Business Finance: Impact of Operational Management on Financial Results

Business finance

Contents
Executive Summary.........................................................................................................................3
Task 1...............................................................................................................................................3
1. Explain.....................................................................................................................................3
2. Impact of company's operational management on financial results........................................5
3. Steps recommended to improve company's cash flow through better working capital
management.................................................................................................................................5
Executive Summary.........................................................................................................................7
Task 2...............................................................................................................................................7
1. Monthly cash budgets from 1st Jan to 30th April 2021...........................................................7
Monthly cash budgets..................................................................................................................7
2. Recommendations to the management of Thorne Estates Limited.........................................9
References......................................................................................................................................11

Executive Summary
Financial management of company issues includes cash activities. It encompasses sales and cash
controls to ensure the company's financial stability. The focus of this research is to cover Trend
Ltd (TL corporate)'s finance activities in manufacturing of fitness and footwear. Trend Ltd
explores terms such as benefit, cash flow, operating expenses, receipts, inventory and payable
and evaluates their effect on the accounting records. Forms are also addressed to increase cash
flow through improved control of capital expenditures.
Task 1
1. Explain
A. Profit and cash flow
Profit - Profit is some over-cost sales. Income is the financial gain gained because the company's
net revenues outweigh the company's total expenditures. The corporation shall be either held for
future activities by a company or shall be divided to the owners (Klopotan, Zoroja and Meško,
2018). It is collected from a benefit and loss account sometimes called the revenue statement. A
business breaks into separate phases of its profit and loss account — firstly, processing profit
known as gross profit. Additionally, additional marketing and promotions costs are much lower
to the total revenue from gross profit. In addition, all non-operating expenditures and sales are
adjusted. Further, the final amount of net profit, also known as systemic profits, is calculated for
both non-operating costs and revenue. This surplus is then converted to the profit after tax by
income tax. It is said that the owners have this level of value accessible.
Cash flow - Cash balance applies to the net cash flow of a company over a certain time. Cash
refunds are considered inflow when outflow is cash transfers. If cash flow in a company beats
cash outflow, it is considered as a favourable situation for the firm and the shareholders will gain
more value (Mian and Sufi, 2018). For businesses to ensure smooth processes, cash flow control
is of extreme importance. Businesses also plan financial statement as operational requirements.
These plans are regularly, quarterly, half-yearly or annually tracked and revised to make
appropriate changes. An additional cash flow statement is designed for an aggregate cash inflow
outflow situation throughout the year or the time stated in the Company's balance sheet. The cash
flow is split into three sections – operational cash flow, investment cash flow and funding cash
flow. Operations require transactions, purchases, accounting operations, etc. Investment takes

account of corporate investment input and outlet, circulated loans, interest received, selling of
capital assets — acquisition. Financing operations take account of financial structure changes,
loans used, interest payments, dividends.
Difference between two- The most important distinction between return on investments is that
profit is really just an accounting body that reports net profits generated in companies, whereas
cash flows reflect actual cash flows and outflows. In other terms, benefit is profitability of the
company and cash flow is stability of the company. Another distinction is that a corporation
benefits from the accounting standard while the cash balance of the company is measured from
the cash accounting information system.
B. Working Capital, receivables, inventories and payables
Working Capital - Two elements of working capital include accumulated assets, including such
currency, accounts receivables etc. and interest expense like payables, short-term lending, etc., as
a total balance of each (Young, 2018). When existing assets outweigh current liabilities, they are
known as the business's optimistic working capital
Receivables - Account receivables are those that owe money to businesses like commercial
debtors. This is the company's cash assets which represent those amounts that produce business
revenues in the coming years. In order to control the debtors payment period, the organisation
operates a special scheme to deal with industrial debtors.
Inventories - Stocks mean all the goods produced and traded by a corporation. It is kept between
productions or order by organisation before delivery is fulfilled. They can be either untreated,
medium or finished goods.
Payables - Account payables mean certain individuals, such as company creditors, who owe the
money to company. These are the firm's organizational obligations which represent those sums
to be charged in the immediate future by the company. Company operates a different payout time
bargaining scheme for business creditors.
C. Impact of change in working capital on cash flow
Working capital management and cash flow are important to the enterprise and communicate
with one another as the business analyses its profitability. Working capital is the disparity
between new and current obligations or, in many other terms, decides a corporation's free cash
for short-term liabilities (Tenca, Croce and Ughetto, 2018). Total assets contain currency and