Financial Analysis Report for Global Security Solutions - Finance

This report presents a comprehensive financial analysis of Global Security Solutions. It begins with an introduction outlining the purpose of the forecast and then delves into a detailed analysis of the company's performance using ratio analysis. The analysis covers key areas such as profitability, examining metrics like net profit ratio and operating margin; growth, considering factors that drive investor confidence; solvency and debt management, assessing the debt-to-equity ratio and times interest coverage; cash flow management, evaluating the company's cash position; and asset management, analyzing efficiency ratios like inventory turnover and accounts receivable turnover. The report also highlights the company's overall performance, key strengths (customer-oriented strategies) and weaknesses (slow cash realization), and concludes with a discussion of the elements of a master budget. The analysis provides insights into the company's financial health and offers recommendations for improvement. References are included for further reading.

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Table of Contents
Introduction......................................................................................................................................3
Purpose of the forecast.....................................................................................................................3
Analysis...........................................................................................................................................3
Profitability..................................................................................................................................3
Growth.........................................................................................................................................4
Solvency and debt........................................................................................................................4
Cash flow.....................................................................................................................................4
Asset Management.......................................................................................................................4
Overall Performance........................................................................................................................4
Key strengths and Weaknesses....................................................................................................4
Forecast for the next three months...............................................................................................5
Justification of the forecast..............................................................................................................5
Prepare an operating budget............................................................................................................5
Conclusion.......................................................................................................................................5
References........................................................................................................................................6

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Introduction
Financial analysis is the most important analysis that is carried out by the corporates for
understanding the overall performance of the company. The financial analysis gives the answers
to all the problems as the financial statements are the key reports that are required to take the
strategic decision making for futuristic decisions. The financial analysis is also carried out to
understand the vision and mission of the company (Daniel, Neves & Horta, 2017).
Purpose of the forecast
Every organization has the purpose of preparing the budgets and planning in advance to deal
with the uncertain adversities and the best way to deal with such kind of the situations is to make
the provision in advance. In case of the Global Security Solutions the company is engaged in the
preparation of the budgets and taking extensive care of the planning and control. Following are
some of the critical reasons why the preparation of the budgets is necessary and important. The
important factors have been listed below (Osadchy, et al 2018).
 The budgets are prepared with an intention to have the smooth accountability of the
operations of the company.
 Budgets mainly provide the benchmarks against the comparison of the results, so the
proper and the corrective measures are taken. These measures will help in eliminating the
problems form the root.
 Budgets help in identifying the weaknesses, and thereafter help in the proper allocation of
the resources in the most sustainable manner.

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 A budget is also helpful in regulating the imposition of the taxes in the various sectors
within the different parameters.
Analysis
The ratio analysis technique is applied to find out the performance of the company within
different parameters such as the growth, liquidity, profitability, debt management, management
of the assets, cash flow. This technique will basically help in determining all these parameters in
detail in terms of both the quantitative as well as the qualitative factors (Bordeianu & Radu,
2016).
Profitability
The profitability of the Global Security New Zealand can be analyzed through the
profitability ratios such as net profit ratio as it increased from 38% to 41% whereas the return on
equity was 31% in the year 2016 it was 41% and it fluctuates the due to the higher income
whereas the equity factor is consistent and not growing much in the denominator factor. The
operating margin however has increased from 46.8% to 44.3% in the year 2018. The operating
margin of the company has increased due to the reduction in the operating expenses as compared
to the period of the last three years (Chang, et al 2019).
Growth
The growth of the company can be realized with the help of the two major factors such as
the profitability as well as the stability of the company. The investor invests in the company on
the basis of the overall growth and the opportunity. Therefore it is necessary to project the
growth of the company. The growth will also help the company in taking the strategic decisions
(Guo, Spínola & Seaman, 2016).

