Business Finance: Managing Financial Resources for Organizational Success

Business Finance

Table of Content
Executive Summary...................................................................................................3
Part 1..........................................................................................................................3
Question 1............................................................................................................3
Question 2............................................................................................................5
Question 3............................................................................................................6
Part 2..........................................................................................................................8
Executive Summary :.................................................................................................8
Question 1............................................................................................................8
Question 2..........................................................................................................10
Question 3..........................................................................................................10
References...............................................................................................................11

Executive Summary
Business finance refers to the process of managing financial resources of an organization.
It is essential part of running an organization. Success of an organization is depends on how
effectively their mangers manage sources of gearing money. This report is based on data collect
from Mediterranean Delights Ltd. In this concept of profit and cash flow are determined, how
working capital effect on cash flow activities and ways which helps managers for generating
effective cash flow activities with the help of effective management of working capital are
described.
Part 1
Question 1
A) Differences between profit and cash flow:
Profit: It defined as income generates from running a business activity. In other words profit is
the excess of revenue over expenditure (Berger and Black, 2011).
Cash flow: It refers as the net amount generating from cash and cash equivalent
activities. In other words cash flow represent net amount of incoming and outgoing of operating
activities.
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 Amount of financial gain an
organization generates
through its business activities.
Net sum up of inflow and
outflow of activities related to
cash transactions
Purpose Organization calculates profit
to identifying performance
level of their business
activities.
Main purpose of formulating
cash flow amount is to
analysis activities which helps
in generating more income .
Time Transaction related to profit
are recorded on accrual basis.
Transactions are recorded
when cash amount actually
received and paid by