Financial Management Report: Concepts, Analysis, and Performance

This report delves into the crucial aspects of financial management, emphasizing its role in assessing real expenditures, sales, profits, liabilities, and investments for improved decision-making and competitiveness. It explores the core concepts of financial statements, including the cash flow statement, income statement, and capital structure, along with their significance in evaluating a company's financial health. The report provides a comprehensive analysis of different financial statements, such as the balance sheet, profit & loss statement, and changes in equity, and their related ratios, including profitability, efficiency, liquidity, and financial leverage ratios. Furthermore, it highlights key financial performance indicators and discusses strategies businesses can employ to enhance their financial outcomes, such as debt management, expense reduction, and effective resource allocation. The report utilizes financial data to compute and analyze ratios, illustrating how these metrics are used to assess a firm's performance, effectiveness, and market success.

Importance of financial
management

Contents
INTRODUCTION...........................................................................................................................3
SECTION 1.....................................................................................................................................3
Concept of financial statements & importance of financial management...................................3
SECTION 2.....................................................................................................................................5
Difference types for financial statements and ratios....................................................................5
SECTION 3.....................................................................................................................................6
Company’s key finance performance indicators:........................................................................6
SECTION 4.....................................................................................................................................7
Discuss the process which business use for improve its financial performance:........................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
The practise of managing and controlling funds, and several other financial forces, is indeed
business finance. This field is particularly concerned with the procurement of useful natural
resources, products, and advantageous additives that help an industry's overall benefit improve.
Internal divisions evaluate the corporation's income success and standing over the span of a
calendar year using a number of financial statements (Adiandari, 2020). This essay discusses the
importance and concepts of FM, along with usefulness of accounting documents and profitability
ratios. Compute the financial statement, balance sheet and related ratios for the case study to use
the Business Review Model. Moreover, measure the financial statement and capital structure and
used the Business Review Template, and explain the related ratios to the case study.
SECTION 1
Concept of financial statements & importance of financial management
Financial management assist with assessing real expenditures, sales, profits, liabilities, and
investments, providing for better rational decisions to increase competitiveness. The three main
financial statements tend to also be the cash flow statement, income statement, and capital
structure, that help in the process determinations of all accounting practices in relation to
quantify a financial reward or production. That the majority of these kind of financial statements
are compiled using the proper global economy or form, making the transition to audit
committees easier. The report presented in order to assemble a unique balance sheet claims to be
management accounting. Financial statements tend to be documents created for formal
accounting reports as well as evaluating the status of the company's operations, regarding
profitability. Financial statements would be used in corporations (Atil and et.al, 2020). Net
profits are used to calculate a company's sales revenue on a financial operation. The financial
power is a list of the company's revenues that indicates the supplier's revenue and expenditures.
Such remarks aid the organization's understanding of its situation. Accounting statements are
kept in the form of a journal, and even a ledger that tracks the company's performance. To
evaluate a company's market share, the percentage approach is used. For a better interpretation,
the following are the key applications of this declaration:

• Evaluate the success of the business: The most basic method of income accounting should be to
provide reports on anything related to a company's financial place at a specific period. In order to
make the best strategic decisions, this intelligence is characterised by a number of individuals.
• Credit accessibility: Managerial accounting provides customers with a snapshot of the
enterprise, but investors may use that knowledge to maintain generating new income for
company growth or to reduce flexibility until the rehabilitation process begins.
• Focuses on helping customers make decisions: Financial statements contain all of the
information necessary for prospective buyers to decide how much to fund the business. Like a
result, it aids in raising the price per inventory that consumers want to buy. Precise financial
accounts are needed to make a profit (Al Raoush, A’aqoulah and Athamneh, 2020).
• Accounting data is advantageous to the administration so it assists executives in making
important decisions on revenue laws and regulations based on business accounts. Government
officials have the authority to tax income tax rates based on sales and properties.
• Investment bankers which function in investment management should take the following
courses: The following is the most crucial information: Investment managers can learn a lot
around a company's financial status from its income statements and change their statements
appropriately.
The willingness to react to exactly this very same varying presence of specific entities, such as
shareholders, the larger population, administrators, and others, is linked to the reputation of
financial performance. The majority of certain remarks are as follows:
• The Importance of Leadership: Owing to the rise size and sophistication of the guiding
variables company operations, sensitivity to technical advances is needed to deal with proposed
method feasibility.
Upper management demands current, accurate, and comprehensive information.
Executives of a financial position are informed of a funding plan's development, expectations,
and main competitiveness (Ebenezer, Musah and Ahmed, 2020).
• Information shareholders' Importance: The role of management is confined to managing
business activities. Inside the firm's management, board members seem unable to speak back and
forward between. The impact of the same required actions, on the other hand, should be reported
to investors as strategic information allocations at the outstanding level.

