Financial Decision Making in Tusker Plc : Report
Added on 2020-01-23
14 Pages4676 Words38 Views
Finance
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Financial Decision Making
EXECUTIVE SUMMARY The management of financial resources is significant for different organization. This isbecause it assist in making allocation of the funds with greater effectiveness. Further it involvesdecision making regarding the aspect relating to investment and financing. Profit and lossstatement of Tusker Plc presents that revenue earned by organization in 2015 is greater incomparison with 2014. This is due to the reason that distribution expenses in this year weregreater which presents that organization has made huge efforts towards increasing awarenessamong the individuals regarding the firm. The gross profit earned company in 2015 is greater incomparison with 2014. This is due to the reason that in 2015 the cost of sales is less. This hashuge impact of the gross profit of the business. From capital budgeting it can be examined thatpayback period of investment project is 4 years and 5 months. Therefore organization can makedecision regarding selection of option regarding expansion. 2
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................3PART 1 BUSINESS PERFORMANCE ANALYSIS ....................................................................3Interpretation of the statement of Profit and Loss.......................................................................3Statement of Cash Flow...............................................................................................................5Ratio Analysis..............................................................................................................................6PART 2............................................................................................................................................7Investment appraisal....................................................................................................................7Non financial factors....................................................................................................................9Sources of internal finance.........................................................................................................10CONCLUSION..............................................................................................................................10REFERENCES..............................................................................................................................123
INTRODUCTIONFinancial decision making is of greater importance for every business. Decision makingwithin firm is a thought process that acts as an aid in making selection of logical choice from theoptions available. The management of financial resources is important for different organization.It assist in making allocation of the funds with greater effectiveness (De Martino, Kumaran,Seymour and Dolan, 2006). Further it involves decision making regarding the aspect relatingwith investment and financing. Through this operations of organization can be accomplished. In the present report financial decision making has been discussed in context of TuskerPlc. The company is building and home improvement merchant that carries out its operations inhighly competitive building and construction industry. The study entails to make analysis ofbusiness performance. This is done through evaluation of its profit and loss as well as cash flowstatement. It also includes sources of internal finance for expansion plan of business intoWestern Europe. PART 1 BUSINESS PERFORMANCE ANALYSIS Interpretation of the statement of Profit and LossProfit and loss is referred to as financial statement that includes summary of revenues,costs as well as expenses borne during a particular duration of time. Through these recordsinformation can be offered regarding the ability of the firm (Ashraf, 2009). This statement is alsoreferred as statement of financial results, income and expense statement as well as statement ofoperations. The analysis of the profit and loss account of Tusker Plc is being carried out. Thisdata of two years that is 2014 and 2015 has been compared in order to gain insight to thefinancial position of the company to a greater extent. The interpretation of the statement of profitand loss has been done on the basis of variables that includes revenue, gross profit, overheadsand net profit. Such has been carried out in the manner stated below:Revenue: It is referred to as the income which is earned by the firm. Further it assist the businessin meeting the expenditure to a significant level. The statement of Profit and Loss of Tusker Plcreflects that the revenue of the company in the year 2015 was £316m. However in the year 2014it was £298m. Thus it can be viewed that revenue earned by organization in 2015 is greater incomparison with 2014. This is due to the reason that distribution expenses in this year were4
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