BGC Ltd Company Financial Ratio Analysis and Cash Budget Report

This report presents the financial ratio analysis and cash budget of BGC Ltd Company which provides cleaning services in high street shop and out of town shopping malls and offices. The report suggests effective policies to attract domestic market and generate revenues.

Part 2
Assignment Part 1 and 2

Table Of Content
Introduction
Part A
Part B
Part C
Conclusion
References

Introduction
 This report based on the BGC Ltd Company which provides cleaning
services in high street shop and out of town shopping malls and offices.
The company face issue of less liquidity in company due to COVID 19
because company provides cleaning services in Retail Company and
offices.
 After COVID most of the stores and offices are closed so company not
able to provide cleaning services. As a result, it impact on the company
performance in negative manner which is presenting in profit and loss
statement. In this report consist of ratio analysis in order to analysis
liquidity, solvency performance.

Part A
From the calculations performed in the report of some of the
financial ratios, it could be ascertained by analysing the
statement that the performance of BGC Ltd is declining and the
reason behind this decrease is the covid – 19 situations. This has
also led to decline in the efficiency of the company. The
following is the analysis of the ratios:

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 Gross Profit Margin: From the calculation, it can be said that the GP of
BGC Ltd has declined from 2020 to 2021 by approximately 3 %. In the
year 2020, the margin was 6.81% and in 2021 it remained only 3.94%.
 Net Profit Margin: The net profit margin of the business organisation is
negative in the year 2021, which is -0.86 and in 2020 it is 1.91. On
comparing with the gross profit margin, the net profit has declined
majorly this is due to the change in the operating expenses. The rate of
change is more as the change in the revenues. This is the reason of the
negative net profit margin.

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 Return on Capital Employed: It is computed by subtracting the total assets
from the current liabilities and then dividing the profit before interest and
tax by the capital employed. The return has declined by around 10% which
is a major decline in the ratio.
 Current Ratio: In this the current assets are divided by the current
liabilities. This measures the liquidity position of the firm. The ideal ratio
should be 2: 1. But it can be observed that the ratio is 2.24 in 2020 but in
2021 it has remained 0.96. With the decline in the profits, the impact has
been also upon the liquidity position of the company and it is very crucial
to enhance it

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Working Capital Cycle: It is also known as the cash operating cycle. It means that
in how much days approximately the operating cycle in turned. This shows the
efficiency of the firm. But, as all the situation can be seen, it has also diminished.
Gearing Ratio: The company is occurring more debt in comparison from the year
2020 in 2021. In 2020, the ratio was only 13.81% but the n it has increased to
29.14%. It means that the equity is declining and the firms borrowing has been
increased.
Interest coverage Ratio: This ratio has also declined so much but it has declined to
the decrease in the profit before interest and tax. The ratio in the year 2020 and
2021 was 22.75 and 2.04.

Part B
 A cash budget depicts a firm's predicted cash inflows more than a fixed
period of time. It is a forecast of cash revenues anticipated in the
coming so over budgeting process, as well as cash expenditures and the
cash position with the firm at the conclusion of the time frame.
 The cash situation, on the other hand, can be determined relatively
regularly, perhaps once a month, to maintain track of the firm's
financial results.

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 The cash budget identifies the opportunity that the revenue is
extremely low, but if the administration wants to expand the company
organization, it must concentrate on providing a constant other revenue
or that it should expand at a set pace every month. Since a company's
situation can become essential in the event of a market downturn, and
in order to overcome that circumstance, the company is looking cash
available to stay afloat in the global market. Furthermore, the purchase
might be contingent on sales, as holding too much stock could result in
wastage of materials and obsolescence if not delivered.

Part C
If it is proposed that company switch to domestic
cleaning, the market forecast for 2022 shows that
the office boom will be 800, the static will be 375,
and the recession will be 250. Domestic cash flow
shows a boom of 1100, a plateau of 400, and a
recession of -200. As a result, it suggests that the
possibilities of a boom are 25%. The percentage of
people who are in a state of stagnation is 35%,
while the percentage of people who are in a state
of recession is Based on the entire study, BGC Ltd
should choose the second alternative, which is to
shut down the retail component and focus on the
domestic market.

Conclusion
As per the above report it has been
concluded that company face various
problems after COVID and has less liquidity
and profitability. Company has prepared
effective cash budget that present actual
performance of company in which presents
total cash inflow and cash outflow in
effective manner.
Company has to make effective policies to
attract domestic market and generate
revenues

References
Leistikow, D., Chen, R.R. and Xu, Y., 2022.
Spot asset carry cost rates and futures
hedge ratios. Review of Quantitative
Finance and Accounting, pp.1-39.
Li, Z. and Gu, J., 2020, February. Research
on Artificial Intelligence Cash Budget of
Electric Power Enterprise Based on
Evidence Reasoning. In The International
Conference on Cyber Security Intelligence
and Analytics (pp. 308-314). Springer,
Cham.