Importance of Financial Management for Business: Explaining Concepts, Financial Statements, Ratios and Case Study Analysis

Applied Business Finance

Contents
INTRODUCTION...........................................................................................................................................3
SECTION 1....................................................................................................................................................3
Explaining concept and importance of financial management................................................................3
SECTION 2....................................................................................................................................................4
Describe the financial statement and the use of the ratios used in the financial management..............4
SECTION 3....................................................................................................................................................6
(i) Complete the Business Review Template............................................................................................6
(ii) Produce the income statement using Excel........................................................................................6
(iii) Complete the Balance Sheet using Excel...........................................................................................7
SECTION 4....................................................................................................................................................7
By considering the example of the case study, calculate the ratios and analyse how can the financial
performance of the business can be improved.......................................................................................7
CONCLUSION...............................................................................................................................................9
REFERENCES..............................................................................................................................................11

INTRODUCTION
Financial management (FM) is the process of effectively achieving a firm's aims and objectives.
This is the process of better managing company budgetary assets to achieve corporate goals. In
today's world, it is critical for businesses to focus on enhanced economic resources development
in order to increase their profitability (Kim and et. al., 2019).
SECTION 1
Explaining concept and importance of financial management
In simple terms, financial management may be defined as "budgeting" (funds). It is
directly associated with the efficient and productive use of funds, i.e., when funds were obtained
whether or not they were completely realized. Financial management helps firms meet its goal,
including assuring the firm's survival chances. Many enterprises have to be dissolved because
their resources have been mismanaged. Additionally, firms have insufficient budget that must be
allocated in a method that yields a higher return than the cost. As a consequence, budgetary
control will be a need in the future.
Importance of financial management
The financial administration of a newly formed corporation is crucial. A firm will require
a large amount of cash when it first starts off, which may be secured through both long- and
short-term strategies. These funds might be used to acquire assets. The main issue, however, is
that such funds be invested in assets with a higher return (Malo-Alain, Aldoseri and Melegy,
2021).
Lacking competent financial management, a company cannot function: In history's
economic climate, small businesses and technology are on the rise, which means more
possibilities for financial advisors have become available. With no authorized person in charge
of handling the input and circulation of finances, a successful organization cannot function.
Since a successful businessman generates revenue, he or she may use it to pay expenses for
materials and raise employee compensation. In a business, delivering elevated products or