Financial Management and Ratio Analysis for Improved Performance

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Table of Contents
INTRODUCTION...........................................................................................................................3
SECTION-1.....................................................................................................................................3
Financial management and its importance..................................................................................3
SECTION- 2....................................................................................................................................4
SECTION-3.....................................................................................................................................5
Business review...........................................................................................................................5
SECTION-4...................................................................................................................................10
Ways for the improvement of performance...............................................................................10
CONCLUSION..............................................................................................................................11
REFERNCES.................................................................................................................................12

INTRODUCTION
Financial management refer to making plans, organising all the activities, directing and
controlling of financial undertaking in a company. It is important to analyse financial position of
company so that improvement can be made and it helps in achieving goals and objectives of
organisation (Osadchy and et.al., 2018). The report examines, importance of financial
management, main financial statement and use of ratios in financial management. Process which
company can use to improve financial performance is discussed. The report includes,
profitability, liquidity and efficiency of company based on result of ratio analysis is discussed.
SECTION-1
Financial management and its importance
Financial management:
Financial management refers to the management of finance that would assist the
company to attain its objectives. financial management is the strategic planning, organizing,
directing along with controlling that would enable the company to have a management of finance
in such a manner that would lead to have a throughout availability of funds across the business
operations (Brigham and Houston, 2021). Financial management helps in identifying current
financial position of company and better plans can be made to accomplish goals and objectives.
There are three type of financial management i.e., investment decision, dividend decision and
financing decision.
Importance:
Financial management plays an important role in improving the profitability of the
company. This is because with the adequate management of funds the company would be able to
attain high profitability. It also assists the company to provide economic stability along with
enabling saving to the company. This means that through the mode of financial management the
company would be able to maintain financial stability in terms of meeting with the rise and fall
of economic condition. Financial management plays a crucial role in an organisation as it helps
in improving employee performance and increases overall value of firm. It helps in providing
economic stability and encourages employees to save money (Faccia and Mosco, 2019). This is
beneficial for workers as it helps individual person to do financial planning. Managers are

responsible for handling all the activities in an organisation. They are managing funds and make
plans for proper allocation of funds.
This is beneficial in improving operational activity of organisation. When funds are properly
use then it reduces cost of capital and increases overall productivity of firm. Financial
management is beneficial for an organisation as it helps in identifying funds required to run
business and make arrangement for funds. It is essential to make plans and strategies for
allocation of funds and manage all the activities properly. It helps in reducing cost of capital and
maximises profit of organisation. Financial management plays a crucial role in an organisation
because it helps in improving overall performance of company (Lessambo, 2018). Managers of a
company are handling all issues and managing funds so that work can be done properly. When a
company has good financial position it increases overall productivity of firm.
SECTION- 2
Financial statement refers to maintaining record of financial activities in an organisation.
With the help of financial statement correct position of company can be identified. It is essential
to make financial statement so that changes can be made in plans as it helps in achieving goals
and objectives. It is essential to make financial statement so that targets can be achieved. There
are four financial statement i.e., balance sheet, income statement, cash flow statement and
statement of shareholder’s equity. These help in making better plans and goals can be
accomplished. Balance sheet helps in identifying current financial position of company. In
balance sheet assets and liabilities of organisation are mentioned and it helps in generating more
profit (Hasanaj and Kuqi, 2019). It is essential for an organisation to make plans and strategies so
that goals can be achieved.
There are some benefits of financial statement like, better debt management, identifying
trends, managing liabilities, progress and compliance, helps in tracking real time. It is essential to
make financial statement because it helps in providing information about results of operation,
current position of company, cash flow of an organisation. This help in making better plans and
changes can be made for growth and development of company. It is essential to make balance
sheet and cash flow because it helps in determining whether organisation is having funds and
estimation of profit can be done. With the help of financial statement better decision can be taken
which is beneficial in growth and development of company.

BUSINESS FINANCE

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
Section 1...........................................................................................................................................3
MAIN BODY...................................................................................................................................4
Section 2...........................................................................................................................................4
Section 3...........................................................................................................................................6
iv) Analysis of company's profitability, liquidity and efficiency with the help of ratio analysis
.....................................................................................................................................................8
Section 4...........................................................................................................................................9
Process through which the company can improve its financial performance.............................9
REFERENCES..............................................................................................................................11
APPENDIX....................................................................................................................................12

INTRODUCTION
Section 1
Definition of financial management: According to Guthman and Dougal, Financial
management is concerned with the activities such as planning, acquiring, controlling and
administering the financial resources of the business.
Financial management is a practice adopted to manage the financial resources associated with
the organisation. Financial management is a concept comprises with various features that involve
planning, implementing, controllability such like factors.
Planning
Planning is a initial stage belong to the financial management as a concept. This is an
initial stage of the financial management practice adopted by the organisation. Planning involve
analysing the need of the business entity in context to financial resources and on the basis of the
needs analysed this is about to plan the use of financial resources at the organisation. Planning
play a significant role in the entire financial management related practices adopted by the
organisation (Yang, 2021). This stage of the financial management practice support both the
aspects or elements such as analysing the financial requirements of the business entity along with
identifying or planning about the right sources to mitigate the respective financial requirements.
Organizing
Organising is among the core financial management practice adopted by the organisation.
This is about to organise all different funds available with the organisation. The role of
organising is very crucial in respect to the business venture when it comes conducting the
financial management practice at the company. This involve identifying the sources and on the
basis of the identification done this is about to organise all different funding requirements of the
company. All different sources of funds are also analysed in this which comprises with long term
sources along with short term sources of funds identified by the business entity.
Directing
Directing is among the core area of practice related to the financial management practice
adopted by the organisation. Directing is about to guide the financial professional to make a best
possible use of the financial resources adopted by the organisation. The role of directing is to
ensure the most optimum level of utilisation related to the financial resource obtain by the entity

(Ferdiana and Sulistyo, 2019). Directing is the use of different techniques like budgeting and
such like practices to make a best possible use of the financial resources adopted by the firm.
Role of directing is very significant in respect to the business venture to support the organisation
in consuming financial resources in the best way possible. This is done byt the head of finance
team and professional contain experience and good knowledge about the financial resources and
its utilisation.
Controlling
Controlling is among the core area or practice that support the business entity to improve
the utility of the financial resource adopted by the organisation. This is a process that involve
taking suitable decisions to manage and control the financial resources entertain by the venture.
The above stated factors are a part of the different concepts related to the financial
management adopted by the organisation.
Importance of financial management
 It improve the financial stability at the organisation.
 Financial resources are get to utilise in the best way possible through the use of best level
of financial management practices adopted by the company.
 Financial management support the financial stability at the organisation.
 This also play role in improving the liquidity situation at the organisation.
MAIN BODY
Section 2
Financial statements are all about the documents that demonstrate about the different
areas related to the financial management practices adopted by the organisation. All these
statement demonstrate about the all different areas and tactics related to the financial stability
uphold by the organisation.
Income statement
Income statement is among the core record associate with the financial management
practice adopted by the organisation. This is a statement demonstrate about the income and
expense record belong to the venture (Chmutova, Vovk and Bezrodna, 2017). The role of the
income statement is to project about the income business venture entertain against delivering
business operations and the expense that could be incurred against delivering the business