Managing Financial Resources - Clariton

Added on - 21 Jul 2020

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MANAGING FINANCIALRESOURCES
TABLE OF CONTENTSTASK 2............................................................................................................................................12.3 Information required for different financial decision makers..........................................1TASK 4............................................................................................................................................14.1 Basic elements of financial statements.............................................................................14.2 Comparing financial statements of Clariton Antiques Limited with partnership entity. .24.3 Analysing financial performance of the Clariton firm using financial ratios...................7REFERENCES..............................................................................................................................10
TASK 22.3 Information required for different financial decision makersPartners-Within company when finance is raised through additional partners then theyrequire information regarding to the profitability of the firm. The reason is that, higher theamount of profit when generated by the entity then it is beneficial to put money. Along with this,liquidity condition of Clariton limited is also necessary to take in to account because it showsfirm's ability to pay debt amount on time. Hence, profitability is one of the very main concern tomake decisions regarding financials in the companyVenture capitalist (We Finance Limited)-It relies on the company's return oninvestment ratio and as the proportion of such ratio is higher, then it gives more fund. Due tothis, while allowing Clariton for raising finance, venture capitalist basically needed informationrelating to the ROI (Smith and et.al., 2016). Apart from this, minimum requirement of venturecapital is that, the business must has at least 50% ROI which lead to generate better return.Finance broker-It is the intermediary party among the bank as well as business which isgoing to take fund from external source. The finance broker is also concern towards the profitcondition of the Clariton because more income leads to earning of higher brokerage amount.Apart from this, bank requires financial statements through which it determines valuation of thefirm within industry in effectual manner. More the valuation of business lead to raise higheramount from the bank and expand it in other market.TASK 44.1 Basic elements of financial statementsIncome statement-Very basic account which prepared and highly required for thecompany is income statements which is used for assessing profitability of the business firmwithin industry. It has mainly three elements through which overall statements made which arerevenue or net sales, expenses and income or profit. Revenue shows those amount which areearned by selling products and giving services. It is also known by term annual turnover amongthe people. In second element all kinds of expenses such as fixed, variable, direct, indirect,operating etc. costs are recorded (Repetti and Jung, 2014). Moreover, three basic incomes areshown which are such as gross, operating as well net.1
Balance sheet-Statement of the financial statements like balance sheet depicts liquidityposition of the firm through which Clariton Company can know that up to which level it able tomeet with the short term debts. It has generally two main heading which are such as assets aswell as liabilities. In the assets side two sub heading included which are like fixed as well as non-fixed assets. Apart from this, when looking at the liabilities side then it includes three elementswhich are such as current and fixed liabilities as well as shareholder's equity.Cash flow statement-The financial account under which costs and position of differentkinds of activities are shown is considered as cash flow statement. Through this Clariton able toknow determine that at the end of year it is at the which position in terms of cash (Revell, 2016).Generally cash flows of main three activities are described at here which are stated below:Cash flow from operating activitiesCash flow from financing activitiesCash flow from investing activitiesStatement of changes in equity and gains-The company when raise finance and capitalfor the business by issuing shares in the market is called as equity capital. In this section offinancial the management shows about amount of capital which is raised through equity shares.Along with this, amount of dividend as well as retained profit is also described in the statementof changes in equity and gains (Sabri and et.al., 2015).Disclosures of financial accounts-It presents different kinds of notes, accountingstandards, GAAP theories etc. which are used to make accounting treatments in differentfinancial statements. Apart from this, those principles of accounting like going concern,consistency, prudence etc. are also stated through which any kind of treatments are made in thebooks of accounts.4.2 Comparing financial statements of Clariton Antiques Limited with partnership entityBase of makingdifferenceClariton Antiques LimitedPartnership firmCapital accountIn the balance sheet accounts ofcapital made only one.Due to having two or more number ofpartners capital accounts are prepared inaccordance to that. Further, when in the2
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