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Assignment on Financial analysis and decision-making

   

Added on  2021-02-19

16 Pages4533 Words109 Views
FinancePolitical Science
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Financial Decision Making
Assignment on Financial analysis and decision-making_1

Executive summaryFinancial analysis and decision-making is the practice that provides for evaluating theprojects, businesses, budgets and the main aspects relating to finance for the purpose ofidentifying the suitability and the performance. The present report is based on Easylight Plccompany which deals in Airlines where its primary geographical region of business is Englandand Scotland. The company has created a strong platform in the year 2017 & 2018 and planningfor making the investment or the expansion in France. The strategy of the company is to createits well-known presence in the existing markets and to become as the short-haul airline companyof the Europe. In relation to the financial analysis of this company, the study has thrown a deepinsights towards its financial statements that is income statement, cash flow and the balancesheet with adequate market segment analysis. Moreover, it also focuses on the investmentappraisal methods that has been used by the company for choosing the project and the sourcesthrough which it can raise funds with taking into account the non-financial factors that areimportant for gaining success from the project.
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TABLE OF CONTENTSExecutive summary..........................................................................................................................2INTRODUCTION...........................................................................................................................1PART-1............................................................................................................................................11.1 Statement of profit and loss account......................................................................................11.2 Statement of financial position..............................................................................................21.4 Analysis of market segment...................................................................................................5PART-2............................................................................................................................................52.1. a Management forecast.........................................................................................................62.1. b Investment appraisal tool...................................................................................................62.2 Sources of raising finance......................................................................................................82.3 Non-financial factors that has to be considered in respect of the expansion.......................10CONCLUSION..............................................................................................................................10REFERENCES..............................................................................................................................12
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INTRODUCTIONFinancial decision-making refers to the process which is been responsible for taking alltypes of decisions relating to the stockholder's equity and the liabilities of an entity along withthe issue of the bonds. It concerns with the decisions regarding the borrowings and the allocationof the funds that are been required for making the investment decisions. It is been considered asthe most crucial decisions that is to be made by the managers in relation to the financing-mix ofan enterprise. It involves the decisions regarding the procurement of funds, its optimumutilization and the gaining larger returns. The present study is based on Easylight Plc, a leadingairline company of UK and delivering higher returns to its shareholders. Furthermore, the studyincludes an assessment of business performance of an entity by interpreting the income , balancesheet and the cash flow statement. Moreover, the report also throws a deep insights towards theinvestment appraisal tool, sources of the finance and the non -financial factors that are taken intoaccount at the time of making analysis.PART-11.1 Statement of profit and loss accountProfitability ratio analysisParticulars Calculation 20172018Gross Profit 30313211Net profit 443541Sales revenue 45274686Earnings before interest and tax oroperating profit 583690GP ratio Gross profit / sales * 10067%69%NP ratio Net profit / sales * 10010%12%OP ratioOperating profit / sales 10012.8814.72Interpretation : Profitability ratio define the efficiency of the company that how it ableto increase the profit and generate high revenue (Profitability Ratio Analysis, 2018). The grossprofit ratio shows that how a company able to manage the inventory by controlling the cost andmanufacture the goods and services to pass the cost of product to the end user or customer. Thehigher gross profit ratio present higher growth of Easyflight plc company. According to theabove table it can be concluded that the net profit ratio is increasing 10% to 12% which implicatethat they are able to pay the debt of the company and maintain the growth in the market. It can be1
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