Business Finance: Analysis of T-shirt Ltd's Performance and Financial Management

Business Finance

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
TASK 1........................................................................................................................................3
Analysis business performance of T-shirt Ltd.............................................................................3
TASK 2............................................................................................................................................8
Brief description related with financial information & management of cash of T-shirt Ltd.......8
TASK 3..........................................................................................................................................10
Explanation of budget and its essential techniques...................................................................10
CONLCUSION..............................................................................................................................12
REFRENCES.................................................................................................................................14

INTRODUCTION
Business entities are expected to conduct their business operations efficiently by controlling their
financial capital. Finance is the flow of money from which the overall operations of the company
spread. It's the blood of the enterprise (Connolly and Bank, 2020). T-shirt Ltd has taken to
consider the importance of corporate finance. This report includes an overview of the results of
business by measuring and evaluating the financial ratio. This further describes the use of a
reliable and cash accounting system. This involves how efficiently administrators use the budget
to make plans and assess the potential value of income. The advantages of the registered public
association in the stock exchange have been defined in this report in an appropriate manner.
MAIN BODY
Part 1
1.1 Statement of profit and loss.
In order to measure the business success of an organisation’s employees, the financial ratio is
used to make it easier for them to consider differences in each item in a company's financial
statements.
The income statement or profit and loss document is among the company's balance sheet and
shows the company's revenue versus expenses over a given period of time. It illustrates how the
sales are transformed into the revenues and expenditure of the business (Lewis and Liu, 2020).
As far as T-shirt limited is concerned, it can be seen that the business is expecting a net deficit of
500 million in 2019 and a net profit of 372 million in the final year of 2018. This is attributed to
a higher degree of spending in the year 2019 relative to the year 2019. In order to allow a
thorough review of the income statement, below those main ratios is indicated, which are as
continues to follow:
Profitability ratio
Gross profit ratio
Gross profit ratio = GP/ Sales
*100
60.01% 45.02

Net revenue ratio
Net profit = NP/ Sales *100 17.07 -36.66
Return on assets ratio
ROA = Net revenue / Total
assets
1.28 0.8
Return on equity ratio
ROE = Net revenue/
Shareholder's equity
2.59 4.4
Interpretation: Income statement is being used to assess the viability of the company. These
consider the elements that are required to produce sales. It considers ration not only an item that
is used or applicable to the income statement, but also certain items that are connected to the
balance sheet. Gross profit percentage; help assess the income gained by the company by selling
its items. T-shirt Ltd produced 60% of the gross profit from the latest fiscal year, but was unable
to achieve a high rate of gross ration in 2019 comparison to the previous period.
It has a strong effect on the net profit ratio. In comparison, as compared to 2018, the company is
not able to make a profit and experiences a high loss.
Their net profit falls as a result of the high cost spent on running company operations.
T-shirt Ltd, owing to its possibility condition, it is very difficult for the company to provide its
owners with a sufficient profit. In 2018, the return created from the use of assets is higher, with
T-shirt Ltd expected to enjoy 1.28 per cent of sales from the use of its company assets and in
2019. They adapt to be able to gain 0.8 of their company assets. However the rate of sales
generated by equity in 2019 is much higher than in 2018. The reduction in revenue indicates that
T-shirt Ltd does not control its financial resources adequately and does not apply appropriate risk
management. Owing to poor management of the financial structure, the amount of capital
outflow reserves raises as opposed to cash inflow market operations.