FINANCIAL ANALYSIS

Financial Analysis

Financial Analysis

Task 1

A)

Particular

Dr

Cr

cash

£10,000

 

capital

 

£10,000

 

 

 

bank

4000

 

cash

 

4000

 

 

 

furniture

1200

 

cash

 

1200

 

 

 

cash

9000

 

bank

 

9000

 

 

 

goods

10000

 

A/P Yaw

 

2000

A/P Ahmed

 

5000

A/P Ben

 

3000

 

 

 

goods

2,200

 

bank

 

2,200

 

 

 

Motor vehicle

4500

 

bank

 

4500

 

 

 

purchases

2500

 

bank

 

2500

 

 

 

machinery

4,500

 

A/P Betty Ltd

 

4,500

 

 

 

Wages and Salaries expenses

600

 

Rent expenses

900

 

Advertising expenses

500

 

repairs and renewals

250

 

Business rates

1200

 

Bank

 

2450

 

 

 

A/R Prince

5500

 

A/R Mohammed

6500

A/R Hanana

8800

A/R Shami

8000

goods

 

28800

 

 

 

A/P betty ltd

4500

 

cash

 

4500

 

 

 

bank

2,000

 

cash

 

2,000

 

 

 

cash

2000

 

A/REeric

 

2000

 

 

 

account payable ben and yaw

2700

 

cash

 

2700

 

 

 

cash

7500

 

A/R Hanana and Shami

7500

 

 

 

cash

4000

 

bank

 

4000

 

 

 

Fittings

4,000

 

A/P Newcad Ltd

 

4,000

Goods

500

A/R Mohammed

500

A/P Yaw

200

A/P Ben

300

Goods

500

Cash

10000

Sales

10000

Purchases

2000

Cash

2000

Tast 1 B) and C) are presented in attached excel worksheet and in Appedix A and B.

Financial Ratios of Betty Enterprises

Profitability Ratios

2011

ROA

7.1

ROE

6.7

ROI

9.3

Liquidity Ratios

2011

Quick Ratio

0.8

Current Ratio

1.3

Efficiency

2011

Total Asset Turnover

1.5

Receivables Turnover

4.3

Inventory Turnover

2.7

Accounts Payable Turnover

3.3

Task 2

The business functions in which Betty Enterprise operates are explained below.

Accounts and Finance 

In addition to the internal accounting system (cost accounting, statistics, financial planning) and external accounting (accounting, commercial law and tax law financial statements) in corporate accounting nor the most pre-and post-calculation, controlling and liquidity planning are integrated. 

Marketing

The marketing functions of Betty Ltd market the company products to new customers and new locations and provides marketing and sales materials to the sales department. Market department also carries market research to increase their sales and market share by entering into new markets.Human Resources Function 

The Human Resources function including staff management, recruitment, staffing and workforce management. In addition to the typical duties of a personnel department, the HR function include the operational and training, employee evaluation, and occupational safety. 

Customer Service

The customer service department ensures that the customers remain satisfied and are retained for future business. The people in customer service department provides follow up service to customers and assist them in smooth functioning of the business process.

Sales Department 

The sale includes the placement and contract function between the production and consumption. The consumption can also be a utility function and the production of a service function. Integrated into this function can be: market research, product range, sales promotion, sales order processing. 

Task 3

Business Capital is the essence for the success of ventures. Ventures need to use capital to run the business, such as product purchases, shop rent, to make profit, and even need more capital if engaged in a large number of commercial projects. Capital is enterprises' blood, driving force behind economic activities of enterprises and sustained impetus (Livingston, 2007, pp. 13-15). Therefore, effectively raising capital is an important factor for the enterprise creation, survival and development. However, as the main body involved in a dynamic environment, enterprises will encounter more varieties of financing instruments and more complicated financing environment (Duening, 2009, pp. 23-25).

The dynamic development of market economy often leads to the development of both conventional and more alternative sources of funding. Especially during the tightening of conditions for capital, the company dates back to more and more creative, and thus alternative forms of recapitalization.

Financial Needs of Betty Enterprise

Good financial management is to optimize the three indicators of funding that are working capital, the need for working capital and cash requirements. The company should act on the financial indicators to limit the use of external funding.Betty Enterprises should reduce the need for the company's cash and reduce reliance on bank loans, by acting on both working capital and working capital ...