BSc Hons Business Management: Financial Management and Improvement

This report provides a comprehensive analysis of financial management concepts and their importance in enhancing business performance. It begins by defining financial management and highlighting its significance in managing funds, maximizing profits, and aiding decision-making. The report then describes key financial statements, including the income statement, balance sheet, and cash flow statement, along with the use of financial ratios for evaluating profitability, liquidity, and efficiency. A case study is utilized to demonstrate the application of these concepts, with calculations and ratio analysis presented. Finally, the report discusses processes that businesses can implement to improve their financial performance, emphasizing the role of financial statements in assessing an organization's financial health and sustainability. Desklib offers additional resources, including past papers and solved assignments, to support students in their studies.

BSc (Hons) Business Management with
Foundation
BMP3005
Applied Business Finance
The concept and importance of financial
management and the processes
businesses might use to improve their
financial performance
1

Contents
Introduction 3
Section 1: Definition and discussion of the concept and
importance of financial management 3
Section 2: Description and discussion of the main
financial statements and explain the use of ratios in
financial management
4
Section 3: Using the template provided 5-9
i. Completing the Information on the ‘Business Review
Template (Ensure that you display your calculations for this
detail)
6
ii. Using Excel producing an Income Statement for the Sample
Organisation (see Case Study). This should be included within
your appendices 6
iii. Using Excel completing the Balance Sheet 7
iv. Using the Case study information describing the profitability,
liquidity and efficiency of the company based on the results of
ratio analysis 7
Section 4: Using examples from the case study describing
and discussing the processes this business might use to
improve their financial performance 9
Conclusion 9
References 11
Appendix 12
2

Introduction
Financial management can be defined as the most substantial part of managing the funds
appropriately by considering all the economic and monetary aspect of the organisation. For this,
an appropriately knowledge is needed for financing the resources (Chu and et. al., 2022). The
report has been divided into 4 section. In section 1, the role and the concept of the fiscal
administration is defined. In section 2, the key financial statement along with the used of these for
the management has been discussed. In section 3, the business review template has been filled
along with the income statement and balance sheet. On the basis of this the fiscal ratio are
calculated along with the evaluation. In section 4, the points which can be considered for
improving the financial performance has been discussed the end.
Section 1: Definition and discussion of the concept and
importance of financial management
It is the concept in which consists of the function of governing the resources by
applying it in the business activities appropriately. It main concentration is on the governing
the business operation by maximizing the profits that could be gained by the firm. It is a pillar
which creates a balance between the benefits gained and the expenditure by optimally
utilising the funds in an efficient way. It also aides the executive in making decision
regarding the investment and the disinvestment process.
Significance:
1. Manage of the business procedures: It ensures the firm has sufficient cash in the
organisation to run it operating activities successfully without any hindrances. For
this, the stock turnover, debtors, and the creditors payment Is made on time by
ensuring the access of the cash flow remains within the firm (di Filippo and et. al.,
2022).
2. Hovering of funds: The another help which is the financing department does is the
managing the funds so that it can be used for expanding the business activities and the
development of the firm can be proceeded. It is the responsibility of the department
to find out the capital sources such as bonds, equities debentures and many more
which can be embraced by the firm for escalating its market value and share. It can be
done by analysing the advantage and the demerits by properly justifying the cost
allocated at optimal cost.
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3. Decision making: It aides the business in taking all the key decision regarding the
