Improving Financial Performance: A Case Study Analysis

This report provides a comprehensive analysis of financial management and its critical role in ensuring a company's financial sustainability. It delves into key concepts such as financial statements, profitability ratios, and their application in assessing a company's financial health. Through a case study approach, the report examines how a business can leverage financial management processes to improve its overall performance, including strategies for investing in resources, reducing spending, and implementing effective stock control methods. The analysis includes calculations of financial ratios like current and quick ratios, offering insights into the company's liquidity, efficiency, and profitability. Ultimately, the report underscores the importance of strategic financial planning and management for achieving long-term financial stability and growth.

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Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Section 1: The concept and importance of financial management..............................................1
Section 2: The main financial statements and explain the use of ratios in financial management
.....................................................................................................................................................2
Section 3: The main financial statements and explain the use of ratios in financial management
.....................................................................................................................................................5
Section 4: Using examples from the case study describing and discussing the processes this
business might use to improve their financial performance........................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8
Appendices......................................................................................................................................9

INTRODUCTION
Monetary administration is the act of strategically preparing, organising, managing, and
overseeing a company's banking industry in order to ensure that it runs smoothly and sans failure
(Eka, 2018). This research examines and explores the fundamental notion of money planning and
the crucial function it plays in a company's fiscal sustainability. It also goes through the
significance of the tax return, net debt, corporate finance, and profitability ratios that seem to be
the four primary profitability ratios. It presents a comparative assessment and gains a
comprehensive understanding into the corporation's economic sector of quality administration
using the Enterprise assessment form and the monetary information from the practical example.
MAIN BODY
Section 1: The concept and importance of financial management
Cash performance is the consistent with the organization which aids in the effective
budgeting, administration, and supervision of the company's finance aspects. Monetary planning
aids in the achievement of the company's monetary goals established at the beginning of the
fiscal quarter. The corporate finance department plans the right distribution of finances to meet
the firm's client requirements. It assists the company to obtain cash from a wide range of origins
and to administer them effectively. Financial administration that is successful aids the
organisation in growing revenue and performing its obligations efficiently. Finance
administration performs an essential function for the company by utilising the assigned funds in
a specialized industry. It aids in price reduction and increased revenue for a company. Finance
administration is in charge of a corporation's economic stability. The financial division seems to
be in charge of cost cutting. It also aids in the managing of funds for long term investments and
individual riches (Foyeke, Olusola and Aderemi, 2016). The right funds are allocated from
various areas of the company is important to the achievement of a corporation. The prosperity of
investors is also reliant on the financial administration of the various enterprises, which
contributes to the profit of the company. Finance administration is important for a corporation's
economic development. The forecasting for the prospective for the growth of the company is
dependent on the finance effective administration. Additionally, a corporation's economic
administration determines prospective growth opportunity. The financial group's administration
is crucial in securing the firm's finances and fortune. The other crucial aspect of finance

administration is presenting investors with a comprehensive income report. The finance
leadership department of a corporation guides its personnel in order to achieve specific fiscal
objectives. The effectiveness of personal finance is represented in the firm's strategy for the
prospective that aids in the firm's current income gains. The finance leadership committee also
decides on the administration of basic resources, completed products stocks, and item pricing.
The finance executive committee also decides on the operational expense reductions. The
finance administration department typically plans resource efficiently for the company's
productivity and distribution. The group's primary priority is to make higher revenue while
spending fewer. It also ensures the financial security of the firm's expansion. The financial
division is also responsible for company's ongoing development and compensation and benefits.
The financial division is in charge of improving the reputation of the business in the eyes of the
general public by collecting state and local levies. Ultimately, the finance administration group
determines the development of a company and its revenue in terms of achieving the previously
stated objectives.
Section 2: The main financial statements and explain the use of ratios in financial management
Balance sheet:
2016
Total
£0
Non Current assets
Intangible assets 5,793
Tangible assets 52,812
Investments 10,693
69,298
Current assets
Stocks 28,571
Trade debtors 26,367
Short term deposits 14,779
Cash at bank and in
hand 14,632
84,349
Current liabilities
Bank loans and
overdrafts 9,610
Trade creditors 19,493
Other Creditors 678

