Business finance assignment : Excellence Electronics ltd
14 Pages3855 Words170 Views
Added on 2020-01-07
Business finance assignment : Excellence Electronics ltd
Added on 2020-01-07
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BUSINESSFINANCE
Table of ContentsBUSINESS FINANCE.............................................................................................................1INTRODUCTION....................................................................................................................3TASK1......................................................................................................................................31.1 Difference between profitability and cash flow.............................................................31.2Concept of Working Capital Management.....................................................................41.3.What steps should bet taken to improve the working capital of EEL............................6TASK2......................................................................................................................................72.1 Capital budgeting process and the capital investment appraisal method.......................7P.2.Application of the capital investment appraisal methods..............................................82.3. Analysing the methods which are suitable for the appropriate decision making..........9CONCLUSION.......................................................................................................................10REFERENCES.......................................................................................................................12
INTRODUCTIONBusiness Finance is an overview for the occurring of the financial activities. Itprovides a brief of financial status and financial activities for the organisation. It helps inproviding the financial position of the company. The financial position helps in framingdecisions according for the organisation according to the financial stability. Excellenceelectronics Ltd(EEL) maintains their financial position and stability of their company theygets to manages their finance at suitable resources(Avery,Bostic,Samolyk,1998)Presentreport is based on the Excellence Electronics Ltd which maintains their accounting recordsregularly and operates their operations for maintaining the company's profitability andproper regulation of workflow.TASK11.1 Difference between profitability and cash flowProfitability consists the state of gain or loss for the company.. Profitability stateconsist with the generating profit after deduction of all the expenses the cost reservedconsists as the profit for the company. Profitability ratios are the parameters that identifieshow well the company is performing the work in terms of the profit. It identifies the firmsability to generate the profits. Various profits margins are evaluated for measuring of theprofitability state(Chortareas, Girardone and Ventouri,2011)The profitable ratio evaluatesthe performance and efficiency of the company. They also leads to measures the company'sperformance which leads to identifying the working performance of the company.Profitability ratios are of two types:Margin ratiosReturn ratios
Margin ratios consists of gross ,operate ,net flow and cash flow margin whichconsists the operational activities of the goods sold and net cash flow derives at the certainlevelsReturn ratios consists return on assets ,returns on equity and cash return on assets itidentifies the profitability on the assets and the investments measures. By implementing the above methods it gets easier for any organisation to derives itsprofitable state from the operational activities and measures the financial stability of theorganisation. It also helps in deriving the net cash outflow flow occurrence and cash inflowof the organisation within the operational performance(Adjaoud, and Ben‐Amar, 2010). Cash flow consists with the flow of cash within the organisation activitiesperformance. It is movement of the money within the business operations. It helps inidentifying the amount of money the organisation has invested and how much they arederiving from the revenue(Cole,2013). It identifies the real occurrence of the money. It helpsin identification of the liquidity of the business and helps in overcoming from the affectedliquidity problems for the business.It helps in analysing the risk factors within the organisation and enables theorganisation to build up them for the future upcoming challenges so that they can continuetheir operations smoothly and effectively. It identifies the profit state for the organisation.The positive cash flow depicts the a stability position of the organisation and helps them tore investment in their operational activities and for the expansion in the business. Thenegative cash flow situation defines the crisis for the organisation they loses there profitstability and reaches to a debt situation and defines the decrement in the liquid assets.Both the methods leads to a beneficial for the Excellence Electronics Limited toevaluates their financial measure ability and maintaining their financial positions andprepare themselves for the future challenges for the company by maintain g a stablecondition(Ayyagari, Demirgüç-Kunt, and Maksimovic, 2010.).Along with the major difference between the profitability and the cash flow are:ProfitabilityCash flowIt defines the income and profitstatements It defines only the cash transactionsIt derives from the assets selling at aIt derives the cash from the selling of
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