Managing Financial Resources: Financial Statements, Ratios, and Stakeholder Needs

Managing Financial resources
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Table of Contents
Table of Contents.............................................................................................................................2
Assignment 1...................................................................................................................................3
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Q1. Identifying the various financial statements and financial ratios.........................................3
Q2. Interpret the financial ratios of the company........................................................................5
Q3. Identifying the financial information needs of different stakeholders..................................7
CONCLUSION................................................................................................................................8
Assignment 2...................................................................................................................................9
INTRODUCTION...........................................................................................................................9
MAIN BODY..................................................................................................................................9
Question 2. Identifying the meaning of cost-plus pricing and problems using this approach.....9
Question 3. Identifying the financial ratios of the company.....................................................10
Question 4. Analysing the terms................................................................................................11
Conclusion.....................................................................................................................................12
REFERENCES..............................................................................................................................14
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Assignment 1
INTRODUCTION
Resource management entails efficiently managing and monitoring the different resources
that are used to ensure the organization's effectiveness (Morales, 2021). They aid in enhancing
the company's working efficiency, which is achieved and performed by workers and
management. To effectively control them, it is necessary to understand the company's structure
and specifications, which can be accomplished by analysing the overall position of the company.
Managing capital and other considerations effectively aids in determining the firm's overall
effectiveness. The various financial ratios and income statements are examined in this article, as
well as the financial data needs of various stakeholders. Aside from that, assessing the meaning
of cost-plus pricing and researching the approach's issues. This also includes the various
variances that aid in measuring the firm's efficacy, which contributes to several advantages in
management to improve profitability.
MAIN BODY
Q1. Identifying the various financial statements and financial ratios
Financial statements are documents that provide an accurate picture of a company's
financial results at the end of the year. It displays the formal records of all required financial
transactions that occur in the company. They assist information users in evaluating the
company's financial status, liquidity, and efficiency. This reflects the transaction's financial
consequences for the company. Preparing financial statements aids in the calculation of earnings
and is an essential aspect of the company's annual report. The following is a list of financial
statements:
 Income statements- This is the financial data that all businesses use to report on their
financial results over a particular time span. It is also known as the profit and loss
statements or the income and cost statements for a specific year. The following are some
of the components:
Revenue- It refers to the sales of products and services produced by a company in the
accounting period. This can be collected from both cash and credit transactions, and it is useful
for determining productivity and yielding numerous benefits.
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Profit and loss- The net income earned after deducting costs from income is referred to as
profit or loss. If revenue exceeds expenses, profit will result; if expenses exceed revenue, loss
will result.
Expenses- This is the cost of doing business that a corporation incurs on a day-to-day basis.
Salaries and depreciation are examples of operating costs (Musoma, Kilobe and Mnyawi, 2016).
 Balance sheet- The balance sheet, also known as the statements of financial condition,
depicts the asset, liability, and equity positions at the end of the accounting period. This is
a vital aspect of the financial statement because it assists consumers of financial
statements who are searching for information about the company's financial situation.
This aids in the evaluation of the company's performance and efficacy, as well as the
completion of important organisational decisions.
 Statements of cash flow- This is a collection of financial statements that summarises all
cash inflows from the company's continuing activities and foreign expenditure sources. It
also includes all cash outflows for company operations and investments over a period of
time, as well as providing the investor with a snapshot of all transactions. The cash flow
has three parts that can assist the investor in determining the company's stock. Operating
activities, investing activities, and financing activities are the three forms of activities
involved in this. Each has their own method for calculating productivity and managing
cash flow.
Ratio analysis- It is the examination of different items of various financial data contained in
a company's financial statements in order to assess the firm's efficacy and performance. The
external analyst primarily uses this to assess different aspects of the company, such as
profitability ratios, liquidity, and solvency. This is extremely useful for measuring overall results
using various ratios. The following are some of the ratios:
 Liquidity ratio- When a company is facing financial difficulty and is unable to cover its
debts and obligations, this calculate the company's ability to fulfil the obligation using
current assets. It can easily turn its assets into cash and use the capital to pay off any
outstanding debts. Current ratio, Fast ratio, and cash ratio are just a few examples.
 Solvency ratio- This ratio compares the corporation's debt levels to its assets and annual
earnings to determine the company's long-term financial viability. The debt to capital
ratio, debt ratio, interest coverage ratio, and equity multiplier are all relevant ratios. These
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