Managing Trend Limited and its Impact on Financial Results

BUSINESS FINANCE

TABLE OF CONTENTS
TASK 1.......................................................................................................................................................3
1...............................................................................................................................................................3
2 Describing the way of managing Trend Limited and its impact on financial results.............................4
3. Analyzing methods that can be utilized for better working capital management and cash flow..........5
TASK 2.......................................................................................................................................................6
Preparing cash budget from 1st Jan to 30 April for throne Estate............................................................6
Methods for improving TEL performance...............................................................................................9
REFERENCES..........................................................................................................................................11

TASK 1
1.
a) Explaining Profit and cash flow
Profit refers to an income earned from business activities. It is difference between
revenue generated and expenditure spent to obtain income. Profit is end outcome for which
business conducts operational activities. Financial gain is main motive of conducting business
practices by organization (Le and Ngo, 2020). Trend limited earned 60 million operating profit
from manufacturing gym clothing and footwear.
Cash flow is movement of money from which is basically related with payments. It is
mainly concerned with future payments that an organization is expected to pay. In addition to
this, this decides liquidity of particular company which helps firm to get sustainable position in
market.
Profits Cash flow (CF)
It is an accounting concepts which is fictional This is can be obtained from funds sources to
attain liquidity
Profit that tell that Trend limited is going in
right direction or not
CF indicates company has enough resources to
generate profit.
Company can evaluate through profitability
that it can survive for longer period.
Demise of organization can be known through
analysis regarding lack cash flow
This is can be measured in terms of amount Cash flow is measured in time value form.
b) Describing working Capital (WC), receivables, payables and inventory
WC is available amount within in company for establishing daily operational activities. It
can be obtained by deducting current liabilities from assets. Operational efficiency can be
assessed by determining working capital (Le, 2019). In addition to this, it helps Trend limited to
know its financial position in industry. Proper policies should be formulated by TL to ascertain
capability for paying its short term obligation sin effectual manner.

Receivables are debt owned to company by buyers of TL products. This arises due to
company’s policy of selling goods on the basis of credit which is recorded in balance sheet as it
is treated as liquid assets (Gigli and Mariani, 2018). This can be utilized by organization for
meeting shorter obligations. It may result in bad debt so it is suggested to Trend Limited to
follow up customers for avoid risk.
Payables are those payments that are remaining to pay for purchasing inputs and other material on
credit. It is money owned by business to its suppliers which is shown on liability side of balance sheet
(Carey, Knowles and Towers-Clark, 2017). Trend limited has increased to £ 95 millions that are an
indicator of higher liability which need to pay on time for sustaining good creditworthiness in market.
Inventory term is widely used to represent stock of inputs, work in progress material, and output.
It aids Trend limited to meet market demand and supply in appropriate way (Singh and Verma,
2018).TL ahs good amount of stock in its London warehouse that can be utilized by organization for
sustaining in sector . Company requires analyzing market condition for proper inventory management as
inappropriateness in this can lead to rise in cost.
c) Explaining impact of working capital on cash flow
WC heavily impact cash flow of enterprise as it is determined through examining difference
between current assets and liability. Cash as being part of current assets highly get affected from
movement in working capital (Anton and Afloarei Nucu, 2021). Changes in current assets and liability
in same proposition does not influence WC of Trend Limited. Purchasing of assets reduced liquidity in
company which also result in declination of CF and working capital &vice versa (Berikol and Killi,
2021).
Trend limited WC would not be affected in case of purchasing inventory with cash as both are
included in current assets. Insufficiency of working capital may reduce operating capacity of TL
due to reduction in cash position of company. Trend Limited has agreed to pay £5 millions for
supply of goods in turn impacts cash position which highly influence working capital of
enterprise. There are several methods that can give guidance to TL for managing WC.
2 Describing the way of managing Trend Limited and its impact on financial results
TL manufactures footwear and gym clothes which supplies goods to various biggest
brands. The company’s shares is owned by Arpha and four family members. Proposition in