Income tax payable 3,585
Other creditors
including tax and social
security
4,562
37,928
working capital 46,421
Total assets less
current liabilities 1,15,719
Non Current
Liabilities
Bank loans and
overdrafts 16,506
Other Liabilities 7,304
23,810
Provisions for
liabilities 8,094
Net assets 83,815
Capital and reserves
Called up share capital 39,436
Reserves 1322
Retained earnings 43,057
Total equity 83,802
Business Review:
2016 20
15 Change
£’000 £’000 %
Turnover (continuing operations) 1,89,711 1,79,58
7
5.60
%
Profit for the financial year 43057 18,987 126.7%
Shareholder’s equity 83802 63,057 32.90
%
Current assets as % of current liabilities 222% 30 -

4% 82%
Customer satisfaction 4.5 4
.1
10
%
Average number of employees 649 61
8
5
%
Gross Profit = £81125
Net Profit = £43057
Net Profit increased in 2016by126.7 during the year.
Shareholders’ equity increased by 32.9% by £83802.
The company’s “quick ratio”(Current Assets(excluding stock)divided by Current Liabilities)is
1.47:1
The company’s “current ratio” (Current Assets divided by Current Liabilities.)is 2.22:1.
Calculations:
Gross profit = sales – COGS = 189711 – 108586 = 81125
Net Profit = Revenue – total expenses = 81125 – 38068 = 43057
Profit = 43057 – 18987 = 24070
Current ratio = current assets / current liabilities = 54349 / 37928 = 2.22:1
Quick ratio = (current assets- stock) / current liabilities
= (84349- 28571) /37928 = 1.47:1
Equity = 63057 / 20745 = 83807
Increase in profit = 63057 / 32.9% = 20745
The 4 elements of fiscal statistics are as follows:
 The Revenue Account is a representation of a corporation's revenue and the element in
which the money is used. It also depicts the primary components of a net value, sales, and
expenditure over period. The financial report depicts the firm's full financial records over
several durations. It aids in the fiscal statement analysis of a company's
fiscal performance. The revenue report of the business calculates the expenditures and
profits to calculate the firm's profits and losses (Kwilinskyi, Shteingauz and Maslov,
2020).
 On a yearly or monthly level, the capital structure is the part of accounting of the firm
that represents the holdings and obligations of an affiliate. The fiscal status of a business

can be easily comprehended with the help of a monetary statement examination. The
financial statement additionally calculates the founder's and company's ownership. By
examining a financial statement, an investor's capital growth could be determined based
on the firm's existing situation.
 A firm's financial circulation report displays its total financial inflow and expenditure
statistics. The working capital typically shows how much money the corporation has on
hand. The working capital generally shows where the money comes from. It specifies the
revenue required for corporate operations as well as the money produced from various
suppliers. The accrual accounting also includes data on mortgages with descriptive
parameters. It aids in the corporation's economic management by evaluating the many
sources of money intake and expenditure. The working capital also determines
anticipated revenue estimates.
 Proportion assessment is the statistical evaluation of a company's finances and
effectiveness from an operating point of view. It is divided into 5 sections: income,
stability, activities, indebtedness, and marketplace position of the organization. To
measure business results, numerous associations utilized multiple kinds of profitability
ratios. The financial proportion depicts the company's rise or fall based on the outcomes.
The effectiveness proportion reveals the health of a company (La Torre and et, 2019).
Section 3: The main financial statements and explain the use of ratios in financial management
Filling in the blanks on the 'Business Review Template- In 2015, the business had a
revenue of £17,95,87,000, and in 2016, it had a revenue of £18,97,11,000. This move resulted in
a 5.6 percent increase in sales, and the overall earnings more than doubled in 2016, a difference
of 126.7 percent that is rather impressive. It indicates that the organisation is providing excellent
service to its clients. The stockholders' capital climbed by 32.9 percent to £39436, indicating
how venture capitalists are becoming more interested in this company. Every one of such
beneficial developments implies that the financial value is strong.
Creating a Financial Statement for the Example Organization in Spreadsheet- The
revenue report is a financial summary that provides factual results regarding a business over a
length of timeframe. An financial statements for a season is often prepared to demonstrate each
year's costs and revenues. The business has a revenue of £18, 97, 11,000 that is acceptable but
just not great, according to the spreadsheet. If the company needs to enhance its sales, it would

