Report on Profit, Cash Flow and Wworking Statement on Root and Cook Ltd

Added on - 03 Jun 2020

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Business Finance
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................3PART 1............................................................................................................................................31. Explaining various terms.........................................................................................................32. Determining the financial position of the business as per the outcomes of various financialresults..........................................................................................................................................43. Recommending the steps to control the cash flow through working capital management.....8PART 2............................................................................................................................................81. Evaluating the terms................................................................................................................82. Illustrating the various terms of investment operations........................................................113. Recommending the professionals to pursue the project........................................................14CONCLUSION..............................................................................................................................14REFERENCES..............................................................................................................................15
INTRODUCTIONTo make the strategic decisions in terms with designing the operational activities of thebusiness there is need to have better financial management. It determines the financial statementsof the business which will be helpful for execution of operations and profits. In the present reportthere will be study over the various financial terms such as profit, cash flow and workingstatement on which Root and Cook Ltd. The report is also consists of outcomes of the investmentappraisals which are helping in having the appropriate information regarding the profitability ofthe proposed project. Therefore, in relation with such measurements the professionals will havesufficient details regarding the expansion of business operations.PART 11. Explaining various termsa. Analysing the profit and cash flow and determining the differences among themThe terms profit and cash flow are different from each other in accordance with analysingthe financial health of the business. However, in accordance with the business requirements thereis need to manage the cash flows and various transactions of the business which in turn will behelpful to the entity to have profitable growth.Profit: It is a surplus amount which will be helpful to the business in terms of analysingthe expenses and gains over the operational made by them. Thus, with the help of such amountthe business will become able to perform the operational activities (Campbell, 2017). Purchaseraw material, pay salaries to the employees, dividend payments to the shareholders as well as itcan plan for the expansion of the business criteria.Cash flow: The inflows and outflows of the cash balance in the business which will behelpful in analysing the liquidity. However, the level of cash balance determine the ability of theentity in meeting the expenses as well as making the adequate payments to the operations(Kumar, Sivashanmugam and Vennela, 2018). It ascertains the requirement of the cash has beenmet and analysed by the business professionals.Determining the difference between profit and cash flow:ProfitCash flowThis is the method of analysing theThe determination of the daily tasks and
surplus amount over all the income andexpenditures made by the business in afinancial year. These are the amount onwhich the firm will make payments tothe shareholder's dividends, operationalinvestment as well as make paymentsof the taxes.operations of the business which in turnhelps in analysing the inflows andoutflows of the total cash (Young andPagliari, 2017). However, it helps inmanaging the daily financial activitiessuch as taxation, purchase ofinventories, employee salaries as wellas paying off the costs incurred invarious operations.b. Ascertaining the concept of working capital:This is the technique which helps in determining the efficiency of the business in day today operations. This ascertains the ability of the firm in meeting the short terms requirementssuch as analysing the current liabilities and current assets of the firm (Block and et.al., 2018). Itfacilitates the information to the professionals that the firm is having enough short term assetswhich will be helpful in meeting to pay off the short term debts.c. Analysing the impacts of working capital over cash flow2. Determining the financial position of the business as per the outcomes of various financialresultsTo ascertains the appropriate financial health of the entity there are analysis of the 5 yearsfinancials which will be helpful in suggesting the adequate changes in the operations ofRoot andCook Ltd. Thus, there are analysis of cash flow statement, income statement and balance sheet ofthe entity which will indicate the operational transactions held during the period and which willbe beneficial in ascertaining the liquidity and efficiency of the business.Cash Flow statement:Cash flow statement of Root and Cook Ltd.ParticularsInitialinvestment20162017201820192020Net income1200000022500000290000003500000042000000
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