Importance of Financial Management and Financial Statements in Business Report

Business Report
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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 p
Appendix p
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Introduction
Business reports are developed for reporting over the evaluation and analysis conducted of
respective organization towards a particular issue, certain set of circumstances or any
financial operations that relates to the performance of the entity. The most important function
for the purpose of developing business reports is to make sure that each and every relevant
information about the organization and the business been conducted is communicated
efficiently and succinctly the respective parties. This is also a business report where several
financial aspects of case study organization is discussed and elaborated. Report begins with
discussing the importance of financial management within the Business. Along with
describing the use of financial statements and their purposes for conducting effective
financial management (Ameliawati and Setiyani, 2018). Moving further, two financial
accounts that are income statement and balance sheet are developed for the case study
organization as well as missing figures are filled in the business review template. The end of
the report, with the help of calculating number of ratios and analysis is conducted about the
business performance and its efficiency as well as growth. Moreover, moving towards the
end of the report some recommendations are also provided to the business for improving the
financial performance and allowing them a chance to grow and develop further successfully
Section 1: Definition and discussion of the concept and importance of financial
management
Financial management is a term which refers to the strategic planning, organizing,
directing and controlling of all the financial assets and undertaking of a business organization
or a respective institute. Financial management is a process which has a huge importance for
a business entity where there are number of management principles applied in order to
manage all the financial assets of the company and playing an important role in the physical
management of the entity.
Financial management is related to taking financial decisions and making the most
prominent choices in the financial field providing the company most of the benefits. There
are three major types of financial management decisions that are being made by the owners
of the entity or the financial members of it. The three types of financial management
decisions are investment decisions, decisions and dividend decisions.
Every organization either small or large need financial management as it is the area or
the function of it which is dealing with and concern with the profitability, expenses, cash and
credits etc. of the business. The factors which makes financial management and important
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element of a business entity are planning, controlling, organizing and directing and last is
decision making.
Financial management a company is managed by the financial managers and financial
teams. There are several different rows that I've been allotted to a financial manager of an
organization and the major responsibility they hold is to distribute all the financial resources
of the company in the most prominent manner and long with investing it in the right way
towards the right cause and in the right time for gaining the most efficient returns (Barr and
McClellan, 2018).
When it comes to identifying the main objective or primary focus of financial
management team within a company some of the major factors which are considered are as
follows:
 Profit maximization
 Improved efficiency and effectiveness of the brand
 Balanced financial structure
 Business sustainability and survival in the market
 Proper allocation and mobilization of financial resources
 Effective investment as well as spending decisions
 Increasing long term profitability of the entity
Section 2: Description and discussion of the main financial statements and explain the
use of ratios in financial management
Financial management includes development of number of financial statements that
are necessary for a company to develop in order to understand its financial position as well as
its short and long-term survival in the market. But financial management is not only useful
In developing effective business reports. It supports the organization and top level
management in making appropriate decisions for future as well as present. The
resources which helps a business organization and management in developing appropriate
decisions and proceeding towards the success of the company in the most prominent manner
are the financial resources which are also called as financial statements.
There are several different types of financial statements that are developed by
businesses in order to make appropriate decisions and to seek a good picture of what is the
current position of the company in the market in financial terms. Some of the financial
statements that are developed and used by businesses in today’s world are as follows:
 Income statement which is also known as profit and loss account.
 Balance sheet which is also stated as a financial position of a company.
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