Unit 29 Report: Financial Analysis of Nikki Consulting Ltd.

This report provides a comprehensive financial analysis of Nikki Consulting Ltd., a management consulting company based in the UK. It delves into the core considerations of small and social business enterprises, the customer relationship management process, and the application of financial tools. The report analyzes the company's cash flow forecast, including fixed and variable costs, and applies break-even analysis to assess financial performance. It also examines the contribution of financial statements to successful management and highlights key regulations and legislations impacting small enterprises, such as the Health and Safety Act, Employment Law, and minimum wage regulations. The analysis aims to provide insights into the financial health and strategic planning of small businesses, offering valuable information for students studying business development.

UNIT 29
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Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................3
Activity 1 (Covered in brochure).....................................................................................................4
Activity 2.........................................................................................................................................7
TASK 3............................................................................................................................................7
P4 Monthly cash flow forecast fixed and variable cost...............................................................7
P5 Application of break even analysis.......................................................................................10
P6 Financial statements and its contribution in successful management of organisation.........12
TASK 4..........................................................................................................................................13
P7 Key regulations and legislations that have implication on small enterprises.......................13
REFERENCES..............................................................................................................................16
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INTRODUCTION
Small business are establish with minimum capital and resources which supports to perform
all activities and increase the profitability. The aim of organisation is to run business sand
expand it continuously so overall performance can be improved. In small size organisation,
managers are playing a vital role as it analysis the information by visiting the market that helps
to increase the business performance. In other words, small business are considered as integral
part of organisation which are spending small amount of investment and managing all activities
effectively (Zakarya and Gillam, 2019). For increasing insight about small business and its
expansion Nikki Consulting company has been chosen that is management consultant company
in Hounslow, UK. The employees who are working in this, providing consulting services to its
customers which helps to maintain the good performance in business environment. Topics are
covered in report are main consideration of small and social business enterprises, customer
relationship management process, analyse of cash flow forecast, budgets and break even
analysis. A part from all such discussion regulations and implications on small business and
social enterprises are covered.
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Activity 1 (Covered in brochure)
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Activity 2
TASK 3
P4 Monthly cash flow forecast fixed and variable cost
Financial resource are those capabilities which increases business performance in
competitive business environment. Forecasting is the activity that uses to get future information
in order to increase the organisational productivity and profitability. For running a business there
should be have financial resources that helps to operate a business successfully and give
competitive advantages to company. Cash flow is a statement which is prepared by managers in
order to know the financial position of their company by arranging the funds and resources
properly. In context to Nikki Consulting Ltd. managers are preparing the cash flow statement by
involving variable and fixed cost that helps to manage the activities and make profits. There are
different sources of fund that are as defined:
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Lease and Hire purchase – This is important activity which run by managers of
organisation in order to run small business by giving their property of lease and hire purchase
that can help to increase the investment on business. With the help of this process and sources
Nikki Consulting Ltd is can its existing business and also could expand in future time. This
increases the business profitability and productivity by explaning roles and responsibilities of
employees to work (Pakroo, 2018).
Bank Loan – Businesses are having other option which they can use to collect the funds
for the purpose of running business that is bank loan. Business whether small, medium and large
are needed financial resources which helps to perform the all activities and managing the
financial performance. For taking the bank loan there is need to pay the interest amount at a fixed
rate of interest. Nikki Consulting Ltd ca use bank loan that is providing secured loan to
customers for performing all activities which are decided by managers in order to expand the
business and maintain profits. This create a challenge for organisation to run business by paying
interest charges that can be help to increase the performance.
Own saving – All business concern who have decided to establish their own business
firstly depends on their saving which can help to complete the task confidentially. As people are
capable to arrange funds by own self and they are also able to manage the activities then they can
assure that all products and services which are provided by organisation will be of better quality
and standards. This helps Nikki Consulting Ltd to run business of management consultant by
providing proper assistance and guidance to customers who wants management services.
