FINANCE ASSIGNMENT

Finance Assignment



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Answer (a)

The first category is partner. A partner is a person who is a party to a mutually beneficial cooperation, including strategic partners. The second person interested may include suppliers. Organizations or individuals that supply products to customers, providing the company or its competitors' material resources needed for production and marketing. Finally the third person and the most important one is the investor who is willing to invest his money in a specific company.

Answer b)

Profit and Loss Account

Companies measure their income by a financial statement called a profit and loss statement. This statement shows all sales, cost of goods and expenses incurred by the company for the current year. Most companies generate monthly and annual P&Ls for review by management and external users. The main reason for establishing a P&L is to measure the amount of income that a company has generated during the current accounting period (Battista, G. L. and G. R. Crowningshield, 2005).

P & L contains several numbers of benefits for the company and to the investors. Each of these gives us different and useful information. In addition, P and L (and perhaps other information) usually provides enough information to calculate several other numbers such as earnings EBITDA and EBITA.

P&L represent the company's ability to generate revenue through commercial operations. Companies often need financing to help create facilities for their operations. Smaller companies tend to obtain bank loans based on the amount of income that a company has won previously. History of solid P&L is essential to get the best loan terms. Public companies can issue shares to investors, creating opportunities for funding through equity investments. Investors will use the ratio ROE to determine whether the company has a solid history of revenue, which indicates the good potential returns in future operating revenues.

Many companies show exceptional separately. If there was any business discontinued, or plans for business during a short period, these are also shown separately. These may give investors a better idea of ??the core business (the justification for doing so). For example, if the company decided to sell a particular transaction and the price was agreed, shareholders need not really worry too much about the execution of this operation.

Balance Sheet

The imporatance of balance sheet to the company and to tehinvestors is to know the assets compnayt consists of and rights owned by the company, and other items with the common feature used in the generation of income. Within the Active, we distinguish between non Current Assets and Current Assets. We call those non-current assets and property rights acquired with the intention of remaining in business for over a year.  Equity is seem by the investors to see the amount of money that has been invested by the owners, shareholders' equity, adjustments for changes in value and Grants, donations and legacies(Beaver, W. H. and J. S. Demski, 2008). The liabilities on the other hand, consists of all financial resources obtained by the company for the performance of its functions and estimates of future ...