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
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
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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
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Introduction
Financial management is defined as crucial component including both the
monetary as well as non operations as it assists the firm to find ways for obtaining large
amount of funds in the most profitable manner. The financial management was taught as
the component of accounting used in conventional ways. Due to the impact of
improvisation, it has been expanded to different spheres of the business. The impact of
financial management in the company will be explain in this section. The report will cover
crucial financial records and also the usage of measures in FM. The report will also
highlight about review sample of business as well as will provide completion of appointed
criteria. Moreover, the report will also cover monetary performance gain strategies.
Section 1: Definition and discussion of the concept and
importance of financial management
Financial Management: The management of finance is termed activity which
involves effectively maintaining the balance of funds in order to promote smooth
action of business activities. The aim of financial management department is to take
care of organization and direction of activities of financial activities. The critical
activity of financial management in the organization is to drive effective employment
of resources, procurement of funds from right sources as well as investing in right
assets in order to achieve financial stability and growth. Moreover, the financial
management supports the company to allocate resources in the most productive
manner. The following are the main importance of financial management are:
Supports in business success:
The most important role of financial management is to formulate short term as
well as long term financial targets in order to improve the chance of higher
profitability in future(Shapiro and Hanouna, 2019). In relation to this, the financial
management assists the business to assess the future risks and growth
opportunities present in external environment that directly supports the firm to enter
into most profitable growth projects needed for achieving success. Moreover, this
also allow the organization to allocate financial resources freely by choosing the
lowest risky fund options.
Managing rules and taxes:
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The other important aspect of financial management is to help companies in
effectively managing books of accounts in order to avoid burden related to untimely
payments of duties and taxes. In relation to this, the proper maintenance of financial
accounts will not only enable the firm to follow with legal rules but also helps the
company in performing tax calculations in the most accurate manner. Moreover, the
role of financial management is to help organization in order to make correct
calculations regarding payment of taxes and duties(Bapat, 2020).
Better access to finance:
The other importance of financial management is to allow organization to
effectively identify and analyses the available source of funds in order to provide
necessary findings to carry out day to day business activities. In addition to this, the
financial management also assists the company to choose from the cheapest source
of finance for meeting financial targets and in order to accomplish goals of the
company. Moreover, the identification of appropriate funds aids the organization to
maintain the smooth functioning of operations and other business processes.
Controlling business costs:
The other crucial role of financial management is manage and monitor
business expenditure on growth projects or business processes. This support the
company to reduce extra financial burden on them by making sure to effectively
control business costs to larger extent. In addition to this, the financial management
aids the organization in effectively planning costs related to performing business
activities and also assist the company to minimize the amount of unnecessary
charges such as bank charges(White and et.al., 2021).
Section 2: Description and discussion of the main
financial statements and explain the use of ratios in
financial management
The financial statement is termed as formal representation of the company
which support firm's in evaluation of financial data. The major importance of making
financial statements is to provide details as well as supports the organization to
summaries its financial data in order to draw conclusive statements. The annual
creation of financial documents is just as crucial as making a financial decisions.
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