Business Finance

Business Finance

Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
1.1 Statement of profit and loss...................................................................................................1
1.2 Statement of financial position..............................................................................................2
PART 2............................................................................................................................................4
2.1 Explanation of concept of accrual accounting vs cash accounting that includes the benefits
and limitations of each.................................................................................................................4
2.2 What are profit and cash flow and difference between all of them.......................................5
PART 3............................................................................................................................................6
3.1 Definition of budget and explanation or purpose of preparing a budget...............................6
3.2 Benefits of forming a limited company and listing it on a stock exchange...........................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Business finance is the funding which is required by an organisation for the purpose of
carrying out all the operational activities in systematic manner. If an entity will not be able to
manage the funding systematically then it may leave negative impacts upon functionality of
business. Proper arrangement and management of funding is very important as it can help to
carry out all the operational activities in systematic manner (Bezemer and Hudson, 2016).
Present report is based upon analysis of financial performance of Vests Plc and the finance
trainee of the company is asked to analyse the financial position of competitor which is T-Shirt
Plc. This assignment covers various topics such as assessment of business performance,
understanding of financial information and management of cash. Apart from this, discussion of
budget techniques and company finance are also covered in this project.
PART 1
1.1 Statement of profit and loss
Statement of profit and loss is a final account in which details of all the incomes, expenses,
losses and gains are recorded. In order to determine profitability of the organisation it could be
used by businesses so that effective decisions could be taken for future. T-Shirt Plc is one of the
main competitor of Vests Plc and in order to analyse the position of company profit and loss
account of it will be analysed. From the exhibit 1 it has been analysed that revenues of the
organisation for 2018 were 2101 which were decreased up to 1366 in 2019 and it shows that
position of the entity is reduced as compared to previous. Gross profit for the year 2018 was
1261 and it is also decreased in 2019 up to 615. In 2018 the entity generated profits of 372 and in
2019 this profit was converted in to loss of 500 (Botrić and Božić, 2017). It shows that the
profitability of the organisation is very low. In order to analyse the position of business in more
detail following ratios are also calculated:
Gross profit margin: It is mainly used for the purpose of analysing operational
efficiency of business so that the investors can formulate decisions for making investment. The
calculation of it for T-Shirt Plc is as follows:
Particulars Formula 2018 2019
Gross profit Gross profit / revenues
* 100
1261 615
Revenues 2101 1366
1