Business Finance Assignment - Doc
12 Pages4283 Words41 Views
Added on 2020-01-21
Business Finance Assignment - Doc
Added on 2020-01-21
ShareRelated Documents
Business Finance
Table of ContentsINTRODUCTION .........................................................................................................................4TASK 1............................................................................................................................................41.1 Difference between profitability and cash flow ...................................................................41.2 Concept of working capital management..............................................................................61.3 Analysis of steps which use to improve working capital of EEL ........................................7PART 2............................................................................................................................................81. Stages of Capital budgeting process.......................................................................................82. Application of these methods................................................................................................103. Analyse the methods which would be appropriate for decision making process.................10CONCLUSION..............................................................................................................................11REFERENCES .............................................................................................................................12
INTRODUCTION Business finance encompasses many activities which are related with an organisation.And provide a disciplinary revolving of money and valuable assets of the firm (Abor andQuartey, 2010). An individual have to get fully aware about this concept because it helps infacilitating about the accounting methodologies, investing strategies and effective debtmanagement. Finance in business is not a new term because every start up and old enterprisesneeded some money to execute their activities. The different forms of finance are borrowings,loans etc. all such are elements which assist an organisation to perform certain number ofactivities. Present reports is based on the excellence electrics ltd. which are producing electricalappliances for household. Company face so much issues while conducting their business hence,owner decide to review the situation for this they told to accountant to prepare a research reportin this concern which helps them in understanding all the factors which affect the business most. TASK 11.1 Difference between profitability and cash flow Profitability: The state of condition of yielding a financial profit or gain. It is a ability ofa business to earn profit. Profitability is made with comprises of two words in which profitmeans the revenue which is generated by the business after deducting and paying all of itsexpenses(Adjaoud and Ben‐Amar, 2010). It is a remaining portion which left from the revenue.And ability means the capability of a firm to generate profit. It shows that does really anorganisation able to generate high revenue. Another term which is concerned in this regard is the profitability analysis it signifies theability of generating profit by a proposal so that it can get adopted by the business. Profitabilityget calculated with the help of methods or system which are termed the ratios. Cash-flow: It is a estimation of the money which get inflow and outflow in a company. Ithelps in calculating that how much amount of money a organisation has invested and how much
amount of money it get by generating revenue. It leads in affecting the liquidity of a business.Positive cash flows helps a firm top settle out all of its debt properly and reinvest in business formaking any project successful(Ayyagari, Demirgüç-Kunt and Maksimovic, 2010). Anotherimportant thing which get fascinated by the positive cash inflow is that in increasing the assets ofa business. It enables an organisation tom prepare them for future financial challenges so that theirworking remain smooth and proper. Further more it also leads in overcoming a business entityfrom financial crises.Where as on the other hand negative cash flow distracts the business from its path. Itcomplete removed the business activities from its track and an organisation start facing manyfinancial ups and downs. It shows that company liquid assets are decreasing and getting reducedday after day. Net cash flow is distinguish from net income and shows that how much amount ishave to get received by the company and what amount is still to get covered. This process is used by the company for the outside stakeholders which helps in runningthe operation of business successfully. So, that they can get aware about the company solvency.If an entity is not being so capable in paying all of its debts it is clearly identify that its getsolvent in the near future. So both the concept are use by EEL to identify that how to deal with their financialissues. They have to control their debts by using appropriate profitability ratio through whichthey can control that. Their debts are increasing day by day so they have to control that and alsowork on all the financial issues which they face. Profitability Cash flow1. Get to determine with the help of someratios.1. It is calculated for the purpose to identify thesolvency of a company.2. It shows the ability of a company in terms ofgenerating revenue. 2. It leads to accumulate about the companyefficiency of working by conducting a properresearch about its solvency. 3. Profitability is shown in the trading andprofit and loss of the company by showinggross profit at first in the trading account and3. On the other hand cash flow is a separateincome statement which enabling in identifythe solvency of an entity. So that proper inflow
End of preview
Want to access all the pages? Upload your documents or become a member.
Related Documents
Business finance assignment : Excellence Electronics ltdlg...
|14
|3855
|170
Business Finance Assignment - Uber Tools Ltdlg...
|12
|3110
|173
Improving Cash Flow through Working Capital Managementlg...
|12
|3330
|242
Financial Accounting: Cash Budget and Differentiation between Cash and Profitlg...
|8
|2259
|194
Business Finance: Managing Funds for Better Performancelg...
|10
|2577
|57
Business Finance Reportlg...
|11
|3252
|296