monetary and the economic factors which the impact the business. It is the reason that
it holds a position in every department of the corporation such as, marketing,
operations, production (Gajdošík, 2022).
4. Long – term Stability: It helps the business association in sustaining in the market
for the long haul of time. Because by handling the funds, it can help the company in
declining its irrelevant expenditures by optimally utilising the funds.
Section 2: Description and discussion of the main
financial statements and explain the use of ratios in
financial management
Fiscal statements are the most important part of the annual report which every listed
company publishes on its website. It is generally prepared for the whole fiscal year. In this
the cost, expenditures, revenue, profit, inflow and outflows of cash, the assets and the
liabilities are recorded for analysing the economic performance of the firm. These
information is mainly utilised by the competitors, executives, government, owners, and
management to evaluate and find the accuracy of the calculations. Some of the financial
statement are discussed underneath:
1. Income Statement: It is a part of the financial assertion in which the profit for the
year is computed which has been earned by the organisation. It can be ascertained
subtracting the operating and direct income by the operating and direct expenditures.
The net profit according to the income statement is calculated in two parts. Firstly, all
the direct incomes, sales and the stock is considered by elimination the cost of sales,
from this the gross profit is calculated. In the second part, the indirect costs and the
expenditures are deteriorated from the gross profit for calculating the amount of net
profit. In short, it can be summarised by the subtracting all the expenses from the
income which has been received by the organisation in the financial year. From this
the position of the profitability can be accessed of the firm (Lei and et. al., 2022).
2. Statement of financial position: It is the balance sheet which has to be summarised
by the assets and the liabilities. From this the monetary health of the organisation can
be determined. The assets side of the balance sheet contained the 3 heads which are
current, non – current and fixed assets. Under which comes the inventory,
equipment’s, tangible assets, cash or bank in hand, investments and many more. The
liabilities side contains the current and non- existing and the equities, in which the
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value of bonds, payables, borrowings, capital, retained earnings are included. From
this the risk that can be taken by the organisation can be determined (Lozza and et.
al.,2022).
3. Cash flow Statement: From this type of assertion, the inflows and the outlay of cash
can be dogged. It helps in making the financial decision especially when making the
investment. It is categorised in three parts. In operating activities, come the direct
expenses of the income and expenses also the decrease or increase in the assets and
liabilities. In investment activities, the acquisition and trade of the fixed assets is
determined. In the financing activities, the increase ort deterioration in the value of
equity is evaluated by recording the dividend as well as the interest expenses and
incomes.
Usage of the accounting data:
 When analysing the monetary records to the executives, it is essential since it helps
them in gauging enormous and complex monetary figures. The investors think that is
troublesome to make evaluation sometimes but it makes it easier for appreciating the
current achievements of the organisation so it might keep investing in the firm.
 The sustainability of the form is regardless of whether the organisation will satisfy its
responsibilities inside a monetary quarter, all assume a part in a business' aptitude to
take care of its current monetary commitments. An organization's repayment cycle is
regularly inspected involving proportions to improve it and increment its credit value
(Mani, 2022).
 An organization that participates in an assortment of business regions and ventures, a
significant number of which are more dangerous. Hazard and its various classes can
be analysed utilizing proportions, and healing measures can be taken to alleviate it.
The obligation to value and obligation to inclusion proportions show how dependent
an organization is on external subsidizing and how well it can reimburse it
Section 3: Using the template provided:
5

