Financial Analysis Assignment - PUMA Sports Ltd
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Added on 2020-05-28
Financial Analysis Assignment - PUMA Sports Ltd
Added on 2020-05-28
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Running head: FINANCIAL ANALYSIS OF POOMA SPORTS LTD.FINANCIAL ANALYSIS OF POOMA SPORTS LTD. Name of the Student Name of the University Author Note
FINANCIAL ANALYSIS OF POOMA SPORTS LTD.1Table of Contents1.Executive Summary....................................................................................................22.Requirement for budget and strategic planning..........................................................33.Discussion related to break-even analysis of new proposed product..........................43.a Cost behaviour of the product..............................................................................43.b Review of risk and return.....................................................................................44.Differences between net cash flows and operating profits..........................................55.Discussion of original and proposed methods of costing............................................65.a Reasons for choice of apportionment...................................................................65.b Sales Director’s view on the proposed method....................................................76.Appraisal of results of capital investment...................................................................86.a Reasons for conflicts between investment advice................................................86.b Risk and return presented by each option............................................................8References....................................................................................................................10
FINANCIAL ANALYSIS OF POOMA SPORTS LTD.21.Executive SummaryThe analysis in this report is based on the requirement of budget and planning of thestrategies of the organizations. The need for a budget to support the objectives and goals ofthe organizations are also analysed in detail. The organization that is taken into considerationfor this analysis is Pooma Sports Ltd. which is based in UK. The major activity of theorganization is the manufacture and distribution of the equipments related to sports includingclothes. The different processes of the organization based are analysed from the perspectiveof the general manager of the organization. The introduction of a product is also examinedbased on the breakeven analysis. The risks and returns related to different manufacturingprocesses are also analysed. The differences between the operating profits and net cash flowsare also analysed in detail. The different costing methods related to the introduction of twonew equipments are amalyzed and one equipment is recommended for the improvement ofthe company.
FINANCIAL ANALYSIS OF POOMA SPORTS LTD.32.Requirement for budget and strategic planningBudgeting and strategic planning are two major factors of a particular businessenterprise. The business organizations regardless of sector, complexity, size all are heavilydependent on the budgetary systems and the budgets so that they can achieve the strategicgoals. The process related to budgeting mainly involves setting of objectives and strategicgoals and thereby developing costs, revenues, cash flows and production. The effectiveinvestment and financing strategies can thereby help the organizations to decide amount ofinvestments that can be made in the future (Alviniussen and Jankensgard 2015). A budget canbe defined as the quantitative analysis which is performed before the policies of theorganizations are applied. The major purpose of the budget system is to aid the objectives ofthe management and thereby direct the managerial efforts effectively. The budget of an organization is the formulated plan of the objectives of themanagement. The major functions that are served by the budgets are, systematic planning,coordination and communication, cost awareness and quantification, evaluation and control,motivation. Budgets are also related to the human behaviour and the success of theorganization mainly depends on the actions that are taken by the top management and theways by which they appreciate the importance of interpersonal relationships (Bianchi andTomaselli 2015). There are three major approaches that can be used to develop the data thatis required for the final budget. The three approaches are imposed or top-down budget,participative or bottom-up approach and negotiated approach. The approach of the budgetdepends mainly on the leadership style of the organization to a large extent. Therefore, it canbe said that the formation of budget is important for the successful operations of theorganization. The objectives and goals of the organization are supported by the budget that isformulated by the management (Bleyen, Lombaert and Bouckaert 2015).
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