Family and friends – This sources of finance is also important which can help to collect
the funds and investment so future activities can be run effectively. This is beneficial for newly
establish organisation to arrange the funds from friends and family at lower interest rate and
unlimited period that do not bound people to pay fixed time. This can help to increase the
productivity and profitability (Nouri and et. al., 2019).
From the above it has suggested to Nikki Consulting Ltd to use Bank Loan that is
appropriate and secure source of arranging the funds in organisation and helps to expand the
business activities effectively. This can help to manage all activities and performance in
competitive business environment.
Cash flow statement, P&L and balance sheet of Nikki Consulting Ltd is given as follows:
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Cash flow Statement
P5 Application of break even analysis
As all organisation has dream to get profits by running business activities and managing
the resources which are available in organisation (Kew and Stredwick, 2017). The manager of
business organisation are responsible to play an important act as they manage the information
and generate the income by performing the activities. Break even point is consider as
concentration point where entity has no profits and no loss. It has taken place while generating
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the profits by involving income and expenses. When managers are understanding their roles and
responsibilities they should perform all activities accurately so it can be managed properly.
Break even analysis is a framework that uses to identify the total number of units sold and cover
the all incomes. In context to Nikki Consulting Ltd, managers are playing important role as they
analysis the financial information and prepare breakeven analysis that provide proper guidance to
small and social enterprises for the purpose of making right business decisions. This helps to
allocate all resources in such a way that they can be used at an optimum level. Another downside
of this is that it helps minimize pollution and increases the performance of industrial operations.
A particular effort is being taken by the organization to boost the selling of the goods so that the
company can make more income and be able to stay in the market for the long term. Manager
collects and analyzes monetary information collected from sources in order to forecast sales
demand. This will give assistance to the boss during the planning of the budgets. There is a
formula that is used by the company to evaluate the break point. If the fixed cost of the product is
30000 with a variable cost of 10 rupees per unit and 15 is the sale price, so in this case BEP will
be determined by adding the following formula (Barnes, Kempster and Smith, 2015).
BEP in Units: Fixed cost/Sales price per unit –variable cost per unit= 30000/(15-10)= 6000
Figure 1: Break even Analysis, 2018
Source: Break Even Analysis, 2018iAb
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The Break Even analysis is seen above the given graph. In order to maintain no benefit or
loss condition, the corporation must sell a certain amount of goods in order to offset the real
manufacturing costs.
P6 Financial statements and its contribution in successful management of organisation
Financial statement are those document which are prepared by management in order to
identify the financial information and get the profitability. The contribution of financial
statement is to ascertain the production and profit level by searching financial information and
make the right business decisions. A person who have special knowledge, skills and experience
can prepare the statement in relation to finance that increasers business performance in
competitive business. For increasing productivity and expanding business by making right
decisions different types of financial statement are prepared by management of organisation who
have specialised in accounting and calculating that determine the profits by using all income and
expenses (Crane and Matten, 2016). For instance, Nikki Consulting Ltd, is a management
consultant company that has number of clients are using available resources in efficient ways and
delivering best services which helps to increase the business capabilities. Some key financial
stamen are prepared by management of Nikki Consulting Ltd that are as explained:
Balance sheet – This is the superior document and statement of organisation which is
prepared by all companies to know their capacity of paying the creditors. As business fully
depend on creditors, investors, suppliers and liabilities that are important to pay off and receiving
the income and profits on end of financial year. This helps to increase the actual financial
position of company by preparing balance sheet and making right decisions. In context to Nikki
Consulting Ltd, managers are responsible to prepare the balance sheet by involving assets and
liabilities of their business so right decision can be taken at right time. This helps to increase the
financial position and bring improvement accordingly (Goffee and Scase, 2015).
Cash flow statement – This is another financial statement which is prepared by
managers by involving all investment, operating and financial activity that can help to maintain
the performance and increase the production. In this, organisation make investment on
equipment, machineries, expenses and inventories which helps to maintain the good
performance. In context to Nikki Consulting Ltd. cash flow statement is formulated by
considering all financial and operating information which are relevant for business organisation
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