Applied Business Finance

Applied Business Finance
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Table of Contents
Introduction......................................................................................................................................3
Section 1...........................................................................................................................................3
Section 2...........................................................................................................................................4
Section 3...........................................................................................................................................6
Section 4...........................................................................................................................................8
Conclusion.......................................................................................................................................8
References......................................................................................................................................10
Appendix........................................................................................................................................11
1. Business Review Template...................................................................................................11
2. Income Statement..................................................................................................................13
3. Balance Sheet........................................................................................................................14
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Introduction
Financial management concept is concerned with organization's financial performance
and results. The main goal of this study is to explore the relevance of the framework of
the financial management within an organization (Dance and Imade, 2019). In conjunction,
financial statements including related aspects of the corporation used as a reference case are
formulated for more evaluation and review in report. The corporation's performance being
examined using ratio review as well as additional findings are made in order to enhance the
corporation's performance.
Section 1
Concept of financial management
Financial management corresponds to the method of a company's financial resources
being planned, procured, allocated, and used. It is part of the corporation's strategic planning
phase and its aim is to maximize the productivity of the capital resources in order to maximize
the corporation's values and shareholder’s wealth. Its aims are to ensuring that funding are
accessible to the corporation in a timely manner, and also that their acquisition and
distributions improve the company's financial structure and wealth management. Moreover,
objective is to build a resonant capital structure with the correct balance of debts and equity
(Herranz, Estévez, Oliva and Dé, 2017).
Importance of financial management
Below listed are certain key importance of business’s annual financial statements:
 Scheduling and management - It analyses financial statements information to plan
budgets, investments opportunities including working capital and liquidity management
in order to help businesses develop efficiently and sustainably. This allows for the
possibility of unforeseen events in the organization.
 Monitoring - This utilizes a variety of budgets/financial plan as well as other financial
statements compiled by financial managers as benchmarks against which company's
actual output is measured. Variations are established, and preventive steps are
formulated, scheduled, and carried out. This is done in order to improve the overall
position of the company.
Roles and responsibility of finance managers
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Below mentioned are roles and responsibility of finance managers:
 Capital structure management - They are in-charge of deciding the organization's optimal
capital structure, as well as raising and managing funds within the organization. They
carry out debt-equity rationing and also working capital flow management They will have
the power to make decisions for the corporation's growth diversification, innovation, and
dividend decisions (Valaskova, Kliestik and Kovacova, 2018).
 Financial controls - They are in-charge of the corporation's financial reporting and use a
range of methods and approaches to conduct these tracking and monitoring measures,
including ratio evaluation, cost accounting and so forth. They must ensure that the
corporation's working capital flows and cash fund management run smoothly in order to
prevent over or under-liquidation.
Section 2
Financial statements
The corporation 's fiscal transactions are reported and outlined in accounting books. They
are then categorized and analyzed deeper in financial reports, that are formal statements. Which
are designed to help users comprehend the financial results and status of the organization in a
direct way. Internal stakeholders, such as corporation management and external stakeholders
such as investors, are also users of this information and facts. The following are an organization's
standard financial statements:
 Income Statement - It's also described as profits and loss account, which is used to find
out a corporation's financial performance throughout a specific period. It is financial
statement compiled using accounting concepts like accruals accounting or matching
method. It considers expenditures incurred and revenue generated during accounting
cycle, which is normally one year. After that, the corporation's net profit is measured
through subtracting all costs from all streams of revenues. These net earnings are then
generally allocated to company's shareholders as dividends or preserved by the
corporation for future operations. In business's Balance Sheet, such retained profit sum is
passed to equity funds or shareholders' fund (Daryanto and Nurfadilah, 2018).
 Balance Sheet - Statements of financial position is another name for it. This
shows position in time that determines the present state of an organization's overall assets
and liabilities. Apart from assets and liabilities, corporation 's equity fund is taken into
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