Financial Decision Making: Assignment

Added on - 21 Feb 2021

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Financial Decision Making
EXECUTIVE SUMMARYIn following report the company will analyse the financial performance with the help ofevaluation of profit and loss account. The financial position of company will be evaluated alongwith cash flow position. The company will look after operating cash cycle of two years that is2018 and 2017. the market segmentation of company will be analysis with the help of this report.In the following financial making decision of easy flights plc there will be analysis of theinvestment appraisal decision. The management forecasting will be analysis where the criticalevaluation will take place taken for next 10 years by easy flights plc. There will be properevaluation of the investment appraisal techniques in which company has used payback methodalong with accounting rate of return and net present value. The company will analysis thedifferent alternative sources for financing of company. The company was to expand in airportretail which will be discussed so that the profitability of business can be developed. In report theeasy flight plc will be evaluated for financial decision making of the company in extent toexpansion in France.
Table of ContentsEXECUTIVE SUMMARY.............................................................................................................1Part 1...............................................................................................................................................11.1 Statement of Profit or Loss....................................................................................................11.2 Statement of Financial Position.............................................................................................31.3 Statement of Cash Flows.......................................................................................................41.4 Market Segment Analysis......................................................................................................6Part 2: Investment Appraisal..........................................................................................................82.1. a Management Forecast........................................................................................................82.1.b Investment Appraisal Techniques.......................................................................................92.2 Sources of finance................................................................................................................102.3 Non financial factor in expansion of airport retail...............................................................12REFERENCES..............................................................................................................................132
Part 11.1 Statement of Profit or LossProfit & Loss StatementProfit & Loss statement (P&L) refers to the type of financial statement which is beingprepared by various profitable and non-profitable companies for an entire accounting period inorder to analysis the financial performance. It is also known as Income Statement. It summarizedthe revenues generated, costs beared and expenses incurred by the organization for entireaccounting year (Robinson and et.al., 2015).Ratios Related to the Profit & Loss StatementFor the analysis of the financial performance of the Easyflight PLC, Company willcalculate and analysis following ratios which are such as -Gross Margin Ratio– It is also known as Gross Profit Ratio. This ratio shows the result whichcomes due to comparison of the gross margin (profit) to the net sales of the company.Gross Margin Ratio =Gross MarginNet SalesNet Sales = Gross Margin – Cost of Goods SoldAnalysis & Interpretation -In the case of Easyflight PLC during 2018,Gross Margin Ratio =3,2111736= 1.85 (Rounded Off)Net Sales = 3,211 – 1,475 = 1736In the case of Easyflight PLC during 2017,Gross Margin Ratio =30311535= 1.97 (Rounded Off)Net Sales = 3,031– 1,496 = 1535From the above two years' gross margin ratio, it can be interpret that in comparison of2017, the gross profit ratio decreases.1
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