Financial Analysis Management & Enterprise

This report provides an overview of financial analysis management and enterprise. It covers topics such as investment appraisal methods, advantages and disadvantages of payback, NPV, IRR, and financial sources for businesses funds.

Financial
Analysis
Management
And
Enterprise

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Advantages, disadvantages for Payback, NPV, IRR:..................................................................1
TASK 2............................................................................................................................................5
Financial sources for businesses funds:.......................................................................................5
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Financial analysis is about knowing business performance how it running its activities for
using funds for generating income. Financial analysis is process for evaluating businesses,
projects, budgets for determining businesses performance, suitability. Financial analysis helps
for knowing which activity gives higher profitability for businesses. It is using for analyse
liquidity, turnover, profitability. It includes using financial data for knowing businesses
performance which helps managers for strategic decision making. Businesses using investment
appraisal methods for knowing which project gives them higher profitability. Businesses using
ratio analysis for knowing financial performance which includes liquidity, turnover, profitability.
This report is about financial analysis management & enterprise. This report includes topics
which is investment appraisal methods (Akbasheva and Yaitskaya, 2020). Apart from this it
includes topics which is financial sources for loan.
TASK 1
Advantages, disadvantages for Payback, NPV, IRR:
Investment appraisal methods is about which helps for knowing which project is gives
higher profitability for businesses. It includes various methods which are payback period, NPV,
IRR.
Payback period: It helps for knowing payback period for investment. It is about period
which it takes for cash flows for income by project for generating initial investment. It is When
CFO has choice he choose those project which gives better performance. In context to small,
medium, large project small project has less period for initial investment. It is about which
project gives better profits businesses invest for those which helps for better performance which
helps for higher profitability for the businesses (Anton, 2018).
For payback period it makes popular choice for managers. The disadvantages for
payback prevent managers for using solely it. It helps for taking decisions for investment.
Advantages:
Simple for using, easy for understand: It needs for few input, easy for knowing better
project than various capital budgeting methods. It need for know it project initial costs, annual
cash flows. For other methods they use same input, they need more input. For costs for capital
which other methods are use needs various assumptions.
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Quick solution: It is easy for calculate, need fewer input, managers are quickly able for
know payback period for projects. It helps managers for strategic decisions, which is necessary
for businesses resources.
Preference for cash: It is necessary data which no other capital budgeting methods
views. Project which has short term payback period has better performance will gives higher
profitability. Such data is necessary for small businesses for necessary resources. Businesses
needs quick investment amount their costs for reinvesting for various better opportunities for
income which helps for better performance which helps for higher profitability for the businesses
(Archer-Brown and Kietzmann, 2018).
Useful for case of uncertainty: It is necessary for businesses which are uncertain, for
technology. Uncertainty typical for project for future annu8al cash inflows. It using projects
which has PBP short which helps for reduce chances for loss by obsolescence for generating
income.
Disadvantages:
Ignores time value of money: It is among disadvantage for payback period which
ignores time value of money which is necessary business method. For this concept time value of
money, the money receive higher has more value than less for its potential for earn additional
return for reinvesting money for businesses. It doesn't includes things which distorting true value
for cash flow.
Not various cash flow is receive: It is about which includes cash flows for initial
investment which receives. It fails when cash flow receives subsequent years. Limited view for
cash flow has force for views project which generate lucrative cash flow for businesses.
It Not realistic: It is simple which is not includes for normal businesses. Capital
investment is about not includes single investment. Project needs more investment for businesses
(Betaneli, Nikitina and Zhelev, 2020).
Ignore profitability: It use for period it not includes profitability, how much profitability
investment gives for businesses. It neglect project benefits which businesses needs for their
capital investment for generating income.
Net present value: It is about which helps for knowing value for cash flow which project
generate more costs for project. It helps for knowing project negative, positive generating profit.
It is about which helps for knowing which project gives higher profits for the businesses. For net
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present value for this project it has various which is small, medium, large. For this large property
gives higher income for the businesses (Klimek and Jędrych, 2021).
Advantages:
Assumption for reinvestment: It doesn't know for cash flow reinvesting for IRR which
not possible. It is about how cash flow receive investing for project rate for return. It views for
reinvesting cash flow for IRR would mean investing cash flow by project for market equivalent
rate for businesses project.
