Financial Management and Processes for Business Performance Improvement

Business Management with Foundation
BMP3005
Applied Business Finance
The concept and importance of financial
management and the processes
businesses might use to improve their
financial performance
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Contents
Introduction p
Section 1: Definition and discussion of the concept and
importance of financial management p
Section 2: Description and discussion of the main
financial statements and explain the use of ratios in
financial management
p
Section 3: Using the template provided p-p
i. Completing the Information on the ‘Business Review Template
(Ensure that you display your calculations for this detail)
p
ii. Using Excel producing an Income Statement for the Sample
Organisation (see Case Study). This should be included within
your appendices p
iii. Using Excel completing the Balance Sheet p
iv. Using the Case study information describing the profitability,
liquidity and efficiency of the company based on the results of
ratio analysis p
Section 4: Using examples from the case study describing
and discussing the processes this business might use to
improve their financial performance p
Conclusion p
References
Appendix p
p
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Introduction
Financial management is regarded as an important portion of a organization
organization that is primarily related with the company's advantage and success.
Financial management has a number of stated tasks that are diverse in character and aid
in the achievement of various goals and objectives. This can be accomplished through
improving advantages, selecting capital development, limiting expenditures, and so on. In
today's world, the concept of financial management is inextricably linked to the concept
of working capital management. It aids in the monitoring and control of instabilities that
could disrupt corporate operations. The focus of the paper will be on several types of
financial abstract strategies in relation to the importance of managing financial resources.
Different financial outlines relating to the firm procedures of the business can also be
utilized with the support of ratio analysis. Various financial outlines relating to the firms
processes of the association of firms that can also be used with the use of appropriate
investigation. This will greatly improve the company's financial and overall performance.
Section 1: Definition and discussion of the concept and
importance of financial management.
When it comes to the concept of management of finances it is defined as the
process of organize, classifying, coordinating, and controlling monetary activities in a
business. It further combines board ideas into the monetary divisions of the trade
association's operating guidelines. It allows you to keep a close eye on and make
decisions about how much money is available in your firm(Choudhry, 2018). It is also
the most popular method for formulating, developing, and implementing a strategy
for all business divisions pursuing prospective objectives. It aids in the management
of crucial financial and business decisions for the association's growth, encouraging
them to examine application options when establishing corporate goals and
objectives. The financial authorities of the business association ensure that each
branch of the organization has access to finances to assist the conduct of their
business activities.
It is often considered as one of the most significant tools for supporting a company
in order to ensure the availability of funds in a timely manner. This will support the
company organization in order to achieve the highest level of financial efficiency
through ensuring financial sustainability levels. It will be fully utilized to support the
business association in order to achieve strong financial stability with the help of
financial arrangements and the allocation and in every aspect of the business, allow
enterprises to run in a effective and efficient manner. In addition to that , it supports
the authorities of finance department in making all investment decision that are
correctly associated with the company's final goals.
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Section 2: Description and discussion of the main
financial statements and explain the use of ratios in
financial management.
The document involves all transactions associated to financial operations of
the business firms in relation to the statements of finances. It aid in the growth
aspects the organization and the institution of suitable financial status for the
purpose to assess the company's success(Kusano, 2020). External authorized
parties which involves auditors, tax officers and government officers etc, frequently
inspect and evaluate these financial accounts for the purpose to analyze and check
the financial status of the corporate firm. A organization prepares various types of
financial statements that involves cash flow statement, balance sheet and income
statement that are mentioned below:
 Balance sheet:It is regarded as one of the significant financial statements
prepared by a corporate organization, and it includes all of the company's
assets and liabilities. It also includes the value of investors, allowing
businesses to make decisions about their financial status.
Equation: Assets= ( Liabilities + Owner's Fund )
 Income statement: Another important aspect of the organization fiscal
summaries is the income statement, which lists all of the revenue and
expenses generated by the company's operations. It also aids in determining
the productivity level of a company for a specific financial period. It aids in the
critical analysis of all profits, costs and pay on shares.
Equation: Net Income=(Revenue-Expenses)
 Cash flow statements:It is a declaration that aids in the organization of
budget summary and allows businesses to make judgments about the total
cash flows of the company. It also aids the business in critically evaluating its
cash-generating capacities in order to meet their financial responsibilities and
meet their consumption needs as needed.
 Accounting ratios are defined as an examination of a organization
performance and financial data for at least two years in order to evaluate its
financial position in competitive markets. It is regarded as one of the most
significant and fundamental tools used by organization for the purpose to
determine and investigate their profit and financial situations(Dinç, 2018). In
addition, accounting ratios are frequently used to compare the performance of
a target market to that of its competitors in general. Liquidity ratios, profitability
ratios, solvency ratios, turnover ratios, and other forms of accounting ratios
are among the most common.
Section 3: Using the template provided:
v. Completing the Information on the ‘Business Review Template
(Ensure that you display your calculations for this detail)
Kindly check the appendix section.
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