Business Finance: Working Capital, Profit, Cash Flow, Budgeting Approaches

BUSINESS FINANCE

Contents
EXECUTIVE SUMMARY.................................................................................................................................4
1) A) Meaning of profit and cash flow and description of their difference..............................................4
B) Explanation of working capital, receivables, payables and inventory.................................................5
C) Effect of changing working capital on cash flow..................................................................................5
2) Impact of changes in working capital on business organization..........................................................6
3) Recommendation related to effective working capital management.................................................6
TASK 2..........................................................................................................................................................7
EXECUTIVE SUMMARY.................................................................................................................................7
1) Explanation of importance of budgeting approaches and their advantages and disadvantages.........7
2) Effect of traditional and alternative budget approaches on Second Sight organization......................9
3) Analysing whether a traditional or alternative budgetary system is appropriate to all or any parts of
the business in its planned future form...................................................................................................9

EXECUTIVE SUMMARY
Business Fund describes people tasks which can be linked to allocation and acquisition of
fiscal funds require by way of company. To put it differently, it's a systematic procedure for
preparation coordinating controlling and disposing monetary capital (Bassemir and Novotny‐
Farkas, 2018). Business fund play significant part in conducting business it can help in reach
competitive advantage into your business enterprise. As a way to comprehend theory of business
fund at a better manner, Mediterranean Delights Ltd has already been accepted. Inside this report
theory of working capital along with their affiliated elements, was characterized, the way
changes in working capital influence on the consequence of financial activities has already been
investigation.
TASK 1
1) A) Meaning of profit and cash flow and description of their difference
Profit: Financial Benefits generated from operating activities is called profit. Put simply
benefit is the excess of income over costs incurred in predetermined time period. It might be
computed by coordinating profit announcement and through using gap managerial accounting
tools such as marginal costing or conventional costing. It is a vital term for virtually any
company whether it's financial or non financial. This aids in keeping sustainability in market.
Business entity utilizes Profit to spot how much profit business get from their company
activities.
Cash flow: It's the net value generated by cash inflow and cash out stream activities. Cash
flow may be the allocation of money and cash equivalent transactions of an organization at
predetermined time period. It just contemplated those actions which affect liquidity status of
conducting business organization (Benlemlih and Girerd‐Potin, 2017).
In a running organization profit and cash flow both are essential terms to determined
profitability level of business entities at particular time period. Following are the differences
among profit and cash flow:
Particular Profit Cash flow
Meaning It is generated amount that
also known as financial gain
in order to conduct all the
The meaning of cash flow
that provide all the activities
of net cash inflow and net