Financial Analysis and Management of Resources: A Comprehensive Report

This report provides a comprehensive analysis of financial resource management, focusing on the evaluation of financial and management accounts, and highlighting their similarities and differences. It explores the requirements of financial statements in both non-profit and profit organizations, emphasizing their usefulness for decision-making and attracting stakeholders. The report also examines the needs of various stakeholders, including shareholders, banking agencies, governmental authorities, directors, managers, and creditors, and how financial disclosures cater to their interests. Furthermore, the report includes a detailed financial analysis of Stratford Yachts Ltd., measuring its financial ability through various ratios such as Net Profit Margin, ROCE, Asset Turnover, Current Ratio, Acid Test Ratio, and Gearing Ratio. The analysis covers the years 2015 and 2016, comparing the results with industry averages to assess the company's financial performance and resource management effectiveness.

MANAGING FINANCIAL
RESOURCES

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1. Evaluating the financial and management accounts as well as similarities in these terms 1
2. Ascertaining the requirement of financial statements in non-profit and profit organisation. .3
3. Determining the needs of various stakeholders of an entity...............................................4
TASK 2............................................................................................................................................5
1. Measuring financial ability of Stratford Yachts Ltd...........................................................5
2. Presenting Stratford Yacht's report.....................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
To improve firm's financial condition and bring stability in economy, there is the need to
have adequate changes in operations. satisfactory management of funds will be fruitful for an
enetity in terms of having proper analysis over the financial accounts of the business. In the
present report, there will be analysis of financial data set of Stratford Yachts Ltd in order to
determine their profitability, liquidity and management of various resources. Therefore, there
will be proper management of all the resources which will be fruitful for the managers in terms
of managing the financial health and internal economy of the organisation.
TASK 1
1. Evaluating the financial and management accounts as well as similarities in these terms
The framework of financial and management accounts is based on making records of all
activities such as inflows and outflows of funds. However, it can be understood as:
Management accounts:
In relation with the management accounting techniques, these are accounts which were
being prepared by the separate units as per recording of the daily activities. The analysis and
outcomes derived from such reporting will be helpful in making appropriate organisational
decisions (Barr, Margaret Budgets and financial management in higher education, 18). It helps
in managing the funds for the operations in better cost control that will make effective execution
over work and workforce. It includes preparation of various budgets and forecasting statements
that will be helpful for making the effective determination of costs to be implicated in
operations.
Financial accounts:
These are the accounts which were made for external users such as investors,
governmental bodies, suppliers, banks and employees in organisation. Therefore, it will be very
useful for decision making as well as determining the profitability of entity (Bryce, Herrington
Financial and strategic management for nonprofit organizations, 17). It mainly includes the cash
flow statements, income statement and statement for change in equity as well as balance sheet of
the firm.
Difference between financial and management accounts:
Basis Financial Accounts Management Accounts
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Requirements These accounts are prepared
for disclosing the financial
position of the entity in the
market. This disclosure will be
helpful in terms of attracting
the large number of investors
for capital collection.
The preparation of the reports
and accounts helps in internal
control and accurate decision
making which will enhance the
organisational ability.
Accuracy These contain the records of
all units in a firm in a
summarized statement. It will
be used for effective analysis
over the financial position of
business (Grabher, Gernot, and
Jonas König). "Performing
network theory. 17).
These accounts contain details
relevant with the costs,
revenue and profits over
operating activities. Thus, the
information belongs to all the
departments in the
organisation that will be
monitored and have effective
cost decisions.
Reporting focus It focuses over creating the
financial statements and
presenting the annual
disclosure in which they
mainly ascertain the turnover.
It is more concerned with
operational reports which are
separately prepared and
distributed in the organisation.
Standards There will be influence of
IFRS, GAAP, FRS and various
standards that will be
necessary for accurate
reporting and proper use of
techniques to present the
reports.
There is no such requirement
of any standards as it is only
considered by the internal
users for gaining the
appropriate information
(Loucks, Daniel and Van
Beek. Water resource systems
planning and management,
17).
2