have to focus on expense management, as it is now £10, 85, 86,000, and that is quite significant,
and therefore would assist boost the sales revenue that is 42.8 percent. Companies would,
however, have to sustain operational costs while increasing operating revenue from 53.1 percent
(Mian and Sufi, 2018).
Finishing the Financial Statement in Spreadsheet- A firm's balancing statement is a
fiscal indication which reflects the firm's current fiscal situation. The intrinsic resources in this
business are £57 93,000 that is lower than the physical resources of £5 28 12,000 in this
business. This suggests the corporation is paying lesser consideration to it’s and trust that could
harm its brand image. In 2016, the business spent £1, 06, 93,000; for present and prospective
success, it must spend even more. The money owed to trading lenders is £194,933,000, which
must be repaid in order to protect the company's image.
Depending on the outcomes of accounting ratios, the firm's revenue, solvency, and
effectiveness-
 Liquidity: The quick proportion reflects a corporation's viability. It expresses the firm's
capacity to pay down its obligations. Because the institution's quick ratio is 1.47, it could
really swiftly transform its inventory into money in order to pay down its obligations.
 Efficiency: This business's financial statement indicates net revenues of £6,92,98,000,
which are more than current debt of £3,79,28,000, indicates that the firm is competent of
generating sufficient income from its resources.
 Profitability: A firm's earnings could be calculated by subtracting its expenses from its
revenue. In 2015, the business used to have a revenue of £1 89 87,000, and in 2016, it
made a gain of £4, 30, 57,000, indicates that the firm is profiting substantially. The
influence on the firm's operating income that has risen may be seen by individuals. This
could benefit in the big scheme of things if it concentrates on its expenditures and strives
to lower those (Panos and Wilson, 2020).
Section 4: Using examples from the case study describing and discussing the processes this
business might use to improve their financial performance.
The following procedures may aid the organization in improving its business results-
 Investing in resources: Given the existing conditions of the business, expenditure in
investments must be raised in order to address the problems. This should assist the
business in increasing its adequate cash flow. Investments in resources are made with the

assumption that the expenditure incurred on goods could create revenue and that their
worth would improve over time, allowing a corporation to expand its finances.
 Spending cuts: One strategy to improve the firm's fiscal position is to reduce spending.
Profitable entrepreneurs engage in Research and development to identify more cost-
effective manufacturing techniques which produce high-quality goods.
 Budgeting prediction evaluation: NPV and IRR approaches are recommended. These
would be computed using the following methodologies that represent the worth of a
business in percentages rather than cash. This is utilized to assess expenditures and
infrastructure upgrades inside a corporation.
 Stock control: To enhance the firm's adaptability, the only in Moment stock control
approach is recommended. Such strategy aids in the optimization of a firm's existing
funds and the reduction of wastage created (Subires and Bolivar, 2017).
CONCLUSION
The effects of finance administration as well as its significance in a firm were examined in
depth in this research. It also conducted a cash flow examination. The productivity, return on
capital, and equity of the firm were investigated using the management assessment form, capital
structure, and retained earnings, as well as the real world example given. Accounting ratios has
indeed been employed to have a better understanding of the subject. Following the completion of
the practical example, techniques for improving the corporation's economic administration were
advised, and strategies for repairing the detected weaknesses were examined.

REFERENCES
Books and journals
Eka, H., 2018. Corporate finance and firm value in the Indonesian manufacturing
companies. BUSINESS STUDIES. 11(2). pp.113-127.
Foyeke, O.I., Olusola, F.S. and Aderemi, A.K., 2016. Financial structure and the profitability of
manufacturing companies in Nigeria.
Kwilinskyi, O., Shteingauz, D. and Maslov, V., 2020. Financial and credit instruments for
ensuring effective functioning of the residential real estate market.
La Torre, M. and et.al., 2019. Business models for sustainable finance: The case study of social
impact bonds. Sustainability. 11(7). p.1887.
Mian, A. and Sufi, A., 2018. Finance and business cycles: the credit-driven household demand
channel. Journal of Economic Perspectives. 32(3). pp.31-58.
Panos, G.A. and Wilson, J.O., 2020. Financial literacy and responsible finance in the FinTech
era: capabilities and challenges.
Subires, M.D.L. and Bolivar, M.P.R., 2017. Financial Sustainability in Governments. A New
Concept and Measure for Meeting New Information Needs. In Financial Sustainability
in Public Administration (pp. 3-20). Palgrave Macmillan, Cham.

Appendices
Income statement:
Turnover 3 1,89,711
Less cost of sales:
Material Cost 42,597
Production Cost 15,231
Labour Cost 50,758
1,08,586
Gross profit 81,125
GP %
= 42.8
Less Expenses:
Administrative expenses 13,751
Other operating overheads 22,374
Interest 1,943
Total Overheads 4 38068
Profit/(loss) for the financial
year 43057 NP%= 22.7