Business Performance and Financial Status | Project

Added on -2020-02-12

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FINANCE IN SME CONTEXT
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................3Question 1: Critical analysis of Trainline’s performance using ratio analysis for 5 years..........3Question 2: Critical evaluation of sources of finance and techniques for investment proposal. .7Question 3 Sources of finance and investment of project............................................................8Question 4 Entrepreneurial ecosystem and business development............................................10Question 5 Ethical consideration for IPO..................................................................................11CONCLUSION..............................................................................................................................12REFERNCES.................................................................................................................................13APPENDIX....................................................................................................................................15Ratio analysis.............................................................................................................................15
INTRODUCTION Finance is not only a crucial element required for the large business enterprises only, it isequally important for the small and medium sized corporations as they need capital for thecontinual of their regular operation, expansion and growth plans and taking the benefits ofmarket opportunities. Trainline is a small sized business that executes various operations such assale of railway tickets, distribution, information delivery and other ancillary services associatedwith the railway journey. The present project will examine business performance and financialstatus of the Trainline computing ratios for a period of 5 years. Moreover, budgeting is also anessential element of financial planning for the purpose of forecasting, therefore, the report willalso prepare cash budgeting for the projection of future years cash position for 2017, 2018 &2019. In addition to this, various financial sources will be critically evaluated and the techniquesfor evaluation of investment proposal will be suggested to the Trainline. Lastly, ethicalconsideration and ecosystem of the business will be analyzed for fulfilling environmentalresponsibilities. Question 1: Critical analysis of Trainline’s performance using ratio analysis for 5 yearsProfitability performance:201220132014201520160.00%10.00%20.00%30.00%40.00%50.00%60.00%70.00%80.00%Gross profit and net profit ratioprofitabilityratios(In%)Gross profit ratio: In the year 2012, Trainline’s GPR was computed to 64.72% gotimproved to 68% in the year 2015 due to grown turnover and effective direct cost control by the
firm. High GPR indicates that business performed excellent and generated greater return on theirtotal turnover (Islam, Alam and Hossain, 2014). In contrast, in the last year 2016, it turned downto 65.95% due to higher increase in the cost of sale by 21.72% in comparison to the increase insales performance by 14.39% due to acquisition of Captain Train due a leading digital ticketretailer. On the basis of it, it can be suggested to the Trainline to create optimum and excellentpricing decisions for their tickets and create new revenue stream for achieving success. Net profit ratio: This ratio measures net profitability performance of the Trainlinegenerated by exceeding the total sales over total payments made. In 2012, NPR was 32.12%increased to 37.61% in the following year, and thereafter, it shows a consistent decline and in thefinal year, it came down to 24.47%. YOY growth by administrative expenditures by 6.85%,10.95% and 29.19% is the main reason behind lower net return to the firm (Goldmann, 2017). Inaddition to this, in 2013, interest income gone up by 35.11% and thereafter it came down by26.71%, 43.45% and in the last year, it shows a little bit improvement by 15.43%. Therefore, itcan be suggested to the Trainline to put excellent cost-controlling measures and better pricingdecisions for getting better yield. Liquidity performance:201220132014201520160.000.200.400.600.801.001.201.401.601.802.00Current ratioCurrent ratio: CR considers total current assets and current liabilities of the business tomeasures Trainline’s capacity to short-term obligations. In 2013, it goes increase from 1.59 to

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