Module Code: 216MANSC/216MANEL 2/18/2020

ECONOMIC AND
FINANCIAL
MANAGEMENT
Module code: 216MANSC/216MANEL
2/18/2020
Student’s name:

Executive Summary
The module and the assignment are aimed at guiding the decision making processes to the
various group of stakeholders. The significance of such a guide lies in the fact that the
business operations are affected by the external and internal environment factors. The result
of the same is that the financial performance fluctuates and so the demand for the shares of an
organisation in the market. The analysis of the shifts in the financial performance has been
conducted with the aid of the financial ratios which are one of the most basic tools for
financial analysis. The importance of the accounting ratios is that the ease of computation,
comparison and evaluation of the changes.

Contents
Introduction............................................................................................................... 3
A. Analysis of the Economic Factors and the discussion of the impacts on the business...............3
B. Financial Ratio Analysis......................................................................................... 4
(i) Return on capital employed:.................................................................................4
(ii) Net Profit Margin:.......................................................................................... 5
(iii) Current Ratio:................................................................................................ 7
(iv) Debtors Collection Period:................................................................................8
C. Accounting Ratios and their significance.....................................................................9
D. Recommendations............................................................................................... 10
E. Conclusion........................................................................................................ 10
References.............................................................................................................. 12

Introduction
A business organisation engages in the production of goods and services that drive the
economic output of a nation or a region. The relationship of a business and the economy can
be stated in the fact that the collective performances of business affect the economy at large.
In conjunction to this, the economic factors such as the inflation rates, interest rates,
consumer behaviour, employment rates, banking policies affect the performances of the
businesses (Robinson et. al. 2015). This means the increment or the decrement in the cost of
production which includes the material costs, labour costs, taxation charges, and others lead
to the movements and the shifts in the supply and demand curves.
The aim of the following report is to highlight the economic factors that influence the
conducts of a business, as examined in the case of the organisation Vodafone Plc., which is a
renowned organisation of UK and globally as well.
A. Analysis of the Economic Factors and the discussion of the
impacts on the business
There are various macro and micro economic factors that influence the conduct of the
business, which are elaborated as follows.
Macro Factors: The key macro-economic factors that affect the conduct of a business are
political, economic, social, legal and the technological factors. All the above factors lead to
the increment or the decrease in the cost of production of goods or the provision of the
services. For instance, the current external environment of Vodafone is influenced by the
events like Brexit, the legal changes leading to disposal of the certain business units. As the
cost of the production has risen, as evident from the declining profits, the shifts in the demand
curve can be depicted with the help of the graph as follows.