Comprehensive Report on Financial Transactions, Statements, and Ratios

This report delves into the realm of financial transactions, providing a comprehensive understanding of their nature and significance. It encompasses the preparation of financial statements, including income statements and balance sheets, which are instrumental in evaluating a company's financial health. The report further explores the calculation of key financial ratios, such as profitability ratios and return on capital employed, to assess the efficiency and effectiveness of a business. A case study is presented, evaluating the performance of 'Rose Roosevelt Delicacy,' providing insights into its strengths and weaknesses. Additionally, the report elucidates the purpose and structure of a cash budget, a vital tool for financial planning and management. The analysis concludes with a discussion on the overall financial performance, emphasizing the importance of effective resource utilization and strategic decision-making to optimize financial outcomes.

Legal and financial
environment

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
1. Explain the financial transaction and give two examples........................................................1
2. Prepare financial statements....................................................................................................1
3. Calculate financial ratios.........................................................................................................2
4. Evaluate the performance of Rose Roosevelt Delicacy...........................................................2
5. Purpose of cash budget, and prepare the layout of cash budget..............................................3
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Legal environment includes laws passed by the government and various decisions making
done by the appellate authority. For any business to sustain in the market it requires to follow the
rules and regulations laid down by the business. In the following report it states about the
financial transactions and how financial statement are used for the analysis of business. It also
includes report by manager which is used by the management for the future perspective of Rose
Roosevelt Delicacy.
MAIN BODY
1. Explain the financial transaction and give two examples.
A financial transaction is an understanding or correspondence between a purchaser and a
merchant to trade resources for instalment. It includes an adjustment of the monetary
circumstance of at least two organizations or people. Purchasers and venders are discrete
substances or articles that regularly include the trading of things of significant worth, like data,
merchandise, administrations, and cash. On the off chance that you trade products one time and
cash some other time, it is as yet an exchange. This is known as a double-entry system: the initial
segment is giving cash and the subsequent part is getting products. A currency exchange has
different components that connect, which so far have helped differentiate it from different
exchanges. For example, there would be a release date, a chart field, an exchange type, and
possibly a customer or seller. Some of the examples of financial transactions are: Cash receipts,
purchase orders and many others.
2. Prepare financial statements
Income statement
Particular Amount Particular
Opening Stock 31308 Sales 619740
Purchases 271360 Return outward 26814
Carriage Inward 23660 Closing Stock 35500
Return Inward 11248
Gross profit 344478
salaries and wages 89042 Gross profit 344478
rent rates and insurance 38836 Discount Received 3500
Heating lighting 24740
Carriage out 9124
1

Postage stationary and telephone 4820
Discount Allowed 4612
Advertisement 11960
Depreciation 30000
General expenses 16700
Net profit 118144
Balance Sheet
Liabilities Amount Assets Amount
Capital 169804 furniture and fixture 150000
Drawing -36880 Bank 8880
Net profit 118144 Account receivable 99000
OUTSTANDING salary 12000 advanced paid expenses 8300
Account payable 39680 stock 35500
cash 1068
302748 302748
3. Calculate financial ratios
Profitability Ratios:
Net Profit Margin = (Net Profit / Net Sales) * 100
= 118144 / 519740) * 100 = 22.73%
Return on Capital Employed = EBIT / Capital Employed
= 118144 / 251608 = 0.47: 1
Working Notes:
Capital Employed = Total Assets - Total Current Liabilities
= 302748 – 51680 = 251608
4. Evaluate the performance of Rose Roosevelt Delicacy
On the whole, it can be analysed that the net profit ratio assesses to measure the gross
success of an organisation. A high net profit margin shows that the business is successfully
pricing its products in a correct way and is having suitable cost control in the business. The net
profit ratio computed of the company here is 22.73% which shows that the net profit of the
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company is very low and the business has not been able to utilise the business resources in an
effective manner resulting in such low percentage of net profit.
It can be concluded that the business return on capital employed is less than the half of the
capital employed by the business it states that the company needs to increase its returns in order
to increase the return for the shareholders as well as the for the company itself.
5. Purpose of cash budget, and prepare the layout of cash budget
Cash budget is a statement which uses to establish the estimation of certain figures which
are related to the income and expenditures of the business. Cash budgets are prepared for the
purpose of assessing whether the business has the availability of sufficient cash balance or not
for the intent of operating the business for a future time frame. The cash budget assists to provide
for the organisational insights for its cash requirements or the presence of surplus if any. The
cash budget also assists to determine and ascertain an efficient and effective allocation of cash
needs. The preparation of cash budgets helps businesses in forecasting the future financial needs
of the business, assists in the evaluation and assessment of the performance of business and
describe the situations where the business is required to take corrective measures. The purpose of
making cash budgets lies in the computation of the cash receipts, cash balances and the payments
made in cash relating to the business in a future period of time. The presentation of such
information’s helps the business to assess whether the business is utilising its funds effectively or
not.
Cash Budget
Particulars
Month
1
Month
2
Month
3
Month
4
Revenue 51645 51645 51645 51645
Total Income
51645.
00
51645.
00 51645 51645
Opening stock
31308.
00
32873.
40
34517.
07
36242.
92
Purchases
271360
.00
284928
.00
299174
.40
314133
.12
3

