Financial Management and Financial Statements

BUSINESS FINANCE

Table of Contents
SECTION 1................................................................................................................................3
Defining and discussing the concept and importance of financial management...................3
SECTION 2................................................................................................................................4
Discussing the main financial statement and use of ratios.....................................................4
SECTION 3................................................................................................................................5
i. Completing the information on business review template..............................................5
ii. Showing income statement as per the given template....................................................6
iii. Showing Balance sheet as per the requirement...............................................................6
iv. Describing the profitability, liquidity and efficiency ratio as per the case study..............8
SECTION 4................................................................................................................................9
Describing the ways which can improve the financial performance of company.................9
CONCLUSION..........................................................................................................................9
REFERENCES.........................................................................................................................10

INTRODUCTION
The financial management is a concept of managing all different financial resources
associated with the business entity. This is about to manage the financial resources part of
business entity in such manner that best level of professional code of conducts could have
been achieved by the business entity. This report will discuss about the different business
aspects and decision making areas to reach at the overall objectives of the professional
responsibility. Henceforth, report will emphasis over the concept of the financial
management in business terminology. The report will also talk about the various financial
statements that motivate and guide the business entity to identify and manage the financial
resources associated with the business entity. Use of ratios will also highlight in this report.
Furthermore, the project will discuss about the projection of different business reports. All
different aspects and areas associated with the business finance will discuss in this project.
SECTION 1
Defining and discussing the concept and importance of financial management
Financial planning basically refers to the strategic planning of the financial resources
of the firm along with exercising the direction and control over the financial undertaking. It
also involves the application of various managerial principles to the financial assets of the
business entity which has an important role to play in fiscal management (Siekelovaand et.al.,
2017). The objective of financial management is to maintaining an enough supply of the
funds pertaining to carrying out the daily business operations and along with that ensuring
that the shareholders of the company receive a higher return on the amount invested by them.
This supports in organization in ensuring that the scarce resources are utilized by the business
organization in an optimum way.
Financial management is very important as it helps in determining the estimated
amount of capital which is being required by the business. This is mainly utilized in the areas
which requires financial planning and implementation like the expansion plan, up gradation
of business infrastructure, investment in fixed assets along with effectively and efficiently
meeting with the daily business needs. After doing this, a decision is being made in respect to
the type of fund which should be utilized along with the proportion. As under this stage, it is
responsibility of the financial managers in identifying the bets mix of the debt and equity
which will not negatively impact the capital structure (Ho, 2018). There are several options
which is being available with the finance manager pertaining to determining the sources from
which to raise the capital. Therefore, the best option is being selected which will result into
attaining greater earning possibility with less occurrence of cost. Another important aspect of

financial management is to meet with the necessary amount of the funds through the way of
allocating the funds as per the needs. In addition to this, any variation in the financial
decision that either increases or decreases the amount allocated can also be imposed. The
objective behind this to maintain the standard of the business along with attaining higher
growth and strong financial position. Another important factor which makes it very important
for every business organization is that it supports in effective management of cash which is
needed for meeting with the basic expenses of the business like payment of salary and wages,
payment of electricity, payment to creditors, purchasing the material and stocks. Therefore, in
short, financial management does not only involves the planning, procurement of funds but
it also involves exercising control over the business finances by making use of various
techniques like financial reporting, ratio analysis.
SECTION 2
Discussing the main financial statement and use of ratios
Financial statements
Financial statement is the different financial records and report that company prepares
to reflect the financial position of the business entity. These are the different financial records
that company needed to present in the accounting books so that actual financial position of
the organization could have been depicted by the business entity in the financial records
(Mukhtaruddin and et.al.,2019). The financial statements are segregated into different parts
such as balance sheet, income statement and cash flow statement. All these are the different
financial records that company projected so that overall financial position of the organization
could have been depicted by the business entity.
Income statement
Income statement is one of the major and prominent financial record that project the
profitability situation of the business entity. This is the financial record that summarizes with
all the income respectively part of the business entity and all the expenditure that company
has been associated with in against to deliver the business operations. Income statement is the
projection of the gross profit margins that is about the profitability make against the trading
activities and functions coordinated by the business entity. Also the net profit margin of
company belong to the respective financial year are also reflected with the income statement.
Both the profit margins are evaluated with support of the income statement prepare by the
company. This is certainly being an effective way or projection of the financial records part
of company.
Balance sheet