Financial reporting is the first step for the cost reduction strategy as in financial reporting organizations presents all the financial and sometimes non-financial activates which at the end determine the primary objective, it reflect the all long term objective of the organization and short term goals of the organization with the help of financial report organization present the financial policies which are more helpful for cost reduction. The second step is analysis of financial reporting as all of the financial reports are made precisely with the day to day processing data, financial reports include a balance sheet of the organization, income statements, cash flow statements, statement of change in equity and notes to financial statements present all of the reliable data but this data some time is not enough to present the strategies or to use them for decision-making process as decision-making process is more critical and more difficult with the number presented in financial reports so here come role of financial analysis where financial analysts analyze these financial reports with financial and non-financial analysis. This financial analysis include the ratio analysis of the financial reports, present the trend analysis for the particular time period which is then used by a chief financial officer to present some of cost reduction strategies which are suitable under the presented data and analysis. The third option is historical accounting which is another tool of management accounting and help to implement the cost reduction strategies, so what is basically historical accounting? Historical accounting presents the historical data that are co-related with present data too but basically it shows all of the data that have been incurred in the past for the same processes in each department for instance, the production department has all historic data for the finished good last year and also reflect how much cost has been incurred in their sub department all of these historic data at the end will help organization to make cost reduction strategies by looking upon the number of historic accounting. Standard costing is a tool of management accounting use for making cost strategies. In process of standard costing organization compare their actual cost with the standard cost with efficient work condition in this process organizations also analyze their variances so that organization come to know what could be the possible issues for the increase of cost and how an organization can reduce those cost to get maximum returns. Budgetary control is the most important and well-known tool presented by management accounting to ensure that how to reduce unusual cost and increase the return on investment of the organization so in budgetary control management accountant present master budgets including cost and revenue budget so that organization can take corrective decisions regarding cost reduction. Cash flow statements also part of financial reporting but when organization present budgeted cash flow and actual cash flow that compression reflect the clear picture of inflow of cash from all of the operational activities and out flow from all operational activities and from investing and financing too so that organization know better how to control cash out flow and in which areas cost reduction strategy will implemented.
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