Financial Analysis of Business: Performance and Statements Report

This report delves into the core concepts of applied business finance, exploring the significance of financial statements and financial management. It examines various types of financial statements, including income statements, balance sheets, and cash flow statements, highlighting their roles in assessing a company's financial position and performance. The report also identifies key financial performance indicators and discusses the use of ratio analysis for evaluating liquidity, turnover, and profitability. Furthermore, it outlines processes businesses employ to enhance their financial performance, such as cost reduction, debt management, and strategies for increasing profitability. The report emphasizes the importance of financial statements in making informed decisions and attracting investors, creditors, and stakeholders, ultimately contributing to long-term business success. The content is presented in sections, covering the concept of financial statements, types of financial statements, key performance indicators, and processes to improve financial performance, concluding with a summary of the findings.

Applied
Business
Finance

Contents
INTRODUCTION...........................................................................................................................1
SECTION 1......................................................................................................................................1
Concept of financial statements & importance of financial management:..................................1
SECTION 2......................................................................................................................................3
Difference types for financial statements:...................................................................................3
SECTION 3......................................................................................................................................4
Company’s key finance performance indicators:........................................................................4
SECTION 4......................................................................................................................................5
Discuss the process which business use for improve its financial performance:........................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7
APPENDIX......................................................................................................................................8

