MEASURING FINANCIAL PERFORMANCE

Measuring Financial Performance



Abstract

The concept behind Managing Financial Resources is to utilize the available resources that exist in the company. This does not only involve implementation of resource management procedure and control but also managing costs and maximizing opportunities. Here, idea and intentions of the management can compensate the resources available in the company; but reviewing desire lists next to financial and strategic plans would be facilitating companies in identifying availability of financial resources within the company, prioritizing resources with respect to goals and objectives, controlling costs for different resources, making appropriate decision based on financial information and would be able to evaluate financial performance of business. This paper would be covering the above mention topic under four tasks.

ABSTRACTII

INTRODUCTION1

DISCUSSION1

TASK 1: YARDLEY WOOD STORE1

a)Cash Budget1

Explanation2

b)Finance needed in the operation2

Explanation2

c)Factors considered In Cash Budget3

TASK 2: GLOBAL MANUFACTURING COMPANY4

a)Pricing Decision using Relevant Information4

TASK 3: MULTINATIONAL ORGANIZATION6

a)You are required to calculate the followings:6

b)Investment Recommend8

TASK 4: FINANCIAL ANALYSIS8

a)Purpose of Financial Statements & size of the Businesses.8

b)Users of Financial Statements10

c)Calculate, Compare and Analyze the Following Ratios11

CONCLUSION12

REFERENCES13

APPENDIX15

Measuring Financial Performance

Introduction

The focus of paper would be on understanding sources of finance available to business, how company take financial decision on financial information i.e. cash budget and pricing analysis and techniques that are utilized by companies for making investment decisions has been clearly defined under different tasks.

Discussion

Task 1: Yardley Wood Store

Cash Budget

The following is the cash budget for Yardley Wood Store.

Explanation

Sales revenues have been projected to be £500,000 per month for the first two months and this will increase to £640,000 for next six months. Since company has allowed one month of credit, sales for the month will be collection in the next month.

As far as cash disbursement is concern, Yardley wood has to pay monthly rent £5,000, while Plant and machinery investment would be in first month worth of £780,000, Additional equipments cost will differ for four months. From second month to onwards, Yardley wood store would need operational running cost worth of £62,000 per month. In first month cash disbursement is higher due to investment. Yardley wood store in first month will have cash deficit while in remaining months they will have cash surplus.

Finance needed in the operation

The amount of finance that is needed in the first six months of the operation is as followed:

Explanation

Financing of Deficiency is needed when company does not meet their cost/expenses with sales (Maher, Stickney, Weil, 2011, p. 279). Yardley wood store would require additional financing in initial month while second to sixth month they will have enough cash to meet their needs, hence, no need of financing. As far as cumulative financing needs is concern, company would not need this as they only need additional finance in first month. Net cash flow will reduce this Finance Deficiency (Stice, Swain, et al, 2011).

Factors considered In Cash Budget

Cash budget only deals with cash inflows and outflows excluding non cash items such as depreciation, amortization etc. Other factors that should be consider while preparing a cash ...