Business Performance Analysis and Financial Information

Case Study T-shirts Ltd

TABLE OF CONTENTS
PART 1: BUSINESS PERFORMANCE ANALYSIS....................................................................1
Analysing Statement of Profit and Loss.....................................................................................1
Analysing Statement of Financial Position.................................................................................1
PART 2: UNDERSTANDING KEY FINANCIAL INFORMATION AND MANAGEMENT
OF CASH.........................................................................................................................................2
Examining the concept of accrual accounting and cash accounting...........................................2
Determining what is the meaning of Profit and Cash flow and how do they vary.....................3
PART 3: BUDGET TECHNIQUES & COMPANY FINANCE....................................................4
Defining budget and examining purpose of preparing budget....................................................4
Determining the main benefits to form a limited company and list it on stock exchange..........5
REFERENCES................................................................................................................................7

PART 1: BUSINESS PERFORMANCE ANALYSIS
Analysing Statement of Profit and Loss
Profit and Loss statement is considered to be prominent in effectively summarizing the key
revenues, expenses and costs which tends to occur over a specific period of time. It is significant
in determining the financial position of the company. T- Shirt limited company tends to
demonstrate that, the revenue of the company has decreased from £ 2,101,000 in 2018 to £
1,366,000 in 2019. Decline within the revenue in turn is mainly because of the loss of the
potential customers and markdown within the prices. The gross profit of the T- Shirt limited
company had a drastic fall from 1,261,000 in 2018 to £ 615,000 in 2019. Change within the sales
is the key factor which leads to decline in the gross profit of the company. However, the other
expenses of the company has significantly increased from 820,000 in 2018 to £ 1,009,000 in
2019. Increase in expenses mainly results in the less profit for the business. It is of crucial
importance to increase the sales and revenue of the company and reduce the expenses to improve
business performance and efficiency. The profit before interest and tax shows negative value in
the year 2019 which mainly accounts for £ (394, 000). Negative profit before interest and tax
indicates that, the sales of the company is not significant and states that the company is not
earning enough to cover the expenses of the company. There seems to be rise in the finance cost
of t- Shirt Company from £69, 000 in the year 2018 to £ 106, 000 in the year 2019. Rise within
the finance cost demonstrates that, the organization has taken up additional set of credit facility.
However, the company has incurred the loss for the year 2019, which mainly accounts for
£500,000. The loss within the company states that, there seems to be high expenses for the
company when compared to income and earnings for the set accounting period. This affects the
financial health and operations of the business.
Analysing Statement of Financial Position
Statement of Financial Position is also referred to as a balance sheet which mainly focuses
on effectively representing and asset, equity and liability of the company for the specific period
of time. T- Shirt limited company tends to demonstrate that, the total assets of the company has
reduced from 1,634,000 in 2018 to £ 1,700,000 in 2019. It states that the asset has been used
within the operations of the business. Decrease in the total asset is mainly because of the rise in
the inventory and trade and other receivables. The t- shirt public limited company has also
increased the credit terms which has been given to the customers from 30 days period to 60 days
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