Time frame It is mandatory and needed to
be prepared by the firm as
quarterly, half yearly or
annually.
It will be prepared on daily
basis which is used for
determining the performance
and efficiency of entity.
2. Ascertaining the requirement of financial statements in non-profit and profit organisation
The use of financial statements is for accurate decision making as well as for analysing
the probability of business. Therefore, as per the rules stated by IFRS, all the organisations who
are operating trade practices must have proper disclosure of the final accounts. Therefore, these
accounts are to be prepared on the basis of international standards which make informative
disclosures to all the users (Vahlne, Erik, and Johanson. "The internationalization process of the
firm, 17). However, the profitability of such statements will be analysed as per its uses for profit
and non-profit organisation such as:
Usefulness of financial statements for profit organisation:
The professionals at the profit organisation make the presentation of the reports which is
with the motive of attracting the large number of stakeholders. The fruitfulness of financial
disclosure for such organisation is based of having sufficient amount of capital and investment in
the business which will enhance their efficiency and ability to meet the targets (Vanacker, Tom,
Collewaert, and Zahra. "Slack resources, firm performance, and the institutional context, 17).
Therefore, they focus mainly over improving the turnover as well as balancing the assets of the
firm which will be attractive to the investors and they feel secure in investment terms. Moreover,
there will be preparation of various accounts which are used by the investors to analyse such as:
 Income Statement
 Cash Flow Statement
 Statement for Change in Equity
 Balance Sheet
Usefulness of financial statements for non-profit organisation:
The initial need of the financial accounts in the organisation which will be based on
having the adequate funds for the operations. Therefore, non-profit organisation does not seek
for better profitability and growth as they seek for the sufficient funds that will be used for
business purpose (Omeje, Kenneth. High stakes and stakeholders: Oil conflict and security in
3

Nigeria, 17). They gather the capital from governmental grants, donations from society, etc.
which they will use for improving the environment and society for better living. They prepare the
financial statement for ascertaining the actual requirement of costs for the operations. Moreover,
there will be preparation of the accounts such as:
 Cash Flow Statement
 Changes in Total Assets
 Statement of Activities
 Balance Sheet
3. Determining the needs of various stakeholders of an entity
The purpose of preparing the financial statements is mainly to disclose the financial
position of an entity in the internal market. It clarifies the motive of presentation which belongs
to attract the large numbers of stakeholders for capital investment. On the other side, the use of
statements for the internal users which are helpful in managing the internal control and accurate
operational decisions (Who Are the Key Stakeholders in an Organization?, 2017). Therefore,
there are various stakeholders to the firm which has their different requirements and interest in
the financial disclosure such as:
Shareholders: The main purpose behind preserving the financial data set among the
society is to attract the shareholders in the firm. This equity holders seeks for the annual
turnover, dividend payable by the organisation to the existing investors of the assets for meeting
short term and long terms debts (Jenkins, Heather, Mammides, and Aidan. "Exploring
differences in stakeholders’ perceptions of illegal bird trapping in Cyprus, 17). These are the
information which were analysed and used by them in analysing the ability of firm in making
profitable returns. Conversely, to satisfy the investors the firm must have appropriate dividend
policies which will be attractive and influencing for them.
Banking agency: Banks seeks for the amount of return they will recover from the
company on the basis of mortgage or loan acquired by them. The surplus balance of the annual
turnover will be considered by the banks in analysing efficiency of firm in making payments
over their existing dividends (Shackleton et al. "A framework for engaging stakeholders on the
management of alien species, 18).
Governmental authorities:These are the users of the accounts which seeks for the tax
payments made the organisation over their operating income. Therefore, the analysis will be
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helpful for government in determining how much tax has been paid by these practitioners in the
year (Fernandez, Paredes, Quirland-Lazo, and Lenz Alcayaga. "Risk Sharing Agreements As
Payment Mechanisms. 17). It will be useful for them in having appropriate reserves as well as
making investments in the capital projects.
Directors and managers: The internal users of the firm's financial analysis are the
directors and managers which seeks for the efforts made by the firm in the year as well as the
gains which will be used for the future development. The focus of these individuals to make
changes in the operational activities, rules and policy which will be helpful to them.
Creditors: The suppliers and overall investors in the firm. Therefore, they use the
financial information as to analyse the profitability and security of their investments in the firm
(Cardwell, Anna, Williams, and Pyle. "Corporate public relations dynamics. 17).
TASK 2
1. Measuring financial ability of Stratford Yachts Ltd.
Particulars Formula 2015 Ratio 2016 Ratio
Industry
Average
Np Margin NP *100 0.57 11.00% 0.51 8.00% 14.50%
Sales revenue 5.3 6.6
ROCE
net operating
profit 0.87 0.95604 0.78
0.6190
5 26.00%
capital employed 0.91 1.26
Asset Turnover
Ratio Sales revenue 5.3 1.13248 6.6
1.2290
5 1.79 times
Net assets 4.68 5.37
Accounts
Receivables
Collection Period
accounts
receivables *365 1.32 90.9057 1.84
101.75
8 183 days
5

