Financial Analysis: Cash Flow vs Profit and Stakeholder Influence

This report provides an overview of business finance, emphasizing the importance of managing monetary resources for higher profitability. It explores the accounting equation and double-entry bookkeeping system for balancing financial statements. The report discusses the benefits of a company's shares being listed on the stock exchange, including increased capital availability and improved marketability. It identifies and analyzes the roles of internal and external stakeholders in Marks and Spencer (M&S), highlighting their influence on business practices. Furthermore, it differentiates between profit and cash, noting their distinct impacts on a company's strategic decision-making and overall sustainability, concluding that cash is more critical for survival. Desklib provides solved assignments for students.

BUSINESS FINANCE

TABLE OF CONTENTS
INTRODUCTION.....................................................................................................................................3
MAIN BODY.............................................................................................................................................3
TASK 2.......................................................................................................................................................3
TASK 2.1................................................................................................................................................3
TASK 2.2................................................................................................................................................5
TASK 2.3................................................................................................................................................7
TASK 2.4................................................................................................................................................9
CONCLUSION........................................................................................................................................10
REFERENCES........................................................................................................................................11

INTRODUCTION
Business finance is concerned with managing and controlling monetary resources in turn
higher profitability. In current era, business finance is higher required to overcome competition
so that higher level of benefits can be derived. Current report will involve cash budget for
attaining proper knowledge regarding balance. Present case study will include benefits that firm
can gain after listed on stock exchange. It will highlight stakeholders of Mark and Spencer
company and difference between cash & profit.
MAIN BODY
TASK 2
TASK 2.1
Financial statement is based on accounting equation which helps to get appropriate
knowledge. accounting equation is associated with assets equals to liabilities and equity. The
particular specified accounting equation helps financial statement to get balanced by involving
double entry book keeping system. Asset side of accounting equation shows valuable resources
that are controlled by the company and other part comprising liabilities & shareholders’ equity
reflects the obligations of firm. The financial position of the organization can be evaluated by
focusing on the specified accounting equation (Kennickell, Kwast, and Pogach, 2017). The
particular equation highly pay attention on deriving the significant involvement of double entry
system that records each side of transaction. Double entry book keeping pay attention on
recording the business transaction in two accounts as debit and credit. It acts to make sure that
entries are consistent by avoiding errors and mistakes this allows to obtain the information
regarding omission and improper recording of transaction so that accurate financial position can
be derived.
Double entry book keepings system helps to ascertain actual position of firm in
financial terms through eliminating errors, omissions, etc. so that having proper information
regarding processing can be derived. accounting equation aids to have balanced financial
position in turn fair and reliable accounting information can be presented. From this, it can be
articulated that accounting equation and double entry book keeping system helps in having
balanced financial position system for instance- company has purchased machinery of $10000

than firm will record this transaction by debiting machinery and crediting cash. On the basis of
this, double impact of this transaction helps financial position to get balance.

TASK 2.2
There are several advantages that are achieved by company from having its share being
listed on stock exchange. The one of the major benefit that specific firm derive from this
includes higher availability of capital as larger number of investors can be attracted. Having
sufficient amount of capital aids in building strong position industry through accomplishing all
the roles and responsibilities in effective manner. Spreading awareness of products and services
offered by company among stakeholders become possible. In addition to this, it provides
assistance to incline the profitability & sustainability in industry. Gaining knowledge regarding
competitor as well become possible through identifying their actions for overcoming
competition.
Listing provides opportunities to company to raise fund for fulfilling is requirement of
business. It as well contributes in inclining the ability of enterprise to get an exist to route to
investors. The one of the crucial benefit that organization can obtained from being listed on stock
exchange includes ready marketability of security so that liquidity can be brought for smooth
functioning of operational practices.
Supervision and controlling of trading in securities as transaction in listed stock
are needed to be carried uniformly as per the regulations and laws of exchange. All the
transaction conducted through paying attention on regulatory mechanism that prevents company
from unfair trade prices (NGUYEN, BUI and PHAM, 2019). It provides assistance in boosting
the confidence of investors as well small companies. There are several merits that specific firm
can derive from having its shares listed on stock exchange but one of the significant practice that
becomes possible for companies to formulated strategy decision involves timely disclosure of
corporate information. This helps shareholders to know the details regarding dividend, bonus
and right issue in turn taking favorable decision in favor of firm becomes possible. Moreover,
gaining trustworthiness & higher credibility in market through executing transparent transaction
becomes possible. It leads frim towards success by attaining competitive advantages.
Listed organization can be achieving ability to arise fund from the financial institution
in ease manner as acceptable to lenders as collateral for credit facilities (Top 10 Benefits of
Listing on Stock Exchange, 2021). On the basis of this it can be articulated that frim can easily
raise funds from various option with maintaining greater degree of assurance. The main reason

behind this benefit is associated with fair practices conducted by listed companies through
maintaining transparency & efficiency in overall operation. This leads investors to have visibility
for making significant decision which can give them long term benefits.
Improving employee morale can be exerted effectively by enterprise through having
shares listed on stock exchange. This allows employees to access the details of firm so that
growth trend can be evaluated to ascertain personal development along with company. From the
evaluation it can be interpreted that these benefits help firm to gain competitive advantages that
can contribute in reaching desire position in industry. Good brand image building, availability of
liquidity, raising fund from diverse platform, inclining morale of employees, boosting growth &
development of frim, etc. are few competitive advantages that can be achieved by particular
organization after being listed its shares on stock exchange.

