I have identified different types of ratios using financial information from the company named First communication plc. I have identified how these ratios help the user to understand the financial position and performance of the business.
Introduction Ratios are useful because they briefly summarise the result of detailed and complex calculation. Ratios evaluate financial condition and performance of a business concern. However ratio simply means a comparison of one figure to other relevant figure. Ratios is used by internal stake holder such as managers, where they assess performance of individual branches, they monitor year to year performance, analyse relationships between revenues and expenses and so on. It is also, used by employees whereby they use it to negotiate wages and conditions, assess security of firm and therefore own a job etc. It is also, used by external stakeholders such as customers and creditors. Creditors assess security of the firm and decide on credit terms offered Liquidity ratios Liquidity ratios provides information about the company's short term financial circumstances, this states the extent to which a firm is able to pay off its debt therefore, it will measure whether the business has enough money to pay its bills. current ratios = current assets current liabilities = ratio Most of the short term creditors would prefer high current ratios as it will reduce their risk. Shareholders may prefer a lower current ratio so that more of the firm's assets are working to grow the business. First communication plc liquidity ratio 2008
Business resources D1
D1, Evaluate how managing resources and controlling budgets can improve the performance of a business. If a business manages its physical and technological resources well this would the performance of the business it will give Sainsbury the full benefits of the resources. If Sainsbury manages and controls its budgets effectively then it can improve the performance and success of the business. If a business manages to maximise it income and minimise it cost then it would improve the business profits level which would improve the business performance. If a business manages it cost and budgets properly by purchasing the right stock level which it needs and knows it would sell with a specific period of time then this means that the business would benefit by making substantial sales revenue from those stock as a result. Another benefit is that the business would be saving money from the space needed to hold the stock in the stockroom. Another benefit would be that the business would be making good profits level from the sales. This would improve the performance and success of the business overall. If a business manages its costs efficiently then it would improve the success and performance of the business. If a business employs the right amount of workers it needs then it would reduce the cost of the business. Another benefit if the business employs the right amount of staff
Evaluate how Cash flow forecasts, Break even charts, Profit & Loss statements and Financial recording systems can contribute to managing business finances Distinction
Evaluate how Cash flow forecasts, Break even charts, Profit & Loss statements and Financial recording systems can contribute to managing business finances -Distinction Introduction Financial control is a vital part of any business. If you lose control it will almost certainly result in your business spiraling into bankruptcy. A wise way to avoid this is to simply record your past cash flows, your current patterns and use the information to construct documents I will explain in detail. These can all be made simply by keeping the required information. Do not forget that all of the information from each document cannot tell you exactly how your company will perform in the future, but it can give you a good guide. I will also include relevant pictures to show what these documents should look like. Cash Flow Forecasts Cash flow forecasts are a great way to estimate how your company will perform in the future. They are the standard way to find where your business will peak and trough in its revenues. It is also a handy way to see how much money your business has recently if it is up to date, since it lists closing balances. You can also check your trading profit (Sales capital minus costs) and revenue, (Capital from sales) whilst also having your capital from last month and costs from the current month easily displayed. These are helpful for a business because they are quick and
In this assignment I will talk about why costs and budgets need to be controlled and the advantages and disadvantages of controlling costs and budgets. I will also explain what can happen to a business if costs and budgets are unmonitored.
Investigating Business Resources Introduction: In this assignment I will talk about why costs and budgets need to be controlled and the advantages and disadvantages of controlling costs and budgets. I will also explain what can happen to a business if costs and budgets are unmonitored. Importance of costs and budgets controlling: It is very important for an organisation to control its costs so that it can manage its financial resources effectively. The reason organisation needs to control their costs properly would be that it would end up saving money on expenses and increase its revenue. This will help the company to increase its revenues and this would allow the company to invest more money if required. For example, the business should control its costs so that it saves money and by having the right amount of stock the business can then have the full benefits of selling those stocks and receiving cash which could be used for other areas of the business. In a business organisation, a budget represents an estimate of future costs and budgets. Budgets may be divided into two basic classes: Capital Budgets and Operating Budgets. Capital budgets are directed towards proposed expenditures for new projects and often require special financing. The operating budgets are directed towards achieving short-term operational goals of the organisation, for instance, production or
business plan unit
"The People's Catering Co." Business Plan Jake Schober Contents: Page # Contents of page 3-5 Introduction 6-8 Aims and Objectives 9 Stakeholders 0-11 Legal Form 2-13 Personal Statement 4-18 Market Research 9-23 Market Research Analysis 24-26 Competition Analysis 27-29 Marketing Plan 30 Human Resources 31 Physical Resources 32-33 Quality 34-37 Financial Resources 38-43 Costs 44 Cash flow analysis 45 Profit and loss analysis/explanation 46-48 ICT Introduction The business that will be starting is a catering business. The business will be called "The People's Catering Co." The business will be located in a villa near Salwa Road. This is because the company can rent out a villa with a big kitchen and will be able to produce more food for the catering. The reason why I have chosen this area near Salwa road is because it is an inexpensive area and is close to the main residential areas of Qatar. Also it is a reasonably accessible area. It is an ideal location for a business because a lot of businesses are located in this area. Therefore people will come into this area. It is a main connecting road in the centre of Doha and is a main highway. The catering business will produce foods for all social occasions, such as buffet's, customer required foods to order, delicacies and other foods that are required for catering. There will be some
Sainsbury's Ratio Analysis
BTEC National Certificate in Business (e-Business) Unit 2 - Investigating Business Resources (Assignment Three) Task (P5 / P6) Sainsbury's - Ratio Analysis 2006 (£m) 2007 (£m) Sales 6,061 7,151 Cost of Sales 4,994 5,979 Net Profit 04 477 Gross Profit ,067 ,172 Current Assets 3,820 ,915 Current Liabilities 4,810 2,721 Stock 576 590 Average Stock 568 583 Debtors ---- ---- Creditors 2,094 2,267 Fixed Assets + Net Current Assets 2,747 9,576 Calculations Ratio Analysis 2006 2007 Profitability Gross Profit percentage of Sales = Gross Profit for year x 100 Sales for year ,067 x 100 6,061 = 6.6% ,172 x 100 7,151 = 6.8% Net Profit percentage of Sales = Net Profit for Year x 100 Sales for Year 04 x 100 6,061 = 0.6% 477 x 100 7,151 = 2.8% ROCE (Return on Capital Employed) = Net Profit for Year before interest rate and Tax x 100 Fixed + net Current Assets 04 x 100 2,747 = 0.8% 477 x 100 9,576 = 5.0% Liquidity Current Ratio = Current Assets Current Liabilities 3,820 4,810 = 0.8:1 ,915 2,721 = 0.7:1 Acid test Ratio/Liquidity Ratio Current Assets - Stock Current Liabilities 3,820 - 576 4810 = 0.7:1 ,915 - 590 2721 = 0.5:1 Efficiency/Working Capital Management Stock Turn over = Average Stock x 365 Cost of Goods Sold 568 x 365 4,994 = 14 Days 583 x 365 5,979 = 13 Days Debtors Collection
In this assignment I will be explaining in detail the importance of cash flow, working capital, costs, budgets and breakeven in selected business and also why it is used in selected businesses.