INTRODUCTION
Business finance is about funds, credit employees for the business. Finance needs which
business has with it purchase assets. Business Finance is about the needs for purchasing assets,
goods, raw materials, and flow for economic activities. Business finance is the process for
managing financial activities for the company which it runs for the accomplish its goals.
Company use various financial statements for its financial position which includes cash flows,
balance sheet, income statement etc. This financial statement helps company for knowing its
financial position which helps for better performance which helps for higher profitability for the
businesses (Aguirre and Rodriguez, 2017. This report is about financial performance. This report
includes topics which are the concept & importance of financial management, various financial
statements & the use of ratios in financial management. Apart from this it includes topics which
are financial statements for the company, process for businesses which business improves their
financial performance etc.
SECTION 1
Concept of financial statements & importance of financial management:
Financial statements are those helps business to know its expenses, income, assets,
liabilities etc. This statement helps business for making its position better. These statements
includes cash flow, balance sheet, income statement. It is about records the business activities
which are mentioned for the financial position, profit earning capacity for the business concerns.
Statements which are prepares the accounting records for the company which are known as
financial statements. The statements which are prepare for the particular accounting period for
measuring the overall position for the business activities which includes the financial position for
the business are known as financial statements. In business there are financial statements which
are balance sheet, income statement etc. The net income which business concerns for the
particular accounting period are the income statement. The summary for the financial position of
the business are known as balance sheet which views the liabilities & assets of the company.
These statements helps company for knowing its position. Company prepares income statements
for the helps of journal, ledger which makes business success. For knowing business position for
the business company’s use ratio analysis. It is prepares by financial statements which helps for
knowing various types for business position. It includes liquidity, turnover, profitability ratios. It
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helps company’s for knowing which are provides return on investment for long term decision
making. These are the concept which helps company for knowing which things provides ebbter
results for its performance.
Financial statements are statements that give a true idea of the financial performance of
an organization at the end of the financial year. Represents the official record of
financial transactions that take place in an organization. These statements assist users
in determining financial position, financial performance and organizational performance.
Use of Financial Statements:
 Determine the financial position of the business: The most important use of financial
statements to provide information about the financial position of the business on a given
date. This information is used by various stakeholders to make important decisions
regarding business (Du Jardin, 2017).
 Credit access: The financial statements present a picture of the business to the creditors
and this information may be used by them to provide additional credit for the expansion
of the business or to limit the credit to begin repayment.
 Helps investors make decisions: The financial statements contain all the important
information needed by potential investors to determine how much they want to invest in
the business. It also helps to make decisions about the price per share that investors want
to invest. A sound financial statement is the key to making money.
 Assists with policy formulation: The financial statements assist the government in
deciding on tax policies and policies based on the company's performance. Government
bodies can levy taxes on a business depending on the level of their income and assets.
Most useful for stockbrokers: The financial statements help stockbrokers with
information about the company's position and thus adjust their quotes accordingly.
Significance of the Financial Statements:
The importance of financial statements takes place in their service to attract the various
interests of different categories of groups such as creditors, the public, managers, etc.
The Importance of Management: The increase in the size and complexity of the factors
affecting business operations requires access to science and techniques in the management of
modern trading problems. The management team needs up-to-date information, precise and
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detailed information. Financial statements assist managers in understanding the progress,
prospects, and status of a business partner in the industry.
Importance of Shareholders: Management is limited to controlling the occurrence of
companies. Shareholders cannot participate in day-to-day business plans. However, the effect of
the following procedures should be disclosed to shareholders during the annual general meeting
in the form of financial statements.
SECTION 2
Difference types for financial statements:
The complete set of financial statements is used to give company for the overview of
financial results and the business environment. The financial statements contain four basic
reports, as follows:
Income Statement: Present income, expenses, and gains / losses made during the
reporting period. These are often considered to be the most important financial statements, as
they reflect the results of the business performance. it helps the company by knowing its profits
in the company. It includes those activities that the company owns its finances. This statement
helps the company to become more efficient which helps high profitability for businesses
(Greenbaum, Thakor and Boot, 2019).
Balance Sheet: Presents assets, liabilities, and business equity from the reporting date.
Therefore, the information presented is timely. The report format is designed so that the total
amount of all assets equals the total amount of all liabilities and amounts (known as the
accounting equation). This is considered to be the second most important financial statement,
because it provides details about whether money is money and why it is invested in an
organization.
Cash Flow Statement: Presents cash flow and cash outflows that occurred during the
reporting period. This can provide useful comparisons to the income statement, especially if the
reported profit or loss does not reflect the cash flows acquired by the entity. This statement may
be made when the financial statements are issued to third parties.
Income Statement: Present financial changes during the reporting period. The format of the
report varies, but may include the sale or repurchase of shares, profits, and changes resulting
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from the reported gain or loss. These are used sparingly in financial statements, and are usually
included in the package of audited financial statements.
Statement of income: It Present equity changes during reporting. The report format varies,
but may include the sale or repurchase of shares, dividends, and changes resulting from the
reported gain or loss. These are used sparingly in the financial statements, and are usually
included in the package of audited financial statements.
SECTION 3
Company’s key finance performance indicators:
It is about which views the company’s position for its income statement & ratio analysis
for knowing profitability for the company which helps for better performance which helps for
higher profitability for the businesses (Tchamyou, 2019).
Income statement: It Presents income, expenses, and profits / losses generated during the
reporting period. These are often considered to be the most important financial statements, as
they reflect the performance results of the business. it helps company for knowing its profits for
the company. It includes those transactions which company has for its financials. This statement
helps company for better performance which helps for higher profitability for the businesses
(Tongpoon-Patanasorn, 2018) .
Income statement
Particulars 2015 2016
Turnover form the
sales 179587 189711
Costs of goods sold
Material costs 38845 42597
production costs 12845 15231
labour costs 47285 50758
Gross profits 80612 81125
Overheads
Administrative
overhead 20251 13751
Operating costs 34293 22374 L
Interest 7081 1943
Net profit 18987 43057
Gross profit ratios gross profit / sales * 100
44.88744 42.76241
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Net profit ratio Net profit / sales * 100
10.57259 22.6961
Net profit ratio increase for 2016 for 12% approx. it is
for company reduces the overhead for costs which helps
it for better performance which helps for higher
profitability for the businesses (Valaskova, Kliestik and
Kovacova, 2018).
SECTION 4
Discuss the process which business use for improve its financial performance:
The companies use various elements for its better financial performance. Company takes
various process for improving the financial position which makes its performance better. The
company makes its strategies as it wants to increase its profitability. The company prepares its
financial statements. From these financial statements the company views for which transactions
gives it higher profits, it expands its business, increase investments which gives higher returns
for the company, it reduces costs, increases profits etc. These steps it takes for increasing its
profitability.
Reduce Company’s Cost: One of the best ways to improve company’s financial situation
is to cut costs. Look around company’s business and see if company’s can find some inexpensive
alternatives to services, equipment and services. See if company’s can find better bank account
terms and insurance policies. For larger expenses, find out if company’s can arrange to pay from
time to time or postpone to keep more money available to company’s.
Refund Outstanding Payments: Unpaid invoices can really hurt company’s income and
the overall financial health of company’s business. If this is a problem for company’s, it may be
time to use a debt collection agency. In the meantime, be sure to keep reminding the perpetrators
of their obligations. Also, when making sales agreements, make sure the terms are clear about
when the payment is made and the terms of the overdue payments.
Sell Unused or Unwanted Goods: Do companies have unnecessary items that just take up
space? Selling them gives the company money faster. If you pay for storage company, the
company also saves money on these costs. If a company has a large number of such items,
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consider buying them. There are auction houses focused on business. Either sell items online via
Epay or another online auction or reseller.
Debt Consolidation: When looking for ways to improve business finances, it is important
to look at the company's current business debt. If the company has a large debt, it may be best to
repay it. It is usually easier and more economical to refinance a corporate debt into a single
payment. Do research and compare different plans before committing to a new arrangement.
Reduce company prices: Where possible, lower prices are always a good way to promote
business and improve the financial viability of a company. Of course, companies need to make
sure that corporations do not lose money. However, in some cases, even a small mark helps to
make the company's products or services more attractive to customers.
CONCLUSION
From the above report it has been concluded that financial statements are those which
helps businesses for knowing its financial position. Financial statements includes expenses,
income, liabilities, assets etc. These statements helps for the ratio analysis as the elements which
are using for the ratio analysis are taken from the financial statements. Income statement which
includes expenses & income for knowing profits for the company. Balance sheet which helps for
knowing liabilities & assets for the company. These financial statements helps company’s for the
long term decision making. Ratio analysis is the process for knowing the liquidity, turnover,
profitability for the company. For increasing financial positioning for the company it helps
company for managing company’s activities which helps for better performance which helps for
higher profitability for the businesses.
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REFERENCES
Books and journals:
Aguirre, S. and Rodriguez, A., 2017, September. Automation of a business process using robotic
process automation (RPA): A case study. In Workshop on engineering applications (pp.
65-71). Springer, Cham.
Du Jardin, P., 2017. Dynamics of firm financial evolution and bankruptcy prediction. Expert
Systems with Applications. 75. pp.25-43.
Greenbaum, S. I., Thakor, A. V. and Boot, A. W., 2019. Contemporary financial intermediation.
Academic Press.
Tchamyou, V. S., 2019. The role of information sharing in modulating the effect of financial
access on inequality. Journal of African Business. 20(3). pp.317-338.
Tongpoon-Patanasorn, A., 2018. Developing a frequent technical words list for finance: A
hybrid approach. English for Specific Purposes. 51. pp.45-54.
Valaskova, K., Kliestik, T. and Kovacova, M., 2018. Management of financial risks in Slovak
enterprises using regression analysis. Oeconomia Copernicana. 9(1). pp.105-121.
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APPENDIX
Income statement:
Balance sheet:
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Business review:
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