Business Finance: Importance, Financial Statements, and Ratio Analysis

Business Finance

Table of Contents
INTRODUCTION...........................................................................................................................3
SECTION ONE...............................................................................................................................3
Financial management and it's importance............................................................................3
SECTION 2.....................................................................................................................................4
Discussion about financial statement and use of ratio............................................................4
SECTION 3 ....................................................................................................................................6
SECTION 4.....................................................................................................................................7
Describe and discuss the processes this business might use to improve their financial
performance............................................................................................................................7
CONCLUSION...............................................................................................................................8
REFERENCES................................................................................................................................9
APPENDIX...................................................................................................................................10

INTRODUCTION
The term business finance is explicated as the study of funds and credits which is used by
an organisation for accomplish of organisational goals and objectives within a decided budget.
Finance is an important part of an organisation as it supports management to perform all
functions and operations that are performed by business. The term business finance undertake
acquisition of funds for match with business requirements (Birt, Muthusamy and Bir, 2017).
This also provide funds to organisation to work with appropriate working capital, diversification
of funds and capital requirement. This also include financial management and use of ratio in
different finance aspects.
SECTION ONE
Financial management and it's importance
Financial management is explicated as a process of managing all activities that is related
with financial aspect of an organisation. This also make sure about availability of funds that
match with daily requirements of business. Utilisation of funds is another approach and it define
about completion of work with arrange of all funds that helps to complete all operations in an
effective manner. Financial management undertake decision-making which is related with
investment, purchase of asset, raise of funds and many more. It also helps to perform all work by
planning, controlling and organising operations related with finance. Moreover, this also include
decision-making for earning high return on investment. This also aids to arrange information that
relates with profit, loss and cost of organisation in order to make appropriate decisions. With this
manager also get to understand about all those activities in which cash is invested to an
organised manner in order to reduce wastage of funds (Blouin, Lee and Erickson, 2018).
Financial management also perform an important role for success of business. Some of them are
mention as follow:
 Financial related plans- Financial management support to develop all investment
related plans. This include planning related with source of funds, requirements of funds
and formulation of budget etc. Monetary plans also help business to deal with complex
situation and competitive environment. Financial plan also support business to
accomplish their goals in minimum time-period. It also results to manage and control all
expenses related with credit and income of business.

 Procurement of funds- Financial management aids an organisation to complete all work
with undertake of all those aspects that is related with sources of funds. Funds plays an
important role to perform business operations. This also provide funds to manage work
when business has to manage perform their function (Bodiako and et. al., 2016). It also
results all operations are performed on daily basis to manage work like, to pay creditors,
purchase of asset etc.
 Utilisation of funds- With proper use of funds manager of an organisation allocate all
funds in an appropriate manner. Like, to delegate or distribute monetary requirement
according to business function. This also provide all information to allocate funds for
invest them properly as this reduce business cost through minimising wastage of
resources.
 Monetary related decisions- Financial manager are responsible for generating financial
decisions and it impacts on functions of business. With impact of financial decision-
making organisation manage and complete their work according to business
requirements. All decisions also aids organisation to manage work by adoption of
methods that aids to complete work with long term approach.
 Increase in profitability- Financial management aids an organisation to utilise all funds
that properly relates with profitability (Doni and et. al., 2019). This also control cost of
organisation by adopting budgetary control methods, analysis of cost etc. for improving
profitability of business. This also improve to save organisation profits through managing
cost related with creditors. With this organisation minimise cost of it's borrowing funds
by performing work through use of budget.
SECTION 2
Discussion about financial statement and use of ratio
Financial statements define about all those indicator which helps an enterprise for
conducting about reporting period. This helps to formulate proper picture that relates with
financial position and performance of organisation. Three types of financial statements that helps
to plan all activities is mention as follow:
 Income statement- This statement reflect about execution of project, all actions or steps
that are yield with institution and stimulation for accomplishing all results. It also