Closing Stock
35500.
00
37275.
00
39138.
75
41095.
69
EXPENDITURE
salaries and wages 7420.1
67
7791.1
8
8180.7
3
8589.7
7
rent rates and insurance 3236.3
33
3398.1
5
3568.0
6
3746.4
6
Heating lighting 2061.6
67
2164.7
5
2272.9
9
2386.6
4
Carriage out 760.33
33 798.35 838.27 880.18
Postage stationary and telephone 401.66
67 421.75 442.84 464.98
Discount Allowed 384.33
33 403.55 423.73 444.91
Advertisement 996.66
67
1046.5
0
1098.8
3
1153.7
7
Depreciation 2500 2625.0
0
2756.2
5
2894.0
6
General expenses 1391.6
67
1461.2
5
1534.3
1
1611.0
3
TOTAL EXPENSES
19152.
83
20110.
48
21116.
00
22171.
80
Cost of sales
32492.
17
34116.
78
35822.
61
37613.
74
CASH SURPLUS/DEFICIT
19152.
83
20110.
48
21116.
00
22171.
80
Opening balance
1068.0
0
20220.
83
40331.
31
61447.
31
Closing balance
20220.
83
40331.
31
61447.
31
83619.
11
CONCLUSION
From the above report, it can be concluded that financial transaction plays a crucial role in
monitoring the performance of the business entity. The financial performance of the business is
not good and it is not effectively utilising the resources of the organisation. The profitability
ratios of the organisation calculated are as net profit is 22.73% and the Return on capital
employed stands at 0.47%. both the ratios fail to optimally utilise the resources of the business
and show a very weak financial position. The report consists of the financial accounts consisting
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cash budget, income statement and balance sheet which precisely depict the performance and
position of the business in the market.
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REFERENCES
Books and Journals
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the Knowledge Gap in High-Value Low-Frequency Transactions. In Americas
Conference on Information Systems, The University of Auckland Business School
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Hoxha, V. and Sadiku, S., 2019. Study of factors influencing the decision to adopt the
blockchain technology in real estate transactions in Kosovo. Property Management.
Lam, M.C., 2019. Transactions with God: market, moralities and agency in the Worship of the
Goddess of the Treasury in Northern Vietnam. The Asia Pacific Journal of
Anthropology, 20(2), pp.111-128.
Liu, C. and et.al, 2021. Measuring similarity for data-aware business processes. IEEE
Transactions on Automation Science and Engineering, 19(2), pp.1070-1082.
Mo, Q. and et.al., 2019. Development of collaborative business processes: a correctness
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Nawari, N.O. and Ravindran, S., 2019. Blockchain and the built environment: Potentials and
limitations. Journal of Building Engineering, 25, p.100832.
Pasquadibisceglie, V. and et.al., 2021. A multi-view deep learning approach for predictive
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Seligson SC, M., 2021. Refinancing Preference-share Transactions: Escaping the Perils of
Sections 8E and 8EA of the Income Tax Act. Business Tax and Company Law
Quarterly, 12(3), pp.1-7.
Tekkali, C.G. and Vijaya, J., 2021, August. A Survey: Methodologies used for Fraud Detection
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Sustainable Communication Systems (ICESC) (pp. 1758-1765). IEEE.
Tiwari, S., Ahmed, W. and Sarkar, B., 2018. Multi-item sustainable green production system
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