Improving Firm Performance through Effective Capital Structure Management

This assignment delves into the poor performance of a firm, emphasizing the importance of managing capital structure, engaging stakeholders, analyzing financial statements, and implementing cost-effective techniques. Key objectives involve maximizing profits within specific timeframes and attracting appropriate investors.

MANAGING FINANCIAL
RESOURCES

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Difference between financial and management accounting...................................................1
Purpose of various financial statements in a profit and non- profit organization..................2
Identifying different group of stakeholders and evaluating their different information
requirements...........................................................................................................................3
TASK 2............................................................................................................................................6
Analysing financial health of Stortford Yachts Ltd...............................................................6
Report.....................................................................................................................................7
RECOMMENDATIONS.................................................................................................................8
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Management and financial accounting reports are necessary for all the firms in
order to manage and control different operational activities effectively. The report will
cover definition and difference between financial and management accounting.
Financial requirements and funds are also explained in order to perform business
operations effectively. Purpose of financial reports to profit and non-profit organisations
is also covered in this report. Stakeholder management and financial aspects in order to
gather capital funds to perform operational activities will be discussed here. A
discussion over Stortford Yachts Ltd. is also covered associated with financial health.
Effective cost management techniques in order to improve and develop financial health
as well as effectiveness of operational activities will be discussed in this report.
TASK 1
Difference between financial and management accounting
Financial accounting: Financial accounting system is concerned with the preparation
of financial statements for parties such as shareholders, creditors, suppliers and
customers effectively. Financial accounting provides financial information which will help
to take decision regarding financial activities within business (Amegbe and Adams,
2016). It is based on different assumptions and principles such as realisation,
consistency, matching and materiality as well as costs. Financial statements are made
at the end of year to evaluate profitability and performance.
Management accounting: It is also known as managerial accounting and provide
information regarding the cost or financial activities. It will also help Stortford Yachts Ltd
management to formulate strategies, policies and forecasting day to day operational
activities. Qualitative and quantitative; both approaches are taken into the accounting of
management accounting effectively. The information turns into a useful data which
helps to take decisions regarding budget, goals, etc. It is made according to the
requirements of management in weekly, monthly and quarterly manner.
BASIS FINANACIAL ACCOUNTING MANAGEMENT ACCOUNTING
Meaning Financial accounting is a
process which focuses on
Management accounting provides
useful information to managers

preparing financial statements
for Stortford Yachts Ltd in order
to provide information (Bower,
2017).
which will help to make policies,
strategies and plans to run
business successfully.
Information Monetary information only. Non-monetary and monetary
information.
Objectives In order to provide financial
information to outsiders.
Better management planning and
to make effective decision
regarding different business
operational activities.
Time frame Statements are prepared at the
end of year in accounting
period.
Management reports are prepared
as per the requirements and
needs.
Reports Summarize report of financial
position of Stortford Yachts Ltd.
Detailed and complete information
regarding business operational
activities.
Users External and internal parties. Internal management only.
Financial and management accounting are the two different aspects that help
organisation in different ways. Financial accounting reserves complete information
about financial activities within Stortford Yachts Ltd. Management accounting helps to
analyse the marketing strategy, performance and preparation of policies and plans in
order to make effective decisions.
Purpose of various financial statements in a profit and non- profit organization
Profit organisation: Any business entity whose primary aim is to generate profit from
the regular operations with a view to maximise the wealth of owners is called as a profit
organisation (De Paula, Arditi and Melhado, 2017). The profit earned by such entities is
either retained in business, for future contingencies, in the form of reserves or
distributed to the owners as the dividend.

