Monitor activity:
Records will be updated on a regular(ideally daily) basis and therefore provide a good indication of how the business is doing in terms of sales, receiving payments, paying expenses and so on. The owner of the business would realise if money going out seemed to be on the increase if money going out seemed to be on the increase while sales were dropping off. Monitoring activity should involve keeping an eye on the bank balance to ensure there are sufficient funds to meet day-to-day expenses. Tesco monitors all its activities. They keep an eye on the money in the bank and how many profit their sales have made. They even find out through monitoring if there sales are doing good or not or what strategy they have to use to make it better.
Control:
The actions can be taken to control the balance between money flowing in and out of the business by having accurate records of transactions and by monitoring the activity closely. For example, if it appeared that expenses were creeping up and but sales staying the same, then the owner could look for ways to control or cut costs. Tesco has a control over their monitoring and they keep the accurate transactions so that helps Tesco to have better control over their cash flowing in and out. Tesco tries to maintain the proper balance by organising everything properly. Tesco would introduce new Tesco branded products which would cheap for them to produce but they would sell them at a higher price.
Management of the business:
A manager is someone who is responsible for the planning, monitoring and controlling of the resources for which they are responsible. A manager understands the business’s accounts will be better able to make informed decisions and plan for the future. Management of the business involves careful co-ordination of resources including staff, materials, stock and money. The manager must ensure there are sufficient funds to pay wages, order new stock, pay bills and meet other demands for cash outflows by balancing this with the money coming from sales. Tesco has management of the business that’s why the business runs properly. The manager ensures that they have enough funds and then they produce new products. They even keep an eye on all the bills that come when the products are produced.
Measurement of financial performance:
Financial records help to find out if the business is making a profit or a loss or whether or not the business was owed money or in debt to others. Key indicators of financial performance include:
- Gross profit- This is the amount of profit left after the cost of producing the good or service is deducted from the amount of sales revenue.
- Net profit- this is the smaller amount of profit made after all other expenses are deducted from the gross profit.
- Value owned to the business- this is the amount of money owed to the business from sales that have not yet been paid for.
- Value owed by the business- this is the amount of money the business owes to others for goods or services purchased but not yet paid for.
Tesco even has the measurement of financial records. This helps them figure out how much profit or loss they have faced. This helps them calculate the gross profit, the net profit, the value added to the business and the value added by the business. All these help Tesco in functioning properly and maintaining the business well and it helps the business make profit.
by
humzah2013hotmailcom (student)
