Financial Management | Business Management

Running head: BUSINESS MANAGEMENT
Business Management
Name of the Student:
Name of the University:
Author’s Note:

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Table of Contents
Introduction......................................................................................................................................2
Financial statements.........................................................................................................................3
Use of ratios in financial management............................................................................................4
Business analysis using template.....................................................................................................5
Business review Template...........................................................................................................5
Income statement for the sample organization............................................................................6
Balance sheet for the sample organization..................................................................................6
Profitability analysis....................................................................................................................8
Liquidity and efficiency analysis.................................................................................................8
Recommended measures for improvement in financial performance.............................................9
Conclusion.....................................................................................................................................10
References and bibliography.........................................................................................................11

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Introduction
Business organizations are established with the objective of earning revenues through
their operating activities and to make profit out of that. Every business organization have some
predefined mission and vision that the organization seek to achieve with their business strategies.
Capital is an important input factor that every business organization need to invest in their
business and to operate their business. Therefore, financing the investment opportunities of a
business with the least cost is an important part of the business strategies. There are various
decisions that are related with the financing of a business. Financial management is an integrated
study and analysis of all the matters related to the requirement of fund, sources of financing,
investment decisions and dividend decisions (Wahlen, Baginski and Bradshaw 2014).
Financial management can be defined as the study and analysis of financing needs of a
business organization, suggesting profitable investment proposals and financing those investment
option with a least cost of capital keeping in mind the leverage effect on the capital structure.
There are mainly three areas where a financial manager has to take certain decision, which are
financing decision, investment decision and dividend decision. The objective of the financial
management is to maximize the wealth of the business thereby maximizing the wealth of the
shareholders through the achievement of the mission ad vision of the business organization.
Sustainability and sustainable growth is an important factor behind survival and growth
of a business. Therefore, every business organization must expand their business to new
opportunities and areas. For such expansion of business and funding such investment proposals,
they must evaluate the investment options and invest in feasible and profitable investment
options. The importance of the financial management is that, it helps in analyzing such

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investment options and help in most feasible investment opportunities. It also helps in selecting
the optimal capital structure which will minimize the overall cost of capital and to maximize the
shareholders wealth. Therefore, the importance of the financial management can be well noticed
in building business strategies, making investment plans and financing those investment
opportunities.
Financial statements
Financial statements are the final report showing the financial performance and financial
position of a business organization for a specific period of time. There are mainly three important
financial statements, one is the Income Statement, Balance Sheet and the Statement of Cash
Flows. Income statement also known as the statement of operations or statement of profit or loss
is the statement which contains all the information relating to financial results of business
operations. It includes, incomes, expenses and net profit or loss made by the business. A
stakeholder can easily understand the financial performance of a business from the information
available in the income statement. It is the statement of operations which shows the net results of
the business operations for a particular period in financial terms (Wahlen, Baginski and
Bradshaw 2014).
Balance sheet also known as the statement of operations, is the statement which contains
the details of assets and liabilities of the business organization. It shows the total amount of
assets held by and organization and liabilities owed to the outsiders. From the information
available in the balance sheet and investor or a stakeholder can interpret and understand the
financial position of the business. Various financial statement analysis tools and techniques can