BUSINESS FINANCE

Business Finance



Financial Analysis - Task

Task 1) Evaluate why business organisations need to keep accurate financial records

Data analysis and figures are the backbone of the international securities business. Management of the company invest huge amount of time and energy to achieve company's objective. The main purpose of the manager is to obtain highest return on the invested amount with less risk of loss. For this purpose, the accuracy of the financial figures is an important part to achieve the highest return. Hence, good financial records are the integral part for the future success and also towards the investors.

Accurate financial records assist the company regarding the financial health of the business, where the money has been invested and what return they are getting, the trend of cash flows, if it is decreasing and manager look for the reasons and what actual profit company is earning for the future investment (Tse 1988, p. 276). There are varieties of reasons for keeping the accurate financial records, the most important one are mention below.

Profitability enhanced by keeping the accurate financial records: This is true, through preparing true picture of inflows and outflow assist manager to operate more efficiently.

Accurate financial records facilitate in identifying the entire business expenses, income, additional income, assets and liabilities: Through this, manager can compare their performance with the performance of the industry which can assist to determine the business operation weakness and string parts.

In order to prepare current financial statements accurate measure are essential: The accurate information is necessary in order to apply for additional funds; any misinterpretation can leads the company in to huge problems (Tse 1988, p. 276).

Tax benefit: Accurate financial records can save the company from paying under or over amount of tax hence to avail tax exception on the internal revenue. Moreover, the accurate financial records during the external audit can help manager to provide an authenticity on the accuracy of their business figure and reason of increasing and decreasing of certain account head.

The basic records to organize information in the company are: daily revenue and expenses (daily), accounts receivable, accounts payable and inventory. Any operation to register must be supported by an invoice, receipt, check or other document to support it.

Task 2.1) Describe the different stakeholders listed below

Stakeholders are any individual, group or organization that is part of company and are affected by any benefit or harm (www.alacarteconsultinggroup.com). Each organization has its stakeholders, also known as interest groups or public interest, often adopted directly by the term “stakeholder:

The current shareholders

They are the internal stake holder. The current shareholders are considered as a part of the company when they purchase even one share of the company. They have equal proportion in the profit of the company according to the shares they possesses

Prospective investors

An investor is an individual who invests in the financial markets or a corporation that provides capital to a stable company. Commonly, potential investor is positioned in the long term rather than short ...