Manage Finances



Manage Finances

Assessment 2

Element: Plan for financial management

Answer no. 1

The financial data is a reflection of the movements that the company incurred during a particular period of time. The financial data analysis serves as an objective that is used as a starting point to provide a reference on the facts about a company. The importance of analysis goes beyond the desired direction and that the results provide information for different users. The financial executive becomes a decision maker on issues such as where to obtain resources, where to invest, what are the benefits or profits of the companies when and how you should be paid to sources of funding, it must reinvest profits (Hull, 2007).

The analysis of previous financial data is extremely important for each of the activities taking place within the company, through this, manager create different policies for external financing, as well as they can focus on solving specific problems that affect the company, such as accounts receivable or accounts payable. Through the analysis of the previous data presented in the financial statements, managers, customers, employees and suppliers can evaluate the performance of the company by comparing the previous and current performance (Hull, 2007).

Following are the primary objectives of reviewing and analysing financial data:

Understand the elements of analysis to provide a comparison of financial ratios and different analysis techniques that can be applied within a company.

Describe some of the measures to be considered for decision-making and alternative solutions for various problems affecting the company, and help planning the direction of investments made by the organization

Use the most common reasons for analysing liquidity and inventory activity accounts receivable, accounts payable, fixed assets and total assets of a company

Evaluate the profitability of a company regarding sales, asset investment, capital investment of the owners and the value of the shares

Determine the position held by the company within the competitive market within which they work

Provide employees with the necessary information they need to keep informed about the situation under which the company works (Hull, 2007).

Answer no.2

The main purpose of researching and reviewing profit and loss in a business is to determine the success or failure of the company in a financial year. Success is generally the difference between revenues and expenses. If the returns are higher than the expenses, it is called profit, and if the expenses are greater the revenues than it will be loss. The researching and reviewing profit and loss in a business is the critical process aimed at assessing the past and present financial position, and results of operations of a company, with the primary objective of establishing the best possible estimates and predictions about the condition and future results (Horcher, 2005).

Answer no.3

Managers review business plan to:

Investigate carefully the industry where the business plan is performed.

Develop a detailed plan to favorably influence the factors that will determine whether the business will succeed.

Define carefully every phase of business, details of operation, and how to properly attach each of the parts of same for a viable business ...