Business Level 3 Unit 2 M1

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Sharma and Ryan are planning to share ownership of the business SIGNature Ltd. The business will manufacture plastic road signs for builders, tourist attractions and local councils. It is imperative that the business are continually monitoring and controlling their cash flow if they aim to survive, specifically making sure there are sufficient funds to cover immediate spending. However, SIGNature Ltd. should avoid holding too much cash as this is an unproductive asset, as the business could lose out on the possible profit from investing in the cash. Many businesses produce regular cash flow forecasts, listing all likley receipts (cash inflows) and

This is a strength that reflects the strong sales during the period analyzed. Years 7 and 8 closely correlate with the overall loss of net sales, cost of goods sold and therefor, decreased sales numbers between years 7 and 8. The gross profit respectively is -16.3% or -$266,000 when compared to year 8. This is a weakness but still represents a strength because the company still grossed or made $1,371,400 before expenses. The horizontal analysis demonstrates it as a loss or a weakness, but positive sales in whether trending in a negative way are positive results when analyzing a positive gross profit. A strong manager would investigate why sales are down and make changes to ensure growth is seen.

The gross profit would also suggest that both years were profitable but with a decrease from £1,000,000 for 2011 to £740,000 for

In accounting there is much to be learned, about the financial aspects of a business. In the past five weeks I have learned the importance of financial reports and how they relate to the success of an establishment. These reports may include balance sheets and income statements, which help accountants and the public grasp the overall financial condition of a company. The information in these reports is really significant to, managers, owners, employees, and investors. Managers of a business can take and deduce financial

In 2007 the company was generating cash from everyday operations but the statement of cash flows shows that the company has had a negative profit from 2006 to 2007, but this is because More Vino has expenses that are higher than their sales

Two discounted cash flow analyses accompany this memo. Part A contains an adjustment for possible business erosion at Rotterdam, while part B does not make that adjustment.

-Information and Communication1Activity 2A:Q1:For each of the following practices related to information, explain how they aremanaged within your project.GeneratingGatheringStoringRetrievalAnalysis.A1:1-There are several ways of generating information by which we could manage the project. We have used the following methods in order to generate the information within our project:-Requesting suggestions and feedback from stakeholders and project staff, which is a convenient way to create the information as their suggestions and ideas would be of help to the whole structure as well as to the refined parts of the project ;-Taking advantage of Feedback Forms, which is again practically working well for a project

As you can see in the graph below, the only cash outflows from the company in year 7 will come from debt financing, with about an $11M outflow from buying back the building from Frank Thomas,

On the other hand, the company has been growing constantly. In deed, according to the net income estimation for 2007 (see Table 7) the company increases its profits $25 thousand dollars more than the previous year. This is an evidence of how the company is been management and of its willing to grow year after year. Nevertheless, the first quarter of 2007 the working capital only has increased by $7 thousand dollars, which is the difference between the current assets and current liabilities but the importance of this is that according to the rotation on receivables and payable accounts, shown in Table 5 and 10, leads us to the conclusion that the company will have to pay its suppliers

The firm’s accounts receivable ratio increased from 68.71 in 2006 to 74.56 in 2010. This means that it is taking Abbott almost six days longer to collect from its customers today than it did five years ago. Furthermore, the firm’s accounts payable days has decreased from 43.72 in 2006 to 38.22 in 2010. This means that Abbott is paying its suppliers 5½ days earlier today than it did in 2006. A change in the inventory ratio from 8.01 in 2006 to 11.03 in 2010 indicates that it is taking the firm longer to sell finished goods than it used to. The increase in the accounts receivable and inventory ratios, combined with a decrease in the accounts payable ratio, indicates poor working capital management and helps to explain why the firm has increased its holdings of cash and short-term investments. To correct this, Abbott’s managers should focus on collecting cash from its customers faster and delaying payments to its suppliers. To maximize its cash position, the firm would be best served by paying its suppliers in the same amount of time as it collects payment from its customers.

The final section of the statement of cash flows is the financing section, which shows the dividends paid, the purchases of stock, the net borrowings, and other possible cash flows from financing activities. A positive trend for investors is the fact that dividends paid has increased (even though it is negative to the firm) as well as sale purchase of stock, from 2009 to 2011 and even increased quarterly in 2011. The net borrowings is off an on from 2009 to 2011 possibly because of certain funds needed in particular years. In 2009, it was $5,746,000,000 and in 2010, it was $190,000,000. It shot back up again in 2011, with $5,960,000,000.

This shows a slight negative compared with the previous year, as being to obtain cash quicker means the business is more liquid and therefore has a better cash flow.

Group operating profit, excluding credit market write-downs and one-off items, impairment losses on reclassified assets, amortization of purchased intangible assets, write-down of goodwill and other intangible assets, integration costs, restructuring costs and share of shared assets, was £80 million, compared with a profit of £10,314 million in 2007. Losses also rose to £7,781 million, compared with £2,387 million in 2007. The loss before tax of Group recorded of £25,038 million, compared with a profit before tax of £8,962 million in 2007. Total income also declined to £26,875 million, while total net interest income rises to £15,939 million, with average loans and advances to customers up 17% and average customer deposits up 6%. Operating

Cash flow forecasting sets out anticipated inflows and outflows of cash in the coming months of trading. Cash flow can be described as the movement of money through the business and it is one of the most important aspects of financial management to keep the business solvent and trading. It is possible for a company to be cash rich but not generating any profit and also for a profitable business to have no cash and be unable to pay its creditors. There are two main ways to avoid cash flow problems; Speed up cash inflows and delay cash outflows. (Marcousʹe, 2003) Cash flow forecasting is different from the cash flow statement, whereas the cash flow statement shows what has happened in the past i.e historical data the cash flow forecast is based on an estimate of future cash flow. By creating a detailed estimate of the inflows and outflows expected in the next period the company can derive the cash flow forecast and by calculating each month’s figures the cumulative cash position can be assessed. This gives the company an idea of any times that they may face a negative cash flow balance and arrangements can be made to make sure extra finance is available in this period. (Lines and Marcousʹe et al., 1996)