• Trend line- This enables the business to see how its financial success has changed over time,
and it also makes it easier to material items financial data over a broad range of income
statements. This provides an explanation of potential clients, allowing them to form a strong
impression more about business performance and providing them with several advantages in
judging production. This can be used to estimate future financial results and recognise financial
volatility. Trend analysts just use it to evaluate their results using diverse accounting measures.
SECTION 2
Difference types for financial statements and ratios
The whole collection of financial details will be used to include the party with an analysis
of financial statements and financial position (Kautsar and et.al, 2020). The below are the four
basic reports based on financial documents:
Cash financial inflows and outlays: The benefit and loss account shows the cash monetary
sources and uses for the year finished. This would help with operating income calculation,
particularly if the recorded assets and liabilities do not adequately represent the cash flow.
Determine the financial shifts that occur mostly more toward the end of the fiscal period. The
analyses' concentrations vary, but it usually includes stock sales and acquisitions, as well as gains
and adjustments arising from the observed value move. They are very often described in
financial statements since they are often used throughout the reporting set of tools.
Profit & loss statement: Earnings, acquisitions, and profits for the current year have mostly
been reported. They are often regarded as significant financial statements and they represent the
details of a firm's management. By reporting the company's earnings, it benefits the organisation.
It encompasses any of the firm's capital operations for which it is held responsible. This decision
relates to the company's success, resulting in improved profits (Sergii, Petro, Svitlana, Nadiia
and Sergiy, 2020).
Balance sheet: At the point of initial acceptance, the financial statements reveal the firm's
liabilities, assets, and assets. As a result, the information provided is current. As a consequence,
the overall value of all investment funds, along with the selling price as well as all creditors,
along with figures, is determined (known as the accounting equation). This would be the most
crucial financial report because it explains the value of time and how it has been spent in a
business.

Changes in equity: This comment shows how equity has changed over the duration of the
period. The stock selling or repurchase, dividends, and adjustments arising from recorded losses
and profits will all be listed on the summarised form. These are sometimes used in the funding
settlement of a merged entity, and the remainder are detailed in legal reports.
Different kinds of ratios:
Profitability ratio: This has become a measure of a group's decision to recover from a certain
amount of funds. This research is crucial for participants to think about right choices in terms of
financial performance. Operating income, operating earnings, revenue growth, and other capital
structure are examples.
Efficiency ratio definition: Productivity calculation is useful in assessing how best an
organisation uses its resources. This often assists analysts in assessing the firm's results. Quite
often encountered efficiency ratios are total assets rates, bondholder’s retention portion, and
account receivable measure (Mihajlović, Tadin and Gordić, 2020).
Liquidity assessment is dealing with the ratio that determines the financial stability of a firm. It is
a measure of a company's ability to meet contractual obligations and meet new cash and many
other internal conditions.
Financial leveraging evaluation: This ratio represents a company's willingness to use economic
flexibility, which includes both the availability of advantages to be received (investments) and
capital outflows (like debentures, loans). This is a measure of the firm's ability to raise funds to
fund its operations. As debt levels rise, share holders are subjected to increased risk. The most
common gearing ratios are debt financing, equity to net assets ratio, equity percentage, earnings
per share, and other gearing ratios.
SECTION 3
Company’s key finance performance indicators:
This is analogous to how financial statements are seen in light of a corporation's career
potential, and will help companies raise share of the market.
Profit and loss statement: It demonstrates how much additional revenue was received,
preserved, as well as how much interest was put or squandered, especially near the end of the
time. Since they represent the company's financial outlook, they are regarded as the largest
income report. It helps in the benefit estimation of a corporation. It relates to the financial

activities of a business. As a consequence of this declaration, the company prospers, resulting in
an increase in income statement (Sugiyarti and et.al, 2020).
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
Net profit ratio Net profit / sales * 100
10.57259 22.6961
SECTION 4
Discuss the process which business use for improve its financial performance:
Proportion measurement in a business helps in assessing the firm's performance, efficacy,
and market success. This seems to be helpful in assessing how effective careful thinking is for
different stakeholders (Svetlova and Thielmann, 2020).
Gross profit
Year 2016 2015