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Solvency and debt
The solvency ratio of the company will provide the proper proportion of the debt and the
equity. The debt management is necessary as too much financial leverage will create the problem
for the company. As it can be observed from the above results the Global Corporation, the debt
and equity is settled at 0.10 and it decreased to 0.09. The debt management of the company is
sound and this again can be proved on the basis of the times interest coverage ratio that
determines the ability of the company to pay back the financial costs. The company has the
ability to settle the financial costs as it increased from 4.38 times to 6.61 times and this certainly
correlated with the less debt to equity ratio and increasing ability to settle the financial costs
(Reinhold & Thomsen, 2015).
Cash flow
The cash flow management is entirely engaged in analyzing the inflow as well as the
outflow of the cash. The cash is the king of any corporate and management of the cash is equally
necessary to the management of the organization as a whole. The cash position of the Global
Company rose in the financial year 2017 from $13786 to $26543, whereas the same saw a fall in
the year 2018 to $19187. The overall cash position of the company is not so smooth and the
Global Company needs to take the initiatives so that the investors shall not back out and the
company is able to deal with the current liabilities or the operating expenses (Oet & Ong, 2016).
Asset Management
The asset management of the company can be understood on the basis of the efficiency
ratios which is again one of the most crucial factors for the operations of the business. The
efficiency ratios include the inventory turnover ratio and the accounts receivable turnover ratio.
The inventory turnover ratio has been reduced from 243.51 days to 211.40 days. The accounts

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receivable ratio on the contrary has increased from 57 days in the year 2016 to 84 days due to the
more credit sales and the credit time period (Gullifer & Payne, 2015).
Overall Performance
The overall performance of the company is satisfactory; however, the company must take
the necessary initiatives to change the scenario and give more competition to its competitors.
Key strengths and Weaknesses
The key strengths of the company are to develop the customer oriented strategies to grab
a greater market share with the customers. The major weakness of the company is in slow
realization of the cash, due to which the cash conversion cycle of the company is disturbed and
needs a refurbishment in it (Daniel, Neves & Horta, 2017).
Identification of the elements of the master budget
The different elements of the master budget are as follows
 Direct labor budget
 Direct materials budget
 Finished goods budget
 Production budget
 Sales budget
 Selling and administrative expense budget
Conclusion
Form the overall analysis it can be stated that the company conducted an entire analysis
of the Global Security Solutions, with the help of understanding the different parameters and also

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by the verge of the forecasts. This can be a time consuming task, yet the company is working on
the initiatives for the better output. This was also seen as the necessary and the accountability
step for the future growth and the enhancement of the business.

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References
Bordeianu, G. D., & Radu, F. (2016). Financial Analysis Models Regarding Profitability when
Applying for a Banking Loan. Economy Transdisciplinarity Cognition, 19(2), 63.
Chang, C. T., Ouyang, L. Y., Teng, J. T., Lai, K. K., & Cárdenas-Barrón, L. E. (2019).
Manufacturer's pricing and lot-sizing decisions for perishable goods under various
payment terms by a discounted cash flow analysis. International Journal of Production
Economics, 218, 83-95.
Daniel, M., Neves, R. F., & Horta, N. (2017). Company event popularity for financial markets
using Twitter and sentiment analysis. Expert Systems with Applications, 71, 111-124.
Gullifer, L., & Payne, J. (2015). Corporate finance law: principles and policy. Bloomsbury
Publishing.
Guo, Y., Spínola, R. O., & Seaman, C. (2016). Exploring the costs of technical debt
management–a case study. Empirical Software Engineering, 21(1), 159-182.
Oet, M. V., & Ong, S. J. (2016). Research in International Business and Finance.
Osadchy, E. A., Akhmetshin, E. M., Amirova, E. F., Bochkareva, T. N., Gazizyanova, Y. Y., &
Yumashev, A. V. (2018). Financial statements of a company as an information base for
decision-making in a transforming economy. European Research Studies Journal, 21(2),
339-350.

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Reinhold, M., & Thomsen, S. L. (2015). Subnational population projections by age: An
evaluation of combined forecast techniques. Population Research and Policy
Review, 34(4), 593-613.