v. Completing the Information on the ‘Business Review
Template (Ensure that you display your calculations for this
detail)
vi. Using Excel producing an Income Statement for the Sample
Organisation (see Case Study)
This is comprised in appendix
vii. Using Excel completing the Balance Sheet
6

viii. Using the Case study information describing the profitability,
liquidity and efficiency of the company based on the
1. Profitability ratios: It helps with deciding an organization's benefit toward the finish
of the monetary year. Contributing, ordinary organization activities, stock profit, and
different sorts of pay could all add to this aggregate. To put it another way, it
computes how much cash it can create from its income (Shoeibi and et. al., 2022).
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Results: The information above show that the benefit of the organization is getting to the next
level. The organization's edge has decreased continuously contrasted with the earlier year.
Then again, the organization's net benefit in 2015 was genuinely low, yet income flooded
extensively in 2016. The company's roundabout spending has been kept up with under close
control, which has brought about this development. This shows that the organization is
investing huge energy to further develop its benefit list.
1. Liquidity Ratio: These measurements are utilized to assess an organization's capacity
to meet momentary commitments with current resources. This proportion is
particularly valuable for loan losses when choosing whether or not to stretch out
credit accessible to the organization and how much credit they ought to broaden
(White III, Chintakananda and Rajwani, 2022).
Analysis: The organization has a decent income circumstance. Given the present
status of issues, the firm has adequate transient resources for cover its obligations two times
finished. It will have sufficient resources for pay off of its exceptional obligation, regardless
of its reluctance to sell its stock. After the payment, there is sufficient money left over for
everyday activities.
2. Efficiency Ratio: It assesses a business' capacity to benefit from its assets. It likewise
keeps up with track of the time it can turn its own head in one course.
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Analysis: In the present situation, the borrower and moneylender turnover rate seems, by
all accounts, to be proper. The partnership has sufficient opportunity to take care of it to
gather cash in the in the interim. In other words, it can pay its borrowers on schedule. An
organization's stock turnover rate can't be determined without contrasting its outcomes with
those of different organizations or past discoveries from same organization.
Section 4: Using examples from the case study describing
and discussing the processes this business might use to
improve their financial performance.
The previously mentioned proportions are utilized to evaluate an
organization's monetary usefulness. Investors can use this data to make expectations and pick
ventures that will fill in profit, soundness, and viability. It assists the organization with
wanting to oversee by expecting the organization's anticipated situation as far as monetary
hardships. Therefore, deciding proportions and dissecting the monetary strength of the
association are fundamental. Boosting abundance is basic since it guarantees the key or long
supportability of an association, which is characterized by its incomes (Yulizar, Apriandanu
and Surya, 2022).
Finishing an organization's prerequisites is, truth be told, a metric that can be used to
work on the organization's prosperity. This can be accomplished by utilizing promoting
methods and concentrating on administrative practices. It centers around bookkeeping
proportions, which is helpful for deciding an organization's monetary wellbeing, worth, and
dissolvability
This can be accomplished by utilizing promoting procedures and concentrating on
administrative practices. It centers around bookkeeping proportions, which is helpful for
deciding an organization's monetary wellbeing, worth, and dissolvability.
It focuses on further developing its advertising systems to acquire buyers. It will
extend its client base while additionally creating income. Then again, the task's profit will be
drained accordingly. It will impact the assertion of monetary situation as a result of the
progress obligation.
The monetary feasibility of the still up in the air by the choices made by the money
office. All consumptions ought to be noticeable from all points and separated to decide if they
are supported (Yankovskaya, Mishchenko and Belkina, 2022).
Conclusion
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As per the financial summaries are a fundamental and essentially significant
component of any business organisation, as it is going with report that is summed up. It will
help the board members in designating the assets to aid the firm in extending and developing.
The idea of monetary arrangement has shown that it is principally utilized in pivotal
direction. It will help in foreseeing the business conditions and getting ready for any
forthcoming authoritative issues. The fiscal ratios are additionally created, which will help
with assessing the organisation monetary well-being and empowering the examination
research. Execution and upgrading of the strategies are also available to the organisation in
elevating the financial performance.
10

References
Chu, Z., and et. al., 2022. Micro-mechanism of brittle creep in saturated sandstone and its
mechanical behavior after creep damage. International Journal of Rock Mechanics
and Mining Sciences. 149. p.104994.
di Filippo, L and et. al., 2022. Vitamin D levels are associated with blood glucose and BMI
in COVID-19 patients, predicting disease severity. The Journal of Clinical
Endocrinology & Metabolism. 107(1). pp.e348-e360.
Gajdošík, T., 2022. Smart Tourists. In Encyclopedia of Tourism Management and Marketing
(pp. 1-3). Edward Elgar Publishing.
Lei, H., and et. al., 2022. Piezoelectric polarization promoted spatial separation of
photoexcited electrons and holes in two-dimensional g-C3N4 nanosheets for
efficient elimination of chlorophenols. Journal of Hazardous Materials. 421.
p.126696.
Lozza, E.,and et. al.,2022. Money as a symbol in the relationship between financial advisors
and their clients: a dyadic study. International Journal of Bank Marketing.
Mani, M., 2022. A Qualitative Study on Financial Inclusion Initiatives in India: Experiences
of Bank Managers. International Journal of Social Ecology and Sustainable
Development (IJSESD). 13(1). pp.1-10.
Shoeibi, S., and et. al., 2022. Performance evaluation of a solar still using hybrid nanofluid
glass cooling-CFD simulation and environmental analysis. Sustainable Energy
Technologies and Assessments. 49. p.101728.
White III, G.O., Chintakananda, A. and Rajwani, T., 2022. Seeds of Corruption? The
Contingent Role of Ties to Politicians and Foreign Subsidiary Relations with
Government‐Sponsored Financial Institutions. British Journal of Management.
Yankovskaya, V.V., Mishchenko, V.V. and Belkina, E.N., 2022. Financial Infrastructure in
the Cooperative Sector of the Economy: Current Needs and Development Trends. In
Сooperation and Sustainable Development (pp. 1079-1087). Springer, Cham.
Yulizar, Y., Apriandanu, D.O.B. and Surya, R.M., 2022. Fabrication of novel SnWO4/ZnO
using Muntingia calabura L. leaf extract with enhanced photocatalytic methylene
blue degradation under visible light irradiation. Ceramics International. 48(3).
pp.3564-3577.
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Appendix:
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