Financial Management and Analysis for Business Review

Applied Business Finance

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
SECTION 1......................................................................................................................................3
Assessing the concept and importance of financial management................................................3
SECTION 2......................................................................................................................................4
Discussing the main financial statements and the use of ratios in it............................................4
SECTION 3. ....................................................................................................................................5
(1) Business Review Template....................................................................................................5
(2) Income statement....................................................................................................................6
(3) Balance Sheet.........................................................................................................................7
(4) Calculation of profitability, liquidity and efficiency ratios of the company..........................8
SECTION 4......................................................................................................................................9
The processes that businesses might use to improve the financial performance of the company
......................................................................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11
APPENDIX....................................................................................................................................12

INTRODUCTION
Applied business finance is defined as the funds required by the owners of the business to
satisfy their needs that include commencement of business, buying capital assets for the business
etc. The present report is based on the concept and importance of financial management.
Financial management refers to the practice of managing the finance of the company which
includes planning, organizing, controlling and directing the financial activities of the company.
The main financial statements are discussed in the report. Ratios are very important in analysing
financial statements. The report will also highlight different processes that business might use to
improve the financial performance of the company.
SECTION 1.
Assessing the concept and importance of financial management
The financial management is generally defined as allocation and control of financial
activities in the organization. Thus, this study indicates proper utilization of funds with the help
of various elements. It includes planning, directing, organizing and controlling the financial
business. In the financial management, firm needs to focus on financial planning thus this
includes profitability. This management encourages employees to save money for future
requirements. The financial management is evaluated to manage principles of finance and also
prepare fiscal management.
Main objectives and concepts.
1. Helpful in regular and adequate supply of funds in the organization to know the financial
position. It will provide financial stability, give peace of mind and keep updating about
income and expense.
2. It is maintained to ensure the proper utilization of funds to attain maximum profitability
by reducing expenditure (Block, Hirt and Danielsen, 2018).
3. To balance both debt and equity capital a proper structure is maintained in the books of
finance to achieve strategic planning.
4. Financial management is being prepared to ensure whether the investment is safe or not
to achieve good rate of return.
5. Budgeting is the concept in which the company can attain the detail information about
expenses and income, balance sheet and profit-and-loss statement.

6. The company needs an accurate information regarding financial reporting which shows
exact position in the market. Cash flow statements shows whether company can pay
bills on time or not.
Importance
1. Financial planning- To maintain finance planning, the company must know income and
expenditure to attain decision-making process.
2. Financial decision- It is totally depended on all the department of a company. This
shows production, rents, salary, miscellaneous expenses. Financial decision can be taken
to study business operation related to buying and selling of goods.
3. Investment opportunities- This will assist an individual in creating wealth so that one
can enjoy their retirement period (Kasim, Haracic and Haracic, 2018). To ensure whether
the investment is safe or not to achieve good rate of return the company must prepare
accurate financial statement.
4. Upgrade the standard of living- The economic growth of an individual is dependent on
proper financial planning. Further, it leads to good standard of living and maintain
personal development.
5. Tax planning- The financial planning of an individual must include tax planning as it
will lead proper control on your expenditure. Hence, it will improve the profitability of
firm and increases the overall value of the firm in the market.
SECTION 2.
Discussing the main financial statements and the use of ratios in it
The financial statement is being prepared by company to analyse financial condition of a
business (Madura, 2020). This statement records the business activities performed by
organization. The main financial statements are :
Balance sheet
This sheet provides an overview of a company's assets, liabilities and equity. The
statement provides overall information about the liquidity and capitalization of company. This
should be maintained in the proper structure to avoid wrong calculation.
Statement of cash flows and retained earning