Business Decision Making: Income Statement, Financial Position, Efficiency Ratios and Limitations

BA4008QA BUSINESS
DECISION MAKING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
(a) Preparation of Income Statement for the year ended 31st March 2021................................3
(b) Preparation of Statement of financial position as at 31st March 2021..................................4
TASK 2............................................................................................................................................6
Three possible limitations of the Income Statement for Ventures..............................................6
TASK 3............................................................................................................................................6
Three possible limitations of statement financial position for ventures.....................................6
TASK 4............................................................................................................................................7
Explanation of how London venture company effective manage following efficiency ratios:. .7
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
The business decision-making is a process which helps the company in evaluating
various alternative and selecting the best alternatives on the basis of its cost-benefits analysis.
This report will cover four tasks out of which in task one the report will cover the calculations of
income statement and statement of financial position. Further, in task two, three and four the
report will cover the calculations of inventory days, trade payable days and trade receivable days
of London Venture company along with the discussion of their effective management. Lastly, the
report will discuss the three limitations of income statement and balance sheet for Ventures.
TASK 1
(a) Preparation of Income Statement for the year ended 31st March 2021
Income Statement for London Ventures
For the year ended 31st March 2021
Particulars Details Amount (£)
Sales Revenue 290357
Cost of Sales:
Opening inventory 13310
Add Purchases 152300
Less Closing Inventory 20550
Less Total cost of sales 145060
Gross Profit 145297
Operating Expenses:
Delivery cost (note 1) 10905
Salaries and wages 41263
Advertising 5478
Insurance (note 2) 8456