Gross profit 81125 80612
Net sales 189711 179587
GP Ratio 42.76 44.89
Net profit
Year 2016 2015
Net Profit 45057 18987
Net sales 189711 179587
Net profit ratio 23.750336 10.5725916
Shareholder equity
2016 2015
Shareholder equity 83802 63057
Current ratio
Year 2016 2015
Current assets as % of current
liability
222% 304%
The below are some suggestions for improving the company's financial performance:
• Debt recuperation: It's essential for the corporation to ensure that its bills are paid and that its
funds to make are maintained. This restricts your potential to function on the fields, leading to
lower lengthy income that is detrimental to market.
• Expense decrease: This should be a corporation's first objective in reasonable amounts high and
ensure that it is far more reliant on profit maximisation. This contributes to the corporation's
increased earnings and revenue.
Adequate communication utilisation: It is allocated properly, which is crucial to the overall effect
of the entity. Defending against potential volatility and reducing energy losses requires real
capital, assets, and distribution of resources.

CONCLUSION
According to the above-mentioned entire article, financial statements are those that capacity
management in recognising their financial position. Costs, profits, liabilities, and assets are
included in fiscal policies. Since the financial review components were obtained from financial
documents, certain papers make ratio testing easier. The financial statement, and covers both
income and liabilities, is sometimes used to assess a company's financial performance. A
corporate financial statement is a piece of paper that details a corporation's obligations and
properties. Such investment accounts can be used by business clients to enable them to make
lengthy investments. Ratio analysis is a tool for measuring a company's financial performance,
output, and competitiveness. It contributes to the company's revenue function by assisting in
growth, especially market performance that improves the productivity and therefore better
margins.

REFERENCES
Books and Journal
Adiandari, A. M., 2020. Personal Financial Behavior and Financial Life Cycle: Evidence from
Indonesia. International Journal of Psychosocial Rehabilitation. 24(2).
Atil, A. and et.al, 2020. Are natural resources a blessing or a curse for financial development in
Pakistan? The importance of oil prices, economic growth and economic
globalization. Resources Policy. 67. p.101683.
Al Raoush, A. T., A’aqoulah, A., Albalas, S. and Athamneh, S., 2020. Impact of Financial
Management on Improving Quality at Jordanian Public University Hospitals. Journal of
Information & Knowledge Management. 19(03). p.2050025.
Ebenezer, A. A., Musah, A. and Ahmed, I.A., 2020. Determinants of Financial Sustainability of
Non-Governmental Organizations (NGOs) in Ghana. The Journal of Accounting and
Management. 10(1).
Kautsar, A. and et.al, 2020. Financial management behavior of junior high school woman
teacher. Technium Social Sciences Journal. 14. pp.445-453.
Sergii, Z., Petro, V., Svitlana, B., Nadiia, N. and Sergiy, A., 2020. New Statistical and
Econometric Approaches to Assessing Financial Processes (Banking Sector, Public Debt,
Financial Management). International Journal of Industrial Engineering & Production
Research. 31(4). pp.609-624.
Mihajlović, M. B., Tadin, D. B. and Gordić, B. M., 2020. The role of financial management in
the company. Tehnika. 75(4). pp.498-503.
Sugiyarti, L. and et.al, 2020. FINANCIAL ATTITUDES, EDUCATION LEVEL IN FAMILY
FINANCIAL MANAGEMENT IN SOMODARAN DISTRICT COMMUNITIES
YOGYAKARTA. KUAT: Keuangan Umum dan Akuntansi Terapan. 2(2). pp.120-124.
Svetlova, E. and Thielmann, K., 2020. Financial Risks and Management. International
Encyclopedia of Human Geography, 5, pp.139-145.