Introduction In this assignment I will be explaining in detail the importance of cash flow, working capital, costs, budgets and breakeven in selected business and also why it is used in selected businesses. In addition all of these factors will help my client make her final decision. Task 1 Cash flow Cash flow is the amount of money that is being spent or received by a business over a period of time. The extent of the cash flow can be used to measure several things such as: Evaluating the performance of a business Determine problems with liquidity To generate projects Returns on the ratio of money gained or lost on an investment relative to the amount of money invested. Examine the growth of a business. Cash flow can be classified into different categories Operational Cash flow - This is the cash received or cash outgoing as a result of the business activity. Investment Cash flow - This is cash that has been received or spent due to investment. Financing Cash flow - This is cash received or expended as a result of financial activities, such as receiving or paying loans, issuing or repurchasing stock, and paying dividends. For Cadbury Schweppes cash acts as their lifeline, it is the one aspect that allows the business to survive. The amount of cash that Cadbury Schweppes throws away shows how healthy it is. In order for Cadburys to have the best possible chance
Sources of Finance available to Joseph Chamberlain Sixth Form College.
Task 4 (P3) Sources of Finance available to Joseph Chamberlain Sixth Form College There are two types of sources of finances namely internal sources and external sources. Internal sources of finance can be from savings or profits however external sources of finance can be from outside the business such as banks, shares etc There are many different sources of finance available generally however it depends on the actual business type. For JCC the sources of finance available to them are as follows: * Banks - banks are able to offer loans, business accounts, commercial mortgages and overdraft facilities based on the business plan. Interest is payable based on the predicted risk. Some security will need to be provided, e.g. assets such as a college premises, college mini bus and any valuable item which is worth more than the loan. JCC may take this loan in for its finance for the use of buying premises. * Hire purchase - hire purchase means that resources can be used by the business while they are being paid for. Until the last payment is made on the agreement the goods are not owned by the business and if payments are not made the finance company can take them back. JCC might use this for purchasing its resources such as computers. * Overdraft - an arrangement with the bank where a business will be able to borrow more money from its bank than is actually in their account.
For this task am going to explain the purpose of accounting in a business organisation.
Nassima Bouchelkia BND Business year1 ID NO, 317357 tutor, M Hamilton Unit 5, introduction to accounting P1) Introduction, For this task am going to explain the purpose of accounting in a business organisation. Accounting, Accounting is a process of identifying the business financial information, it also relates to keeping all financial records and transactions that relates to an organisation. It also known as measuring and interpreting the business economic information. Accounting used to indentify and represent the information to the internal users such as employees and management and external users such as the government and investors. The purpose of accounting, The purpose of accounting to an organisation is that it provides financial statements for the internal and external users which are used for different purposes such as making decisions. Accounting also used as guide to monitor the business income and expenditure. Additionally is also used to manage cash flow forecast that indicates to the business their current financial situation which will help that business to plan for the future Accounting comprises from two stages which are, Financial accounting, it relates to recording day t day transactions by using double entry bookkeeping. The financial accounting makes the entries in an account which know as
Identifying and evaluating two proposed projects for Camerons Balloons - discuss the suitability of investment appraisal methods which are used and analysed on estimated cash flows.
Business studies Unit 11c Introduction In this report I will be identifying and evaluating on two proposed projects for Cameron's Balloons and I will discuss the suitability of investment appraisal methods which are used and analysed on estimated cash flows. Cameron's Balloons is the world's largest manufacturer of hot-air balloons, special-shaped balloons and hot-air airships. Cameron Balloons excels in all aspects of fabric technology from medical products, to fabric structures and inflatable buildings. Investment Appraisal is a technique with several methods which answers if an investment project is worthwhile or not. There are various types of investment appraisal methods and they are as follows: * Payback Period * Accounting Rate of Return (ARR) * Internal Rate of Return (IRR) * Profitability Index Net Present Value (discounted cash flow Companies invest because this will increase their productive capacity. Businesses buy equipment, machinery and buildings to increase their capacity which then means that businesses can meet demands which will generate their sales value and investment will also raise their efficiency and productivity. Cameron Balloons are trying to maintain as productive as possible by repeatedly re-assessing. Cameron Balloons are assessing whether an investment should be made in new production technologies. In