Importance of Financial Management and Financial Ratios Assessment

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Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
The Importance of Financial Management:.................................................................................1
The following are some examples of how to use financial statements and ratios:......................1
Performance of the business is assessed:.....................................................................................6
Strategies for boosting business performance.............................................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9
Appendix:......................................................................................................................................10

INTRODUCTION
The technique of managing financial resources to fulfil an association's cooperative goal is
known as financial management (Bouveret, 2018). This research relies on the idea of financial
management and also the importance of financial management. This research provides financial
ratio for a variety of financial amounts. Furthermore, via an examination of the information
obtained, this study focuses on the profitability, efficacy, and availability of the income
statement provided in the case. In the appendix, you'll find all of the essential calculations.
MAIN BODY
The Importance of Financial Management:
Financial management empowers an enterprise to satisfy the financing needs of regular
business operational activities by ensuring the firm's survivability after having met shareholder
expectations, by ensuring a sufficient supply of financial resources, management of financing for
short and long-term investing activities, and ensuring the firm's effectiveness after achieving
shareholder needs. Financial management establishes a company's optimal investing
structure that comprises the right balance of debt and equity. In terms of financial management, a
company can discover the best financial risk management strategies. The following are important
areas of financial management:
 Potential investors of the company may make the best investment decision based on the
financial management's decision (Eka, 2018).
 Financial management enables a business to give reliable information to a loan facility or
to taxation administrators.
 Through strong finance administration, a corporation can carry on accountancy activities
for the organization's long-term aims.
 A corporation's financial manager can employ financial management to find the best
source of cash with the least financing costs.
 Financial management enables a corporation to generate aggregate outputs which
appropriately reflect the firm's quantitative success.
The following are some examples of how to use financial statements and ratios:
Balance sheet:

2016
Total
£0
Non Current assets
Intangible assets 5,793
Tangible assets 52,812
Investments 10,693
69,298
Current assets
Stocks 28,571
Trade debtors 26,367
Short term deposits 14,779
Cash at bank and in
hand 14,632
84,349
Current liabilities
Bank loans and
overdrafts 9,610
Trade creditors 19,493
Other Creditors 678
Income tax payable 3,585
Other creditors
including tax and social
security
4,562
37,928
working capital 46,421
Total assets less
current liabilities 1,15,719
Non Current
Liabilities
Bank loans and
overdrafts 16,506
Other Liabilities 7,304
23,810
Provisions for
liabilities 8,094
Net assets 83,815
Capital and reserves
Called up share capital 39,436