Business Finance: Analysis and Financial Management

Business Finance

Table of Contents
INTRODUCTION...........................................................................................................................3

INTRODUCTION
Business financing, is defined as the accumulation and administration by business
organisations of investments. The functioning of the business officer, who is typically right near
the top of a company's corporate structure, is to schedule, assess and manage activities. In this
report, two part of such as part 1 (business performance analysis) of T-shirt Ltd’s and part 2
(Understanding Financial Information & Management of Cash) is discussed.
PART 1
1.1. Statement of P/L a/c.
A profit statement or P&L declaration is among the financial report which shows the
revenue versus expenses of the business over a period (Connolly and Bank, 2020). It reveals how
the sales are transformed into the revenues and expenditure of the business. This is seen in the
T-shirt Ltd factor where the group needs a significant loss of 500 GBP million within 2019 while
they made a net income of 372 GBP million within 2018 year. That was because of the higher
amount of investment in 2019 on comparison to 2019. In order to accurately interpret the net
income, some main factors are described below, are as described in the following manner:
Gross profit ratio: The GP margin seems to be the figure used by analysts to calculate the
company's financial output by calculating the amount of funds available from product sales since
paying the expenses of product sold (COGS).r Gross profit is also called the growth
proportion of sales, is also calculated in terms of profitability.
2018 2019
Gross profit ratio 60.02% 45.02%
2018 2019
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00% 60.02%
45.02%
Gross profit ratio
Gross profit ratio
As per the basis of aforementioned table, it could be observed that perhaps the GP ratio
of the organisation was lowered in 2019 relative to 2018. In 2018, the percentage was 60.2

percent lower as well as 45.2 percent lower. That was because of reduced sales of products
produced in 2019 and increased costs. As well as noting that in an efficient year 2019 that is
contributing as smaller gross profit, the business is unable to control its cost.
Net profit ratio: The NP proportion is the ratio is after-tax profits to net sales. It shows
the remaining gain after all sales and approved capital gains are being withdrawn from
production, administration and finance expenses. However, it is one of the best measures of the
success in business of even a company, especially in conjunction with an assessment of how it
handles its capital investment. The variable is usually documented on a sequence map to judge
overall performance. It is also used to equate the profitability of a firm including its competitors.
2018 2019
Net profit ratio 17.71% -36.60
2018 2019
-4000.00%
-3500.00%
-3000.00%
-2500.00%
-2000.00%
-1500.00%
-1000.00%
-500.00%
0.00%
500.00% 17.71%
-36.6
Net profit ratio
Net profit ratio
As per the aforementioned table, it can be observed that perhaps the NP ratio of the
organisation was lowered in 2019 relative to 2018. The figure was 17.71 percent in 2018, which
declined and is now a -36.6 percent net negative rate. The reason for this is due to the larger
amount of costs in 2019 for administration and financing. This illustrates that the business is also
not helpful in combating its total costs and is unable to distribute its resources in an acceptable
manner.
Operating profit ratio: This margin is indeed a production or performance ratio that
reflects the level of revenue a company receives from its operations (Lewis and Liu, 2020) until