Sales revenue 5.3 6.6
Current Ratio CA 1.91 1.22436 2.49
1.3105
3 1.87962
CL 1.56 1.9
Acid Test Ratio CA- inventories 1.79 1.14744 2.34
1.2315
8 1.76323
CL 1.56 1.9
Gearing Ratio Net liabilities 1.56 70.80% 1.9 63.70% 32.00%
total stake
holder's liabilities 0.91 1.26
Distribution Costs
As % Of Sales distribution costs *100 0.49 9.00% 0.61 9.00% 9.50%
Sales revenue 5.3 6.6
Administrative
Costs As % Of
Sales
administrative
costs *100 0.22 4.00% 0.27 4.00% 4.50%
Sales revenue 5.3 6.6
Labour Cost As %
Of Sales direct labour *100 0.98 18.00% 1.25 19.00% 18.10%
Sales revenue 5.3 6.6
Operating Costs
As % Of Sales operating cost *100 4.43 84.00% 5.82 88.00% 85.00%
Sales revenue 5.3 6.6
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2. Presenting Stratford Yacht's report
From: Business Planning Assitant
To: Paul Marriot (Director) Stratford Yachts Ltd.
Subject: Presenting account's report for Stratford Yachts Ltd.
Sir,
As per the analysis I have made over the financial position of Stratford Yachts Ltd, it
can be said that the firm will have appropriate gains and as if they make the proper management
of the operations (Karlsson et.al., "Involvement of external stakeholders in local health
policymaking process. 17). To analyse the profitability, efficiency and liquidity of the firm,
there is need to make analysis over the several ratios such as:
ROCE: In relation with making the adequate analysis over the firm's profitability during
the period, the return of capital employed as on 2015 was 0.95. While, in 2016, it reduced to
0.619. Thus, it has been demonstrated here that the firm has reduction in the operational
performance as compared with the last year. There has been reduction in the operating income
in 2016.
Assets turnover ratio: In relation with making the adequate asset turnover ratio, it can
be said that there are variations in this ratio as in 2015 it was 1.132. While, in the year 2016, it
has increased to 1.23. It is demonstrated here that in the current year, there has been proper
amount of sales made by the firm which are lead it to have better turnover its assets.
Net profit margin: This ratio will be helpful to the firm in determining the probability
which ascertains that they are bale in making the returns to their equity holders. Therefore, in
2015, it was 11% which drastically changed in 2016 as 8%. Thus, in respective period, firm has
poor management of work and increasing operational costs in business activities.
Current ratio: In accordance with the current ratio of the firm in 2015, it was 1.2 while
in 2016, it raised to 1.31. Thus, it can be said that firm has gained ability to make short terms
debt payments on right time.
However, as per such analysis, it can be said that there will be appropriate development
of framework which will balance the internal business management.
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CONCLUSION
On the basis of above study, it can be demonstrated here that the business will have
effective growth and development in the operational activities as if they present the proper
disclosure of the financials. In relation with the use of financial statements by the various
stakeholders of the firm, it is required that statements must be reliable, transparent and accurate.
Thus, as per the financial analysis of Stratford Yachts Ltd., it can be said that there is need to
have control over operating expenses which are influencing the annual turnover of the firm.
Moreover, the use of such statements will be fruitful in managing the business operations as well
as in attracting large number of stakeholders to the firm.
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REFERENCES
Books and Journals
Barr, Margaret J. Budgets and financial management in higher education. John Wiley & Sons,
2018.
Bryce, Herrington J. Financial and strategic management for nonprofit organizations. Walter de
Gruyter GmbH & Co KG. 2017.
Cardwell, Lea Anna, Sean Williams, and Andrew Pyle. "Corporate public relations dynamics:
Internal vs. external stakeholders and the role of the practitioner." Public Relations
Review 43, no. 1 (2017): 152-162.
Fernandez, D. Paredes, C. Quirland-Lazo, and R. Lenz Alcayaga. "Risk Sharing Agreements As
Payment Mechanisms: A Comprehensive And Communicable Practical Approach For
Stakeholders." Value in Health 20, no. 9 (2017): A912.
Grabher, Gernot, and Jonas König. "Performing network theory? Reflexive relationship
management on social network sites." In Networked Governance, pp. 121-140. Springer,
Cham, 2017.
Jenkins, Heather M., Christos Mammides, and Aidan Keane. "Exploring differences in
stakeholders’ perceptions of illegal bird trapping in Cyprus." Journal of ethnobiology and
ethnomedicine 13, no. 1 (2017): 67.
Karlsson et.al., "Involvement of external stakeholders in local health policymaking process: a
case study from Odense Municipality, Denmark." Evidence & Policy: a Journal of
Research, Debate and Practice 13, no. 3 (2017): 433-454.
Loucks, Daniel P., and Eelco Van Beek. Water resource systems planning and management: An
introduction to methods, models, and applications. Springer. 2017.
Omeje, Kenneth. High stakes and stakeholders: Oil conflict and security in Nigeria. Routledge,
2017.
Shackleton et al. "A framework for engaging stakeholders on the management of alien species."
(2018).
Vahlne, Jan-Erik, and Jan Johanson. "The internationalization process of the firm—a model of
knowledge development and increasing foreign market commitments." In International
Business, pp. 145-154. Routledge. 2017.
Vanacker, Tom, Veroniek Collewaert, and Shaker A. Zahra. "Slack resources, firm performance,
and the institutional context: Evidence from privately held European firms." Strategic
Management Journal 38. no. 6 (2017): 1305-1326.
Online
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