TASK 2.3
Marks and Spencer is one of the successful company that operates on international level.
The specified organization is listed on exchange that allows it to have various kinds of benefits.
Large market share is covered by firm which helps it to being connected with larger number of
stakeholders that are distinct as internal & external. Each type of stakeholder play role in
influencing business practices which require firm to pay attention on satisfying so that higher
profitability sustainability can be achieved (Internal stakeholders’ vs external stakeholders,
2020).
The internal stakeholders include management, employees and owners are crucial part of
M&S that contribute in managing operational practices that can contribute in having leading
position in sector. To get competitive advantages the specified organization require to
concentrate on implementing such strategies that can positively impact these stakeholders
(Marques and et.al., 2019). Increasing moral of employees and management provides assistance
to enterprise to improve operational efficiency and declining turnover rate to enhance internal
strengths so that higher profitability sustainability can be obtained. In order to attain success
internal stakeholders play major role to implement the strategies that can help in coordinating
with changing circumstances. Marks and Spencer is being international organization has large
number of internal stakeholders that allow it to meet the objectives of firm like higher
profitability, sustainability, larger market share, etc.
External stakeholders of Marks and Spencer comprises customers, suppliers, competitors,
investors, financial institutions, communities, trade unions, government agencies, etc. these
mentioned stakeholders’ paly crucial role in influencing operational practices of business that
impact both financial and non-monetary performance of company. The specified organization
raise fund from several investors, financial institution, etc. that require firm to largely
concentrate on providing higher returns to them (Ramlah, 2020). This can lead firm to achieve
higher satisfaction from these stakeholders so that stability can be maintained. In addition to this,
customers are one of the significant stakeholder of M&S that contribute in both boosting and
hindering organizational revenue, brand image, position in sector, etc. that impact functioning of
company. Suppliers as well aid in meeting overall operational activities of business that affect
M&S ability to meet market forces. It becomes essential for the firm to focus on complying with

rules, regulations, legislations, etc. that are important for successfully operating in industry.
Adhering to this aids in fulfilling requirement of government agencies etc. On the basis of this,
it can be interpreted that these mentioned stakeholders’ influences functioning of M&S

TASK 2.4
Profit is associated with extra return over the expenditure incurred for the particular
transaction. Cash in business specified that availability of monetary resources that can be used by
firm for meeting its requirement. Profit is one of the significant indicator of liquidity available in
business but it does not give surety of cash availability. There is major difference in profit and
cash which need to be understand in order to take strategic decision so that higher sustainability
can be maintained.
The one of the significant difference between profit and cash that it can be manipulated
as cash. There is less chances to make manipulation in profitability as well spending it as like
cash not possibilities (Muniroh and Yuliati, 2021). There are several difference that need to be
highlighted for having significant ability & understanding of decision making. Company can
have strong profitability but there are chances that it is not possessing enough cash flow that can
impact negatively firm’s proceedings. Profit provides ability to identify the right direction of
proceeding business activities as it is process of cash creation. In case of cash flow, capabilities
to coordinate with changing circumstances can be recognized. It can be thought in the terms of
value creation whereas cash is taken into consideration as per the time term.
Cash flow is basically net amount of money available to business that can aid in
overcoming obligations essential for attaining desire position. It can be positive or negative but
profit is always reflecting in favorable terms only. Cash is highly critical for the survival of
company as compared to profits. Cash can be freely & readily use for obtaining major benefits
to have higher stability whereas for utilizing profit there is requirement to wait for availability of
liquidity. Every business follows different kinds of strategies for managing and controlling
profitability & cash flow so that significant and suitable course of action for having success can
be derived. The reason behind this is that in computation of profitability there is involvement of
non-cash item as well that does not allow to get accurate details. On the other side, computing
cash flow does not give emphasis on non-cash components like depreciation, etc. it provides
assistance in gaining reliable, accurate & fair information in turn making strategic decision for
coordinating with such circumstances can become possible. Stakeholders as well focus on cash
for having dividend, etc. rather than higher profitability. From the evaluation it can be
articulated that cash is more realistic concept as compared to profit which aids in dealing with

prevailing situations. On the basis of this, it can be identified that these are the major difference
between profits and cash. Obtaining these information can provide help in formulating effective
decision for accomplishing objectives.
CONCLUSION
From the above report it can be concluded that business finance plays important role in attaining
success. Current report has given emphasis on accounting equation & double entry book keeping
system role in balancing financial position statement. Present report as highlight benefits of
being listed shares on stock exchange which involves ease in raising fund, etc. Internal &
external stakeholders are of M&S has been explained as well difference between profit & cash.

REFERENCES
Books and Journals
Kennickell, A. B., Kwast, M. L. and Pogach, J., 2017. 7. Small Businesses and Small Business
Finance during the Financial Crisis and the Great Recession (pp. 291-350). University of
Chicago Press.
Marques, P. and et.al., 2019. Corporate social responsibility in a local subsidiary: internal and
external stakeholders’ power. EuroMed Journal of Business.
Muniroh, I. and Yuliati, A., 2021. Do Cash Flow and Accounting Profit Information Affect
Stock Prices?. Journal of Accounting and Strategic Finance. 4(1). pp.108-121.
NGUYEN, C. T., BUI, C. M. and PHAM, T. D., 2019. Corporate capital structure adjustments:
Evidence from Vietnam stock exchange market. The Journal of Asian Finance,
Economics, and Business. 6(3). pp.41-53.
Ramlah, R., 2020. The Company's share price as a result of changes in earnings and cash
flows. Point Of View Research Management. 1(4). pp.154-163.
Online
Internal stakeholders’ vs external stakeholders. 2020. [online]. Available through:<
https://www.termscompared.com/internal-stakeholders-vs-external-stakeholders/>
Top 10 Benefits of Listing on Stock Exchange. 2021. [online]. Available through:<
https://swaritadvisors.com/learning/top-10-benefits-of-listing-companies-on-a-stock-
exchange/>