Business Finance: Analysis of Business Performance, Financial Information & Cash Management

Business Finance

Contents
INTRODUCTION.......................................................................................................................................3
PART 1 Business Performance Analysis.....................................................................................................3
1 Statement of profit and loss..................................................................................................................3
2 Statement of financial position.............................................................................................................6
PART 2 Understanding Financial Information & Management of cash......................................................9
1. Accruals vs. cash accounting...............................................................................................................9
2. Profit vs. Cash flows..........................................................................................................................11
PART 3 Budget and company finance.......................................................................................................11
1. Meaning and Purposes of budget.......................................................................................................11
2. Benefits of forming a limited company and getting it registered on a stock exchange......................12
CONLCUSION.........................................................................................................................................13
REFERENCES..........................................................................................................................................14
Appendix...................................................................................................................................................15

INTRODUCTION
Business companies are required to perform their business affairs successfully by managing their
financial resources. Finance is the influx of capital from which the company's net activities have
expanded. It’s the essence of the business (Popescu and Popescu, 2019). T-shirt Ltd has taken
the level of brand finance into account. This article provides an analysis of the company
operations by calculating and analyzing the financial ratio. This also explains the use of
trustworthy and cash
PART 1 Business Performance Analysis
1 Statement of profit and loss.
A declaration of revenue or a P&L account is a detailed statement of the condition of the
company and is simply a statement of revenue and expenses over a specified period of time. It
demonstrates the method of turning profits into gains and losses of the business. In the sense of
T-shirt limited, it is evaluated that the business was faced with a loss of 500 million in the year
2019 and, on the opposite, still had a net profit of 372 million in the last year of 2018. In order to
evaluate the net income in order to establish an accurate and fair perception of the financial
condition of the company, the following statistics are useful:
Gross profit ratio: It is simply a representation by the corporation of the surplus of sales over
gross receipt. It considers the specific and not secondary expenditures (Kgoroeadira, Burke and
van Stel, 2019). Gross profit is gained by subtracting COGS from overall company receipts.
Gross margin, also alluded to as the overall sales ratio, and is also calculated in terms of sales.
2018 2019
Gross profit ratio 60.02% 45.02%

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On the basis of the above table, it may be observed that the gross profit percentage of the
organization declined in 2019 relative to 2018. In 2018, the ratio fell by 60.2 per cent and
became 45.2 per cent. This is attributed to reduced revenue and increased prices of merchandise
sold in the year 2019. As it says, the organization is not in a position to control its expenses in
the year 2019, which is contributing to a lower operating profit.
Net profit ratio: This is a summary of the higher profitability volume. The word "net profit" is
the overall gain after subtracting all indirect costs together with tax expenditures. That is the left
or deferred financial incentive after all spending relating to production, administration and
finance has been excluded from the overall revenue (Hasan, Popp and Oláh, 2020). In reality,
this is the real and fair opinion of the goals of the organization. This is the communication
measure about how well and how structured the corporation's financial services are. In order to
judge performance over time, the metric is usually reported in the trend table. It is also used to
equate the performance of a corporation with its competitors.
2018 2019
Net profit ratio 17.71% -36.60