Business Finance

Business
Finance

Table of Contents
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
Statement of profit and loss account:...........................................................................................1
Statement of financial position:...................................................................................................2
PART 2............................................................................................................................................2
Accruals vs cash accounting:.......................................................................................................2
Profit vs cash flows:.....................................................................................................................3
PART 3............................................................................................................................................4
Meaning and purpose of budget:..................................................................................................4
Benefits of forming a limited company and getting it registered on a stock exchange:..............5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Business finance refers to credits and funds available within an organisation.
Requirement of finance in any business such as purchase assets, goods, raw material, production
and other flow of activities. It is about planning, organising, managing, coordinating and
controlling overall business finance activities in each department of the company. It is about
raising and managing funds within an organisation in order to run its activities. It make suers
firm that it has enough funds to operate its activities with spending and investing wisely. The
company which is selected for this report is T-shirt Ltd. This report covers topic such as analysis
of profit and loss statement, financial position statement, Accruals and cash accounting concept
and profit vs cash flows concept (Arena and Ferris, 2017). Apart from this it also covers meaning
and purpose of budget and benefits of forming a limited company and getting it registered on a
stock exchange.
PART 1
Statement of profit and loss account:
Ratio analysis refers to comparison of tools which is shows in the financial statement s of
a business. It is used to evaluate the firms liquidity, efficiency of actions and profitability.
Gross profit margin
2018 2019
gross profit 1261 615
Sales 2101 1366
gross profit ratio 0.60019 0.45022
Net profit margin
2018 2019
Net profit 372 -500
Sales 2101 1366
Ratio 0.177059 (0.36603)
Interest cover ratio
2018 2019
EBIT 441 -394
interest 69 106
6.391304 -3.71698
1