Small Sized Business Organization - Report
10 Pages3240 Words62 Views
Added on 2020-01-28
Small Sized Business Organization - Report
Added on 2020-01-28
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Business Finance1
Table of ContentsIntroduction..........................................................................................................................................3TASK 1.................................................................................................................................................3Outlining the cash flow problems and methods to deal with it .....................................................3TASK 2.................................................................................................................................................6Stating the four main methods of investment appraisal and its process.........................................6CONCLUSION....................................................................................................................................8References..........................................................................................................................................102
INTRODUCTIONBusiness finance consists of the wide range of discipline and activities which is closelyrelated to the management of money. Finance is the most crucial element of the business. In this,manager of the firm has accountability to make optimum use of financial resources. Businessfinance may be defined as a process in which organization makes focus on the collection of fundfrom the low cost of monetary sources. Through this, business organization is able to exert controlon the outflow of the firm to the large extent. This report is based on case scenario company offersconsultancy services to the small sized business organization. The present report will differentiatethe cash and profit. Besides this, it will also shed light on the impact of short of cash on the functionand operations of business organization. Further, it will also discuss the stages which are involvedin the capital budgeting process. It also depicts the various tools which help business unit in makingmost profitable investment decisions. TASK 1Outlining the cash flow problems and methods to deal with it On the basis of the cited case scenario, it is advised by the company to two clients or smallsized business organization that they need to manage their cash related activities in an effectualmanner. Moreover, cash and profit is one of the most significant factors which assists corporation inmaintaining the liquidity to the large extent. Nevertheless, cash and profit is highly different fromeach other in the following manner: Difference between the cash and profit: Cash flow includes both inflow and outflow which maypresent of the outcome of the business activities. Cash inflow represents the sales revenue which isgenerated by the firm during the accounting year. Whereas, outflow contains the expenses such assalaries of the employees, office and other expenditures etc. Thus, balance of inflow and outflowclearly presents the condition of deficit and surplus. Position of surplus reflects that company hasmade optimum use of their financial resources to the significant level (Lončar, 2011). On thecontrary to it, profit reflects the revenue which is generated by the firm over the expenditures. Inincome statement, business unit records all the income and expenses whether they received orincurred in cash or not. In comparison to this, cash flow entails the income and expenditures whichare received or incurred by the firm in cash. On the basis of this aspect, it can be said that profitincludes both monetary and non-monetary transactions. Whereas, cash flow is completely based onthe cash related activities. In addition to this, users of cash and profit statement is highly differs to the large extent.Moreover, shareholders of the firm makes evaluation of the profitability aspect because the3
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