The structure of organisation can be a partnership, proprietorship, joint venture
or firm. Such trading concerns strive continuously for minimising expenses and
maximising income to increase the profitability of business to grow and expand.
Balance sheet, profit and loss statements and cash flow statements as well as owners’
equity are calculated in profit organisations
Non-profit organisation: A non-profit organisation, as the name suggests, is a legal
organisation whose primary purpose is to promote public good rather than making
profit. These are found by a group of people who come together for a common purpose
i.e. to provide service to members and people. The managing committee looks after its
management which consists of a group of individuals chosen by the members from
among themselves.
Non-profit organisation such as public hospital, sports club, cooperative societies
and religion institutions (Hasanagas, 2016). Non-profit organisations also earned profits
but they used it for further aim and concern. Financial position statements, activities
statements, change in net assets statements and cash flow statements are used by
non-profit organisations effectively.
It can be said that financial statements reflect the difference between
management and financial accounting. For-profits report mainly on profitability and
increasing assets, which correlate with future dividends and return on investment to
owners and shareholders (Martin, 2017). Non-profit reports for financial position,
stability and how the funds can be used, board members and communities. Profit firms
prepare financial reports and balance sheet in order to list shareholders based on
assets and liabilities. Apart from this, non-profit firms make financial reports to assess
the liabilities, assets and prior earnings effectively.
Identifying different group of stakeholders and evaluating their different information
requirements
Stakeholders: Stakeholder is a person who has something to gain or lose through the
results of project, planning process and programs. Stakeholder engagement process
views relationship with firm or project. Analysis of stakeholder is a technique which is
used to assess the importance and influence of people that has an impact on project or
program’s success effectively.

Stakeholder management is crucial for Stortford Yachts Ltd in order to manage
relationship with stakeholders and not actual group of stakeholders that are managed
and controlled.
Different group of stakeholders
INTERNAL STAKEHOLDERS EXTERNAL STAKEHOLDERS
 Director of Public Health
 Head of Health Intelligence and
Information
 Procurement
 Director of Nursing
 Public Health Strategists
 Public Health Management Analyst
 Director of Programmes and
Services
 Research Scientist
 Communications
 Environmental Health Intelligence
Analyst
 Public Health Manager
 Trustees
 Board committee members
 Local Authority/council
 Providers
 Acute trusts
 Patients
 Service users
 Customers
 Suppliers
 Funders
 Quality assessors
 LINK group
 Special interest groups
 Health visitors/school nurses
 Wider public health workforce
 Media
Key stakeholders among workers and management staff need to be identified.
The change agent or Business Improvement Manager responsible can then turn to
influencing these key stakeholders and building support for the project (Thompson,
2017). By taking this approach, the change agent or BI manager can also assess how
much support he or she can expect and the most effective manner in which his or her
influence might be used. Stakeholder needs are transformed in a formal set of
requirements made by stakeholder. This will be in the form of textual requirements and
documented. The transformation should be managed well, rigorous, repeatable and

documented. Thus, it is important for Stortford Yachts Ltd to manage their stakeholders
in order to manage and control business effectively and efficiently.
Government authorities: Financial statements are mainly used in government
departments in order to determine profitability retained by firm as well as the tax paid by
them effectively (Van Heerden, 2016). This will help government to assess what amount
of tax is paid by firm according to the profits earned by them. Here, the firm will disclose
all the expenses incurred in the period as well as the assets and liabilities of the firm in
the right state.
Banking agencies: Stakeholders which analysed loans, borrowings and interest as
well as tax payables by the firm over the period. Bank will ensure that the firm is able to
pay their interests and loans according to their requirements (Van Lancker, Wauters
and Van Huylenbroeck, 2016). This examination will help to determine the profitability of
Stortford Yachts Ltd and amount of interests payable to them effectively.
Employees: Employees working in the firm seeks information regarding business
profitability. It has a positive and negative impact over employee’s remuneration
payable to them effectively. It will also help them to encourage for putting more efforts
to increase the profits and growth of Stortford Yachts Ltd.

TASK 2
Analysing financial health of Stortford Yachts Ltd.

Report
From: Assistant Business Planning Consultant
To: Business Planning Assistant
Subject: Stortford Yachts Ltd- Accounts information
Sir,
As per the given calculation, I have analysed that the business performance
during a certain period can be said that there are some changes occurred in different
operations and ratios effectively. Thus, it can be said that according to the analysis,
firm will have an effective development and growth in future time period as well as
profitability will be increased for the firm effectively. Evaluation and determination of
financial position of business will be done from analysing different ratios as per the
analysing business returns the firm will have over collected and applied capital of firm
effectively and efficiently. Therefore, it can be seen that according to 2015, it was
27.09 and in 2016, it was 22.05 that a favourable position is made effectively. This will
be indicated that the firm is paying appropriately its payments to shareholders over the
investment capital in the business. The debtor’s collection period was 91 in 2015 and
in 2016, it is 102 which describe that the firm is not able to receive payments from

