Learning Team Reflection
Introduction
This week’s learning deliverable includes the importance of accounting for an effective managerial decision making. It is true that accounting information provides important financial data of company’s costs and revenues; additionally, it also defines options for managers to take decisions on the best option for their companies to minimize cost while increasing profits. The decision making may involve whether to accept special order, make or buy, sell or process further, retain or replace equipment to name a few (Kimmel, Weygandt & Kieso, 2011). This paper discusses the option of incremental and comprehensive analysis and how it can be beneficial to decision making for managers. Furthermore, it elaborates on whether “Incremental analysis is considered to be more economical than a comprehensive analysis, while being just as effective or not” (Learning Assignment, week 6).
Incremental Analysis The management usually faces two different types of decisions: a short-term, regarding the normal operation of the company, and long-term capital investments. The short-term decisions can be carried out and then make them retroactive actions to carry out the strategic company goals. In the long-term decision-making, many resources are involved and may include rigid and difficult processes. The short-term decisions may affect different areas that make up an organization, such as sales, finance, production, human resources, etc. There is a wide range of decisions which can be compromised the company's short term and that by their nature support be modified.
The different types of decisions that involve incremental analysis are accept an order at a special price, make or buy, sell or process further, retain or replace equipment, eliminate an unprofitable business segment, and allocate limited resources according to Kimmel, Weygandt and Kieso (2011). The presentation and management of the data should be structured so that it can be analyzed with the incremental analysis, i.e., only worry about the costs or revenues that will be affected by the decision which management plan to choose. The incremental analysis is to determine the amount, whether increased or decreased earnings by a specific decision, as well as increase or decreases of changes in costs resulted from the same decision. If operated in income with changes in the cost movements are compared, it can be a spread called incremental profit or loss, as the effects leading to the decision.
Comprehensive Analysis
Unlike incremental analysis that deals with understanding the effects of decisions on future earnings, comprehensive analysis looks at every detail of a “company’s financial situation. The goal of such analysis is to provide a complete picture of the financial status of a company both in the current time and projected into the future,” (Wise Geek, 2014). This process requires an enormous amount of data and is time consuming. Management uses the data collected to compute financial ratios to determine the strength of the company’s financial status such as “profitability, liquidity, debt levels, and cash flow,” (Wise Geek, 2014).
Although comprehensive analysis is useful in understanding the strength of the company’s financial status, the outcomes are only as correct as the data provided for the evaluation. In addition, the results cannot show management what type of actions to take regarding making changes in the business. “That is why one of the final steps of comprehensive analysis should be comparing these ratios to the ratios of other financial leaders within the same industry,” (Wise Geek, 2014). Conducting industry comparisons provide businesses with valuable information in terms where the company is flourishing and what processes or operations are in need of review.
Effectiveness of Incremental and Comprehensive Analyses
Incremental analysis is most widely used to determine changes within the company that are considered marginal. In incremental analysis, the objective is to determine what results will occur due to a certain decision. Incremental analysis can be an effective tool in assisting with long term or short term decision making. Comprehensive analysis is more intricate then incremental analysis, as it requires an extensive assessment of all relevant financial reports to aide in decision making. Comprehensive analysis is used to determine the present and future financial status of a company. Once data has been accessed the ratios calculated are compared to other companies within the same industry. With this basis for comparison, a company can figure how strong it appears to outside investors, and make changes accordingly.
Conclusion
This paper concludes the importance of incremental and comprehensive analysis. One of the major roles of management is to identify strategies to employ in the decision making processes that lead to an efficient use of resources and increased profitability. Incremental and comprehensive analyses are two important decision making theories that management uses to aid in identifying business strategies and decisions making for betterment of their business.

References
Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2011). Accounting: Tools for business decision making (4th ed.). NJ: John Wiley & Sons.
Rashid, M. M., Mitchell, Z. W., & Sprouls, E. P. (2011). Teaching incremental analysis: Lessons learned. IIE Annual Conference.Proceedings,, 1-5. Retrieved from http://search.proquest.com/docview/1190409965?accountid=458
Wise Geek. (2014). What is Comprehensive Analysis? Retrieved from: http://www.wisegeek.com/what-is-comprehensive-analysis.htm