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Assignment on Business Finance Pdf

   

Added on  2020-12-26

11 Pages3376 Words74 Views
BUSINESS FINANCE

Table of ContentsINTRODUCTION...........................................................................................................................3PART 1. ..........................................................................................................................................3(a) Profit and cash-flow and their difference..............................................................................3(b) Meaning of working capital, inventory, receivables and payables........................................4(c) Affect of working capital on the cash flow............................................................................5(ii) Concepts which are needed to improve financial performance.............................................5(iii) Steps to improve company's cash flow.................................................................................6PART 2............................................................................................................................................6(a) Elements of financial performance.........................................................................................6(b) Ratio of each year...................................................................................................................7(c) Result to consider the reason of changes in ratios.................................................................8(ii) Analyse and recommendation to assess the financial performance of business. ..................9CONCLUSION............................................................................................................................10REFRENCES ................................................................................................................................11Books and journals:....................................................................................................................11.......................................................................................................................................................11

INTRODUCTIONBusiness finance is a key to run all the business activities. Every business requires themoney to implement all the policies and strategies (Aktas, Croci and Petmezas, 2015). Basically,its simple mean is the money which is required to run the business. In addition, finance isnecessary to buy assets and other equipments for the companies. To understand in detail aboutthe business finance, Uber tools limited company is selected which is involved in the productionof power tools. The project report consist the information about the profits and working capital and itsimpact on the cash flows. In addition, it includes the various ratios to measure the financialperformance.PART 1. (a) Profit and cash-flow and their difference.Profit- Profit is the difference between the money earned and money expand as expense.Generally, profit is considered as the advantage for the company. It is important to do expansefor earn the profit because without expenses it is impossible to get profit. In addition, if expensesare more then earned money than it will not be considered as profit. This is tool to measure thevalue of all the effort and expenses of the company. Cash flow- It is a kind of statement which describes the increase and decrease in the cashfor a particular time period. Basically, it analyse the virtual movement of cash which changes. Itis prepared for a particular time period which may be monthly, quarterly or yearly. Cash inflowindicates the positive situation for the company, on the other hand cash outflow refers thenegative sign of company. Comparison between profit and cash flowBasisProfitCash flowMeanIt is excess of income over expenses.This is the statement of describingchanges in cash for a particular timeperiod.ObjectiveMain objective of calculating profitis to compare the expenses withmoney earned.Its objective to help managers formaking future decisions by providinginformation about the cash out and

inflow.CalculationProfits are calculated by simpleformulas and formates. While it is calculated by three majoractivities like operating activities,investment activities and financingactivities.Profit and cash flow both are the different terms but have the same link with cash (Atrill,McLaney and Harvey, 2014). Uber tools limited company calculates the profits and preparescash flow statements to control the financial activities. Like they have the profit of £ 400millions in a particular year. (b) Meaning of working capital, inventory, receivables and payables.Working capital- It is a kind of capital which is required by a business to operate day today activities. This is related to the liquidity or cash that is needed to run daily operations.Eventually, it is the difference between the current assets and current liabilities. This capitalmeasures the short term financial health of an organisation. Receivables- It may be defined as a process in which a company claims to collect futurecash, assets etc. The receivables can be classified as follows: Account receivables, notesreceivables. Herein, accounts receivables means collection of money from those customers whopurchase goods and services on the credit. Notes receivables means claim of money on the issueof any promissory note. It refers the credit allowed to a customer by issuing a note or document.Inventory- This is a kind of term which is refers as the goods which includes at variousstage of production which is as follows: raw material, work in progress and finished goods.Herein, raw material is a kind of good which is going to be used to production. It is a basicmaterial. Work in progress includes a kind of good which is in the process to complete andfinished good is the last product which is useable. All those stages of goods considered as theinventory for companies.Payables- It means when a company makes the transaction on the credit and amount willbe paid in future then it will be considered as the payables. Payables are like a liability for thecompany which is needed to pay on time to avoid the interest. This type of transactions are donewhen a company don't have enough cash (Mylonas, Afzal and Attrill, 2014).

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