differently in the past three years that has resulted in the change in profitability.

Other information sourced outside of the accounting process may also be of help such as the management of competitors businesses or student feedback. Having gathered all the relevant information, Dana and David must now put aside the idea of closing the business for the moment and first look at ways of improving the schools profitability and solving the problems of the business, while meeting its objectives, using information gathered.

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