Business Decision Making: A Financial Analysis Report on Dysn Ltd

This report provides a financial analysis of Dysn Ltd, focusing on business decision-making through its Statement of Profit or Loss and Statement of Financial Position. It includes calculations for gross profit, net profit, and key financial metrics. The report identifies limitations of both financial statements, such as estimations and judgments used in calculations and the exclusion of non-monetary assets. Recommendations are made to improve inventory management, trade payable strategies, and trade receivable collection, including reducing inventory holding costs, improving payment timelines, and ensuring clear invoice terms. Desklib offers students access to a wealth of similar solved assignments and past papers to aid in their studies.

Business Decision Making

Contents
INTRODUCTION...........................................................................................................................................3
QUESTION....................................................................................................................................................3
Task 1.......................................................................................................................................................3
Task 2.......................................................................................................................................................4
Task 3.......................................................................................................................................................4
3 possible limitations of Dysn Ltd Statement of Profit or Loss statement...........................................4
Task 4.......................................................................................................................................................5
3 possible limitations of Dysn Ltd Statement of financial position......................................................5
Task 5.......................................................................................................................................................5
REFERENCES................................................................................................................................................7

INTRODUCTION
Making decisions is a crucial component that aids in selecting the best option from a vast number
of options. It aids in the identification of the most lucrative portion of the company and the
elimination of needless expenditures by putting greater attention on such operations in a work
framework.
QUESTION
Task 1
Dysn Ltd Statement of Profit or Loss statement of account for the year ended 31 March 2020
Particulars Details Amount
Revenue 290357
Less: COGS (150060)
Gross profit 140297
Selling and Administration Expenses:
Delivery cost 10132
Advertising 5478
Insurance (9306 – 850) 8456
Rent and rates (18612 -3482) 15130
Heat and light 11013
Salaries and wages 41263
Depreciation (12584+ 9440) 22024
(113496)
Net Profit 26801

Cost of sales: Opening inventory + Purchase – closing inventory
= 18310 + 157300 – 25550
= 150060
Task 2
Dysn Statement of Financial Position as at 31 March 2020.
Liabilities Amount (000) Assets Amount (000)
Net profit 26801 Motor Vehicle (172600-
83500)
89100
Capital 170600 Fixture and fitting (153227-
66710)
86517
Trade payable 31511 Trade receivable 31099
Accrued heating and lighting 1210 Bank overdraft 17900
Accrued delivery cost 905 Inventory 25550
Drawings (31288) Cash in hand 950
68807 Prepaid insurance 850
Prepaid rates 3482
255448 255448
Task 3
3 possible limitations of Dysn Ltd Statement of Profit or Loss statement
 Give recommendation and estimations are used in the financial accounts. As a result,
calculating gross profit (or loss) using an income statement isn't always correct.
Depreciation, which is determined by the amount of useful economic lives of

infrastructure such as roads, facilities, and technology, is an illustration of an assumption
utilized in the financial accounting.
 Administration might utilize judgments and assumptions in the accountancy project to
produce the intended operating earnings or net loss number for the quarter.
 Just those actions where worth can be realistically assessed are included in the income
statement. A solid customer relationship policy, for illustration, can generate a good web
presence that is undoubtedly useful to a potentially lucrative activity, but its worth cannot
be selected for further analysis unless it is demonstrated by a real business arrangement.
Task 4
3 possible limitations of Dysn Ltd Statement of financial position
The Balance Sheet, on the other hand, is created by all institutions for the purpose of disclosing
their financial situation; nevertheless, it has the following drawbacks:
Fixed assets are recorded in the Balance Sheet at their absorption costing less (−) amortization.
The actual worth of the commodities cannot be shown by a standard balance sheet. Furthermore,
it shows intellectual capital at book value, it may or may not correspond to selling price.
It regularly includes some assets that have no market worth, such as convertible debt reduction,
preparatory costs, and so forth. The disproportionate participation of such assets raises the
overall worth of the other commodities.
Value disparities can cause problems with balance sheets. These factors play a role in
determining the true worth of assets in a financial statement or financial statement, which can
lead to inaccurate ratios. The lack of accountability in balance sheets is a main drawback.
Because they are very simple to comprehend, it is normal for customers to conceal knowledge,
even when complete transparency is provided. Researchers must examine the working capital in
painstaking depth and determine where the money is going to come from and heading to.
Task 5
a) Inventory Days: Reduce inventory holding costs by selling or marking down older stock and
investing the savings in elevated, quickly items. Employ a low-inventory approach. They will
turn through inventories more regularly if you have smaller quantities of on-hand goods.

b) Trade Payable Days: Because trade credit is generally the least costly type of financing
offered, small firms can not afford their debtors this method. It's more essential to keep your
equity investors delighted in the long term than it is to pay them 15 days late. Company credit
history will also increase if have a solid track record of paying your customers on time. Having a
strong company credit rating will contribute to improvement conditions and far more trade
finance in the future.
c) Trade receivable Days:
 Make sure your notice period are clear.
 Make purchase price crystal clear
 Provide rewards.
 Many establishments may give you a modest discount if you pay in advance.
 Late Penalties should be charged. In company, imposing an extra late fee is becoming
more common
 Obey System. Monitor Expenses.

REFERENCES
Books and Journal