Cash Flow and Working Capital Management for Trend Ltd

BUSINESS

EXECUTIVE SUMMARY
This report en-light about cash flow and working capital management, there requirement
for business firm to improve liquidity and cash balance of an organization. It also presents
impact of cash flow and working-capital management may make to achieve effective production
function and help in reduction in debt part that are increased for payment of current liabilities.
Also show importance of cash-budget, that cash budgeting may applied for better cash
management and working-cycle and how it will work to solve short term obligation of company.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
TASK.1 ..........................................................................................................................................2
(I) Define Profit, Cash flow and discuss difference -.................................................................2
(a)Profit.......................................................................................................................................2
Cash Flow ..................................................................................................................................2
Difference between Profit and Cash Flow..................................................................................2
Explain working capital and its component .............................................................................3
Working capital .........................................................................................................................3
(c) Impact of Working Capital on Cash Flow............................................................................4
(II) Impact on Trend Ltd of Cash Flow and Working Capital ..................................................4
(III)Step for Improvement in Cash Flow and Working capital Management on Trend Ltd......5
TASK. 2..........................................................................................................................................6
1. Drafting cash budget Thorne Estates Ltd ..............................................................................6
2. Interpreting findings from cash budget and recommending strategies to Thorne Estate for
better performance .....................................................................................................................9
REFERENCES..............................................................................................................................11
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TASK.1
(I) Define Profit, Cash flow and discuss difference -
(a)Profit
Profit is a financial term which define return that have been earning from business
activities by an organization. In simple words profit is something extra that is received due to
business operation (Li, P and et.al 2021). Every business is start and run by organizations with
motive to earn maximum profit by business function, all employees, management and director
are working with one common motive that is profit. All companies have various types of profit
classifications gross, operating, and net profit.
Profit= Revenue- All Expense
Cash Flow
Cash flows means flow of cash transaction that is made by an organization in particular
time period to find out net cash balance. It can be find out by summarizing operating, investing
and financing activities with taking help form financial statements (Ni, Y and et.al 2019). Cash
flows is useful when finding net present value for any project, internal rate of return can also be
find out, it defines present liquidity position of business.
Difference between Profit and Cash Flow
Basis of difference Profit Cash flow
Used Profit is useful for company as
well as for investors perspective,
but company will not consider is
in short run they concern for long
term. Investors always look for
profit.
Cash flow is useful for
management to forecast future cash
need and project determination.
determinants Profit is calculated by revenue less
expenses.
In can be find out after determining
profit and financial statements.
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