Business Finance: Managing Funds for Better Performance

Business
Finance

INTRODUCTION
Business finance is about how businesses managing its funds for running their activities.
It is about funds & credit employees for business. Business finance is about need for purchase
assets, raw material, goods for running business activities. It is about managing funds for
businesses. Business finance includes financial statements which includes balance sheet, cash
flow, income statement. Cash flow has various activities which includes operating activity,
investment activity, financial activity. Balance sheet has various elements which is liability,
assets. Income statement has various elements which includes liabilities, assets. This report is
about business finance. The company which is includes for this report is Trend Ltd. It is
manufacturer for gym clothing, footwear businesses. This report includes topic which are profit
& cashflow, working capital, meaning for receivables, inventory, payables, how change in
working capital affects cash flow, how business manage financial results, recommendation for
improving cash flow by working capital management. Apart from this it includes topics which is
cash budget, analysis for businesses (Akan and Tevfik, 2020).
TASK 1
A. What is meant by Profit and Cash flow and how they are different
Profit: Profit is an remaining incomes after all costs are paid and it is usually defined
when they are describing any firms activity. It includes labour, interest and taxes that firm should
be provided. Profit is a rewards for any firm and it is useful for business owners that they are
investing in any activity of enterprise. In case of Trend Ltd, profit is important for firm because
profitability impacts whether a firm can secure their financing and attract many investors to fund
its operations that would be helpful for growing their business. It is an income which is
distributed to owner if they work in profitable areas and it is measure for which the owner can
consist of major part in interests.
Cash flow: It is an statement where they can identify whether cash inflow and outflow in
an enterprise. It measures how firm can manage their position of cash and how well firm can
generate its pay debt obligation and maintained fund for upcoming obligations expenses. It is
mainly used for increase or decrease in amount of money where business, institution or
individual can invest any fund. The amount of cash where firm can used receives or gives the
payment to creditors. With relation to Trend Ltd, managers used this cash flow to identify how
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