Accepts conventional cash flow method: It views cash flow for every year.
Includes various cash flow: It includes various cash flow which using for investment. It
is not payback period methods which ignore cash flow. It includes various cash flow for
businesses.
Better measure for profitability: It is about choose better project for various for it NPV
is better measure for profitability. It views which project gives higher income. It is about which
project helps for generating more income which helps for better performance which helps for
higher profitability for the businesses (Koval, Prymush and Popova, 2017).
Disadvantage:
Estimation for opportunity cost: It is about which helps or know opportunity cost. It is
necessary for initial investment. It is about underestimating initial investment distort
performance.
Ignoring sunk cost: It is about for capital budgeting sunk cost is not including.
Difficulty for know the need rate of return: It is about the knowing rate which cash
flow discounting for corporate finance. Businesses should using WACC for rate, it must project
rate for return. It is about less income project not discounting for its cost for capital for
businesses.
Optimistic projection: It is about managers are optimistic about success for project,
corporate finance need sit for management for take account for business scenario for project,
cash flow is higher.
Might not increase EPS, ROE: It is about not increase EPS, ROE for businesses. EPS,
ROE is what is increase shareholder value. Short term project for higher NPV not works fo
businesses shareholders.
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Difference for size of project: It is about capital budgeting where don't have access for
unlimited funds which have for choose for capital budget. It is for exclusive project comparing
NPV needs funds.
IRR: It is about which helps for knowing which project has higher profits. It has various
disadvantages, advantages those necessary for know about project. It is about there should
analysis for project for knowing better investment project. In context to project for small,
medium, large it views IRR for them. Small project gives higher profits for businesses.
Businesses generating higher income which helps for better performance which helps for higher
profitability for the businesses (Li, 2021).
Advantages:
Time value for money: It is necessary IRR includes time value for money when
knowing project. It includes time value for money which views better performance for the
businesses.
Simplicity: It is about more attractive about this method it is simple for know which
project is profitable using IRR. It increase value of capital than businesses should accept project.
It is easy for managers for strategic decision making which helps for better performance which
helps for higher profitability for the businesses (Li, 2019).
Hurdle rate: It is about hurdle rate is typical for know about investment. IRR not need
for knowing IRR hurdle rate. It not dependent for hurdle rate for knowing better project for
businesses.
Rate for return rough estimate: It is about manager is estimate rate for return, IRR not
base for rate for return. It is about IRR know, it has comparison for hurdle rate for knowing
profitability for businesses (Ptak-Chmielewska, 2019).
Disadvantage:
Economies for scale ignore: It is about which method ignore actual dollar value for
benefits.
Impractical implicit assumption for reinvestment investment rate: It is about when
businesses views project for IRR method, it assume reinvestment for positive cash flow for IRR.
It is about project has less IRR, it views investment for less IRR. It is about project has higher
rate, it views investment for higher IRR.
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Dependent: It is about finance manager views when project has under evaluation
generates for investing for project. It is about when manager purchase vehicle he views for
parking for it. It is about dependent project for businesses which managers invest for generating
profitability.
Mutually exclusive project: It is about investors for mutually exclusive project which
means which project is acceptable. It is about knowing which investment project gives higher
profit.
Different term for project: It is about when various project are there. It is not includes
for IRR method for knowing better investment for generating higher income for the businesses.
Mix for positive, negative cash flow: It is about when project has negative cash flow,
positive cash flow, IRR method is satisfies more than rate for return. It achieves for multiple IRR
profit.
Calculation for IRR not possible: It is about cash inflow are not sufficient for achieving
initial investment. IRR is discounting rate which present value for cash inflow equals initial
investment.
Objective for wealth maximisation: It is about when there is conflict for exclusive
project for NPV, IRR. It is about objective for financial management for wealth maximisation
met for NPV.
TASK 2
Financial sources for businesses funds:
The accounting sources for businesses are value, liabilities, bonds, retained earnings, term
advances, advances on working capital, letters of credit, euro issuance, bold grants and so on.