debtors as capable to the last year recovery effectively.
Therefore, according to the performance managed by firm, it is necessary to
recommend that managerial professionals should make some strategies in order to
make improvements for adopting cost effective techniques. Cost effective techniques
are useful to manage the expenses that will help managers to reduce waste expenses
within organisation. If the ratio between demand and supply will be managed well, it
will produce significant profits for the firm effectively and efficiently. The firm should
allocate resources and appropriate costs for each operational activity within business
in order to increase fruitful gains effectively. The cost for each operational activity
within business should be managed and controlled well in order to reduce the extra
costs incurred in operations. The firm should also manage its significance towards cost
effective techniques in order to maximise profits effectively. Thus, it will reflect on the
profitability produced by business in a specific time period from which the Stortford firm
is able to manage number of investors in order to strengthen towards business
operational and capital structure. This will help to increase profitability by increasing
capital from which they are able to enhance effectiveness of their business operational
activities.
RECOMMENDATIONS
It can be said that the firm is managing its resources effectively and also
stakeholders are managed well by making payments on time (Yeung, 2017). The firm
can improve its cost effective techniques in order to reduce extra expenses within
operational activities. If the ratio between demand and supply will be managed well, it
will produce significant profits for the firm effectively and efficiently (Veltri and Bronzetti,
2015). The firm should allocate resources and appropriate costs for the each
operational activity within business in order to increase fruitful gains effectively.
Improvements in operational activities will also help to manage the resources and costs
of different activities which will help to increase profitability effectively.

CONCLUSION
From the above analysis, it can be concluded that the report will help Stortford
Yachts Ltd to analyse its profitability effectively and efficiently. This will also help to
meet operational objectives and targets. Financial statements and cost effective
techniques are also important for the firm in order to improve and develop financial
position effectively. Thus, the data evaluated of 2015 and 2016 on the basis of provided
ratios will help to determine effectiveness of business in terms of debtors, profitability,
operating and distribution cost etc. 2015 was the best performance year for firm that
shows a favourable condition. Instead of that, current performance of business is not
good and up to mark according to the data analysed above. Stakeholders are also
important for the firm to invest in capital structure and financial statements are also
crucial for profit and non-profit organisations effectively. The firm should also manage
its significance towards cost effective techniques in order to maximise the profits
effectively. Thus, it will reflect on the profitability produced by business in a specific time
period from which the Stortford firm is able to manage appropriate number of investors.

REFERENCES
Books and Journals
Amegbe, P.M. and Adams, M., 2016. Managing financial records for accountability in
metropolitan assemblies in Ghana. International Journal of Business
Excellence 10(4) pp.502-522.
Bower, J.L., 2017. Managing resource allocation: Personal reflections from a
managerial perspective. Journal of Management 43(8) pp.2421-2429.
De Paula, N., Arditi, D. and Melhado, S., 2017. Managing sustainability efforts in
building design, construction, consulting, and facility management
firms. Engineering, Construction and Architectural Management 24(6) pp.1040-
1050.
Hasanagas, N.D., 2016. Managing information in forest policy networks: Distinguishing
the influential actors from the “postmen”. Forest Policy and Economics 68 pp.73-
80.
Martin, P.V., 2017. Managing the risks of ecosystem services markets. Ecosystem
Services.
Thompson, K.M., 2017. Modeling and Managing the Risks of Measles and Rubella: A
Global Perspective Part II. Risk Analysis 37(6) pp.1041-1051.
Van Heerden, B., 2016. Managing your financial health: management. The Dairy
Mail 23(10) pp.56-60.
Van Lancker, J., Wauters, E. and Van Huylenbroeck, G., 2016. Managing innovation in
the bioeconomy: An open innovation perspective. Biomass and Bioenergy 90
pp.60-69.
Veltri, S. and Bronzetti, G., 2015. A critical analysis of the intellectual capital measuring,
managing, and reporting practices in the non-profit sector: Lessons learnt from a
case study. Journal of business ethics 131(2) pp.305-318.
Yeung, H.W.C., 2017. Managing crisis in a globalising era: the case of Chinese
business firms from Singapore. In Chinese Business and the Asian Crisis (pp.
87-113). Routledge.