Financial Management and Control: Ratios and Investment Techniques

Financial Management
and Control

Contents
Contents...........................................................................................................................................2
Introduction......................................................................................................................................3
Question 1 KADLex PLC................................................................................................................3
Evaluate the various types of ratios of KADLex Plc...................................................................3
2. Break even analysis and critically discuss how each of these three metric.............................7
Part B...............................................................................................................................................8
Calculation of the payback, discounted payback, ARR, NPV and IRR with the help of
investment techniques..................................................................................................................8
Sources of finance......................................................................................................................12
PART C..........................................................................................................................................13
Process of budgeting and how targets, budgets, and strategic plans are interrelated................13
REFERENCES..............................................................................................................................15

Introduction
Financial management refers to corporate maintenance of the organization. It helps to
acquisition of dividends and efficient utilization of the funds of any business. There are three
important factor of this management such as funding, dividend and corporate decisions. Controls
are the processors, policies through which the organization analyse and control the position,
portion and utilization of the resources (Polak, 2019). KEDLex PLC is the financial consultancy
company which is situated in the London. The director has prepared the report of ratios and
break even analysis, operating leverage of the business that are discussed below. In this report,
there is another company which is Perri-Perri sauce Ltd that is fast food company in London and
the manager has researched on the investment techniques.
PART A
Question 1 KADLex PLC
Evaluate the various types of ratios of KADLex Plc
Profitability ratio: This ratio helps the company to measure the fiscal performance and the
capability of the enterprise to earn revenues. It assists the organisation to evaluate and compare
the financial health with identical organisation or with past data (Santis and et al., 2018).
1. Gross profit ratio: It indicates the ability of the organisation to generate maximum revenue
by minimising his operating expenses. It is the difference between revenue and cost of goods
sold.
In 2021 Gross profit ratio = Gross profit / Net sales *100
= 31200/58700*100
= 53.15 %
In 2020, Gross profit ratio = 26120/48600*100
= 53.74 %
Interpretation: The gross profit ratio of KADLex PLC in 2021 is 53.15 which is reduced by
very insignificant percentage in against with 2020. KADLex has increased his revenue in 2021
but company has not taken steps to minimise the trading expenses.
2. Net profit ratio: This ratio describe the profit or loss earned by the company after paying
interest and taxes. It shows the relation between earnings after interest and taxes and the
revenue.