These sources of activity are used in various situations. They are grouped according to time,
ownership and control and their age. It is ideal for evaluating each source of capital before
choosing it (Ramskyi and Solon'ko, 2018)
Sources of capital are the most useful area especially for potential customers who are about to
start another business. Probably the hardest part of the many attempts. There are different
sources of capital, we can sort according to different limits (Shrestha, 2018).
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Having understood that there are several options for financing money or capital, an organization
can check. Choosing the right source and the right account combination is a crucial test for any
money leader. The method for choosing the right account source involves both an internal and
external audit of each asset source. To study and look at sources, you need to understand the
many benefits of funding sources. There are several established characteristics on which sources
of money are identified (Sosnovska and Zhytar, 2018).
In any case, banks are the main source of accounts. As is the case in most emerging industry
sectors, banking mediation remains a supported option in Saudi Arabia, with bank credit / GDP
at around half. The economy, like other developing economies, is generally subject to banking
activity, but access to banks is expanding. Also, getting information from people is traditionally
traditional (messenger promotion / GDP is around 12%). The final introduction of home loan
law, along with the expansion of SME lending, should help improve informed access to these
areas and improve the infiltration of banking into the economy (Yang, Ishtiaq and Anwar,
2018).
The problem in high-end economies is that banks have to keep them from over-indebtedness; but
that is not the case here. Homegrown banks have hard capital size and liquidity ratios. This
means that they are in a good position to give credit to the private sector (companies, households
and SMEs) without compromising their financial relationships. Banks are currently expanding
their revenue stream by broadening their focus to include SMEs and households (Zhang, Xia and
He, 2019).
Despite bank loans, Saudi agencies are approaching facilities through the LSE. The market
picture is at an important stage in terms of the need for mailing, ongoing monitoring, as well as
arrangements and authority plans. Initial public offerings and capital raising from neighboring
organizations have gained momentum, which is great for business management and work
experience (Литвиненко, 2020)..
Some government-recognized entities (e.g., Public Investment Fund, Real Estate Development
Fund, Saudi Industrial Development Fund, Saudi Credit and Savings Bank, and Saudi
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Agricultural Development Fund) play an important role in lending credit . From very slow to
profitable. areas of the economy. Their remarkable progress towards the end of 2010 amounted
to 178 billion SAR. Furthermore, the government association in the countryside is very
important in Saudi Arabia. For example, the Saudi Electric Company has a public-private
partnership project program in the strength sector.
The third source of neighboring funds for the after-bank and value market groups should be
corporate stocks. The corporate liabilities market is currently growing, with corporate stocks
impressive against GDP at around 3%. The main corporate security problem in Saudi Arabia
occurred in 2003 and in 2009 the exchange rate for corporate security was canceled. There have
been various connection problems, however no dynamic guide swap features have been created
so far.
Friends and Relatives
New business creators can turn to private sources such as lovers when they start a business. This
could be a bond equivalent to a low loan tax. However, with the possibility that it is not available
from family members or friends, it should be discontinued with a practice similar to that
purchased from a savings bank. This means that an appropriate credit archive will be created and
implemented which includes the amount received, the cost of the loan, the specific repayment
terms (based on income expected from the new company) and the insurance in case of cash.
Venture Capital
Funding Venture capital refers to funding coming from organizations or individuals who are
committed to investing resources in youth groups and are kept confidential. They give money to
youth groups in exchange for part of the business. Investment firms are generally reluctant to
take an interest in a company's core financing unless the group has a proven track record. In
general, they like to invest in organizations that have received critical profitability from the
authors and are now profitable.
They are similarly prone to organizations that have a strong advantage or incentive such as a
patent, an expressed interest in the item, or a very rare (and protective) idea. Funding lenders
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often adopt an active strategy for their ventures, which requires regulatory representation and, in
some cases, the hiring of executives. Funded financial backers can provide meaningful guidance
and business advice. However, they are looking for huge profits from their profits and their
destinations may have difficulty communicating with those of the organizers. They often focus
on their immediate addition.
Funding companies typically aim to create venture capital arrangements of organizations with
high development potential that lead to high profit margins. These organizations are consistently
high-risk businesses. They can look for annual returns of 25 to 30 percent on their overall
profitability package.
