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EXECUTIVE SUMMARY Financial Decision Making

   

Added on  2021-02-19

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Financial decision making
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Table of ContentsEXECUTIVE SUMMARY.............................................................................................................3PART 1............................................................................................................................................31.1 Profit and loss statement.......................................................................................................31.2 Financial position statement..................................................................................................41.3 Cash flow statement..............................................................................................................61.4 Market segment analysis.......................................................................................................8PART-2............................................................................................................................................82.1.a Management forecast ........................................................................................................82.1.b Investment appraisal tools .................................................................................................92.2 Sources for raising finance..................................................................................................112.3 Non – financial factors........................................................................................................13CONCLUSION..............................................................................................................................13REFERENCES..............................................................................................................................14
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EXECUTIVE SUMMARYFinancial decision making is the process of taking effective and efficient decisionregarding company liability and assets to take the useful measure to improve performance inmarket. It also used to achieve the goal and objective of the company by analysing all relevantfactors. It can be summarised that Expert consultancy worked as a consultant firm in market whoprovides it expert knowledge to the different companies to evaluate their financial position andidentify the ways to improve their position in market. It can be concluded that the differentfinancial statements like cash flow statement, financial statement and profit & loss accountstatement etc. reflect the financial position of Easyflight plc company and its growth in themarket. In second part of the report it summarised the evaluation of investment appraisal and thedifferent challenges faced by company to collect the finance from different sources like bank,corporate societies etc. The non-financial source like market share, policy, market environmentetc. help the company to expand the airport retail business. PART 11.1 Profit and loss statementSolvency ratioParticulars Calculation 20172018Long-term debt 16541676Shareholder's equity21722588Debt-equity ratio Long-term debt / shareholdersequity 0.760.65Interpretation : Solvency ratio is used to measure and evaluate the company ability tofulfil the requirement and meet long term debt. Solvency ratio is different for company tocompany (Rauch and Wende, 2015). If the solvency ratio is higher than 20% than it presentsound position of the company. Further, to estimate the solvency of the organisation differentratio is calculated such as debt equity ratio, debt to asset ratio etc. Here, Easyflight plc companyuse the debt equity ratio to measure the solvency of the company.Debt equity ratio is calculated to compare the company total debt against the total equity.Higher debt equity ratio indicate that company use higher bank loan or credit finance in compareto investor finance (Culver, Heitmann and Weiß, 2018). The debt equity ratio in 2017 is .76 andin 2018 is .65 which indicate that Easyflight Plc company has more stable finance because it is
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able to pay the company debt to its equity. It can be interpreted that debt to equity ratio help thecompany to estimate its financial position and solvency to pay debt on time. Profitability ratio :Particulars Calculation 20172018Gross Profit 30313211Net profit 443541Sales revenue 45274686Earnings before interest and tax oroperating profit 583690GP ratio Gross profit / sales * 10067%69%NP ratio Net profit / sales * 10010%12%OP ratioOperating profit / sales 10012.8814.72Interpretation : Profitability ratio refers to generate company income or profit against itsexpenses of particular accounting period. It helps to evaluate the financial position and result ofthe company. Different investors use the profitability ratio to measure company performance andits position in the market to take the decision of investment (Rabbani and et.al., 2018, June). Tointerpret the profitability Easyflight plc use different ratio such as net profit, operating profit andgross profit ratio. Gross profit ratio also known as gross profit margin ratio. The GP ratio of Easyflight plccompany in 2017 is 67% and in 2018 is 69% which indicate that company is able to manage theinventory level and earning higher revenue from its sales which increases the 2% gross profit in1 year. Operating profit ratio also known as earning before interest and tax. It can be concludedthat operating profit of the company is increasing which means that company is able to deal withthe operating expenses and earn higher profit to meet the company requirement. Net profit ratio is calculated by dividing the net profit after dealing all the expenses, tax,dividend etc. to the sales of the particular accounting period (Al Nimer and et.al., 2015). The NPratio of Easyflight Plc present the overall profitability after adjusting all the direct and indirectexpenses. The net profit ratio is increase 12.88% to 14.72% which reflect that they are able topay the dividend to their shareholders.1.2 Financial position statementEfficiency ratio analysis
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