Concept of Financial Management: Doc

Financial
Management

EXECUTIVE SUMMARY
This project report is based on the concept of financial management in which a person
Danial is willing to establish a new business venture with the amount of €730,000. The business
plan includes the import of Rose oil form Bulgaria to France. The retired person have asked to
conduct financial management for the new idea with the help of assumptions and estimations.
For this purpose various aspects have been analysed including sensitivity analysis, cash flow
statement, profit and loss account, balance seep, break even and financial viability analysis etc.
At last a reflection related to overall analysis is also being provided. At the end a reflection is
also being provided regarding the attractiveness of the business idea. A recommendation
regarding enhancing import from Bulgaria is also being provided to Danial. It has been
recommended to Danial that if he is willing to achieve profits around 35000 then goods should
be imported from other country. It has also been suggested to Danial to enhance the sales from
70 bottles per month so that its transactions can also be increased by 5%. It will be beneficil to
reach at the level of selling 800 bottles per year.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Break even analysis................................................................................................................2
Profit and loss statement and balance sheet for first year......................................................5
Monthly cash flow..................................................................................................................8
CONCLUSION..............................................................................................................................14
RECOMMENDATIONS...............................................................................................................15
Critical Reflection................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Financial management can be defined as the process of planning, controlling, organising
and monitoring financial resources that are available within an organisation. It can be conduced
with the help of different elements such as final accounts, ratios, sensitivity analysis etc. It is
very important for all the business entity to conduct financial management on yearly basis so that
overall profitability and performance of business can be assessed (Grant, Ponsford and Bennett,
2012). In this project report a retired person Danial who is recently retired and got €730,000 in
lump sum payment, is planning to establish a retail business of rose oil. It is going to be sold in
France and imported from Bulgaria. In this assignment various topics are discussed for financial
management of Danial. These are sensitivity, break even, financial viability analysis, formulation
of cash flow statement, P & L account and balance sheet.
MAIN BODY
Estimations and assumptions
As Mr Danial is a retired employee of a chemical firm and got £730000 at the retirement
in a lump sum amount. After getting retired Danial is planning to be a part of retail industry of
France by selling rose oil there which is going to be imported form Bulgaria. For this purpose a
financial managers have been asked by Danial to analyse the sensibility of the new business idea
and its viability. While preparing final accounts, cash budget and conducting sensibility analysis
various figures are assumed. A detailed financial plan is also being conducted for the client in
order to make sure that it won't result in monetary disaster (Dunham-Taylor, 2014)(.
It has been assumed that demand of bottled rose oil will be increased with 70 bottles per
month and at the end of the year it will reach to 820 and then remain constant for remaining five
years. With the increment of 70 bottles each month the transactions will also be increased by 5%
1