Business Finance project Assignment
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Added on 2021-02-19
Business Finance project Assignment
Added on 2021-02-19
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Business Finance project 5Financial Management
Table of ContentsINTRODUCTION................................................................................................................................3MAIN BODY.......................................................................................................................................3LO 1 .....................................................................................................................................................31.1 Discussion of Accounting Equation ..........................................................................................31.2 Calculation of changes in the Balance Sheet Components and their effects on thosecomponents......................................................................................................................................31.3 Comparison of Capital at the beginning of the year to end of the year.....................................5LO 2......................................................................................................................................................52.1 Effect on profit of incorrect identification of capital and revenue expenditure.........................52.2 Difference between net Profit and Gross Profit of Shower Pak Limited...................................52.3 Difference between Cost of Sales and Turnover of Shower Pak Limited.................................5LO 3......................................................................................................................................................63.1 Interpreting meaning of cash flow statement.............................................................................63.2 Explaining reasons for discrepancies between bank statement and cash book.........................6LO 4......................................................................................................................................................74.1 Analysing use of Benchmarking in measuring performance along with benefits andlimitations........................................................................................................................................74.2 Analysis of Ratio of ShowerPak Ltd .........................................................................................7CONCLUSION....................................................................................................................................8REFERENCES.....................................................................................................................................9
INTRODUCTIONBusiness finance has been considered as one of the most important business aspect without whichno business function can be carried out. Financial management is related with the process ofmanaging, planning, organising and controlling the financial activities of the business for makingbetter allocation of available and limited business resources. By conducting effective financialmanagement process, it can help in smooth business functioning thereby achieving the set definedbusiness goals in a cost effective manner. The present report is based on ShowerPark limited whcihcis a family owned manufacturer of moulded shower room units. Itwill define better understandingof accounting equation and its concept. It will elaborate reason which brings changes in the capitalat starting and ending of year. How net profit is different from gross profit will be explain alongwith cost of sales and turnover difference. Further, cocnept of cash flow statements will bediscussed. At last, efficiency measures by assessing the current trend and benchmarking comparisonwill be define.MAIN BODYLO 1 1.1 Discussion of Accounting Equation Accounting Equation is the base of double- entry accounting system (Juárez 2015).According to this equation, Balance Sheet is are prepared in Shower Pak Limited. The equationshows the two sides of Balance Sheet in which assets and liabilities of Shower Pak Limited shouldbe equal. Both the sides of the balance sheet should made in equal amount. This system shouldensure that both the debit side and credit side should match with each other. In Balance Sheet, assetsare the valuable resources which are owned by Shower Pak Ltd and liabilities are their obligations.Both liabilities and owner's capital represents that how the assets of a company are financed. TheAccounting Equation can be represented as :-Asset= Shareholders Fund + Liabilities1.2 Calculation of changes in the Balance Sheet Components and their effects on those componentsCalculation of changes in Income Statement of Shower Pak LimitedIncome Statement2017£ 0002018£ 000% change Revenue94821136519.86%Less: Cost of Sales4912589620.03%Gross Profit4570546919.67%
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