Financial management and control: Assignment

Added on - 03 Dec 2019

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Financialmanagement andcontrol1
TABLE OF CONTENTSIntroduction......................................................................................................................................3Part a – Brentwood Plc....................................................................................................................3Report on financial performance for the Board of Brentwood Plc..............................................3Computation of working capital cycle.........................................................................................7Part b – Griffin Plc...........................................................................................................................9Computation of optimum quantities of products by making utilization of scarce resources.......9Relevance to the committed fixed costs in determination of optimum mix for production......10Part c..............................................................................................................................................11Critical evaluation of investment appraisal techniques.............................................................11Analysis of assumptions linked to the model of break even......................................................13Conclusion.....................................................................................................................................14References......................................................................................................................................152
INDEX OF TABLESTable 1: Statement showing profitability ratios...............................................................................4Table 2: Statement showing liquidity ratios....................................................................................5Table 3: Statement showing gearing ratios......................................................................................6Table 4: Statement showing asset utilization ratios.........................................................................7Table 5: Statement showing investment ratios................................................................................7Table 6: Working capital cycle of Brentwood Plc of 2014.............................................................8Table 7: Working capital cycle of Brentwood Plc of 2013.............................................................9Table 8: Profitability statement of product A, B and C.................................................................10Table 9: Statement showing unit demanded in the market............................................................10Table 10: Statement showing ranking of production as profit in accordance with consumption ofquantity of raw material................................................................................................................10Table 11: Statement showing unit to be produced.........................................................................103
INTRODUCTIONFinance is a crucial resource of business thus; management of organization is required tomake appropriate utilization of available resources in order to enhance their profitability. In orderto strengthen the financial position, companies are required to make financial analysis by usingsuitable tools (Ahrendsen and Katchova, 2012). Present project report is focused on theevaluation of various financial tools in order to develop an effective control on business. Thesetechniques will be applied to given case scenario of Brentwood Plc and Griffin Plc. Further,description will be provided regarding the use of investment appraisal techniques and keyassumptions that are linked to the model of break-even point.PART A – BRENTWOOD PLCReport on financial performance for the Board of Brentwood PlcProfitability ratiosProfitability ratio is important for company as they are the key indicators of financialposition of Brentwood Plc. To study the profitability ratio, it is important to have a look on thegross, operating and net profit of company.Table1: Statement showing profitability ratiosRatiosFormula20142013Profitability ratiosGross profit79257360Operating profit14553985Net profit7603325Net Sales2045017900Gross Profit Ratio(Gross Profit/ Net Sales) *10038.7541.12Operating ProfitRatio(Operating Profit/ Net Sales)*1007.1122.26Net Profit Ratio(Net Profit/ Net Sales) *1003.7218.58Gross profit ratio:GP ratio shows how much of every pound of sale is left after calculating the cost ofgoods sold. The gross profit ratio of 2014 was 38.75 while in 2013; it was 41.12 which clearlyshow that gross profit in the current ratio has fallen (Barnes, 2006). This may be due to increasein the trading expenses of company.4
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