Because these are usually high-risk corporate profits, they require enterprises with an expected
return of 50% or more. Assuming some corporate profits return 50% or more while others
disappear, the total package is guaranteed to return 25-30%.
CONCLUSION
From the above report it has been concluded that financial analysis is about knowing how
much profitability generate businesses. Investment appraisal method is about which helps for
knowing better investment project which gives higher profit. It is about analyse how much
profitability businesses generates for businesses. Payback period, It helps for knowing payback
period for investment. It is about period which it takes for cash flows for income by project for
generating initial investment. It is When CFO has choice he choose those project which gives
better performance Net present value, It is about which helps for knowing value for cash flow
which project generate more costs for project. It helps for knowing project negative, positive
generating profit. It is about which helps for knowing which project gives higher profits for the
businesses IRR, It is about which helps for knowing which project has higher profits. It has
various disadvantages, advantages those necessary for know about project. It is about there
should analysis for project for knowing better investment project. There are various sources for
managing funds which includes share, debenture, venture capital. Businesses using these for
managing funds. These sources gives funds for businesses for running their activities which
helps for better performance which helps for higher profitability for the businesses.
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REFERENCES
Books & journal:
Akbasheva, A. A. and Yaitskaya, E. A., 2020. Analysis of the existing methods for assessing the
financial state of the enterprise as a tool to ensure its economic security. Proceedings of
the Voronezh State University of Engineering Technologies. 82(4). pp.327-334.
Anton, S. G., 2018. The impact of enterprise risk management on firm value: empirical evidence
from Romanian non-financial firms. Engineering Economics. 29(2). pp.151-157.
Archer-Brown, C. and Kietzmann, J., 2018. Strategic knowledge management and enterprise
social media. Journal of knowledge management.
Betaneli, F. T., Nikitina, N. V. and Zhelev, P., 2020. Managing the Financial Stability of an
Enterprise in a Digital Economy. In Current Achievements, Challenges and Digital
Chances of Knowledge Based Economy (pp. 267-272). Springer, Cham.
Klimek, D. and Jędrych, E., 2021. A Model for the Sustainable Management of Enterprise
Capital. Sustainability. 13(1). p.183.
Koval, V., Prymush, Y. and Popova, V., 2017. The influence of the enterprise life cycle on the
efficiency of investment. Baltic Journal of Economic Studies. 3(5).
Li, D., 2021. Analysis of Enterprise Profitability Based on Dupont Analysis Method-Taking
China Life Insurance (Group) Company as an Example. In E3S Web of Conferences
(Vol. 233, p. 01173). EDP Sciences.
Li, X., 2019, May. Analysis on Financial Management Mode of Enterprise Group Under Modern
Management Situation. In 1st International Conference on Business, Economics,
Management Science (BEMS 2019) (pp. 261-264). Atlantis Press.
Ptak-Chmielewska, A., 2019. Predicting micro-enterprise failures using data mining techniques.
Journal of Risk and Financial Management. 12(1). p.30.
Ramskyi, A. and Solon'ko, A., 2018. Mechanism of formation of financial security of an
enterprise. Європейський науковий журнал Економічних та Фінансових інновацій.
(1). pp.14-20.
Shrestha, K. P., 2018. Profitability of large cardamom enterprise in Nepal?: evidence from
financial analysis. Journal of Agriculture and Natural Resources. 1(1). pp.76-89.
Sosnovska, O. and Zhytar, M., 2018. Financial architecture as the base of the financial safety of
the enterprise. Baltic Journal of Economic Studies. 4(4). pp.334-340.
Yang, S., Ishtiaq, M. and Anwar, M., 2018. Enterprise risk management practices and firm
performance, the mediating role of competitive advantage and the moderating role of
financial literacy. Journal of Risk and Financial Management. 11(3). p.35.
Zhang, Q., Xia, L. and He, W., 2019, October. The optimization research of investment
management in power grid enterprise. In IOP Conference Series: Earth and
Environmental Science (Vol. 332, No. 4, p. 042016). IOP Publishing.
Литвиненко, Е. В., 2020. FINANCIAL ANALYSIS OF THE ENTERPRISE: JUSTIFICATION
OF TYPES AND APPROACHES. In Концепции современного образования:
актуальные модели развития системы знаний (pp. 48-51).
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