Creating Value In A Dynamic Business Environment †Free Samples

Question: Discuss about the Creating Value In A Dynamic Business Environment. Answer: Introduction: The report explains about the different financial position of a company. It explains about the different funds which could be used by the company to raise the funds. At the same time, it explains about the risk and return from both internal and external financial system. In addition, it explains about the financial statement projection of the company and the performance and profitability level of the company. More to it, it calculates the different ratios of the company and explains about the position of the company in the market and the industry. Further, it briefs about the financial position, risk and return of the company and lastly, it briefs about the project evaluation of the company and budgeting of the company. Financial position of the company: The calculations and the analysis on the financial report of the company explain about the different levels and the positions of the company. Through the analysis on the different source of funds, it has been evaluated that there are various ways through which the company could raise the funds. All is required by the company is to manage the funds according to risk and return of the funds (Higgins, 2012). Though, according to the analysis, it has been found that the retained earnings, equity and debt are good options for the company to raise the funds for short term as well as long term. Further, the study has been done on the financial statement of the company and the performance and profitability level of the company. through the financial statement of the company, it has been evaluated that the net profit of the company is $ 270000 out of which $ 84000 have been transferred into retained earnings and rest amount has been given by the company to its dividend holders which expresses that the company is managing and enhancing a good amount of profit. Further, it explains that the cash inflow of the company is $ 379000 which explains about the good liquidity position of the company. And lastly, the balance sheet of the company express about the good financial position of the company (Hilton Platt, 2013). Thirdly, the study has been done on the financial statement of the company and the different levels of the company such as liquidity level, profitability level, solvency level etc. through the financial statement and ratio analysis calculations of the company, it has been evaluated that the position and the performance of the company is quite competitive with the position of the industry (Ward, 2012). The investment ratios of the company explains that the company is a good choice for the purpose of investment as it is offering more returns to the stockholders than the industry. Further, the liquidity ratio of the company explains that the company is required to enhance the level of the current assets to manage the better liquidity position in the industry. The current position explains that it would be difficult for the company to pay the short term debt amount to the debt holders. Further, the efficiency, leverage and profitability ratios of the company explain that this company is one of the good options in the industry to make an investment (Renz Herman, 2016). The ratios explain that the company would offer huge returns to the investors and the stakeholders of the company. Further, the study on total cost of the company explains that the currently company is required to pay 10.7% of total interest as the cost amount. It explains that the current cost of equity, cost of preferences share and cost of debt of the company is 10.7% and the market risk premium is 9.46% which explains that the current capital structure of the company is quite better and at this point, the risk and the cost both of the company is quite competitive (Schaltegger Burritt, 2017). In addition, the alterative projects have been studied for the company to make an investment. And through the calculations and evaluation on the project, it has been found that the project is offering negative net present value of the company which means if the company would invest into the project than it has to bear the loss. Thus it is suggested to the company to not to make an investment in the given project and must evaluate the other project which would offer positive NPV and at the same time, the IRR of the project should be greater than 10.7% (Zimmerman Yahya-Zadeh, 2011). Lastly, the future forecasting has been done on the financial performance of the company. The budgeting analysis of the company explains that the sales of the company would be variable according to the season and thus the purchase and the inventory level of the company would also vary. Further, the cash budget of the company explains that the cash position of the company is average in starting of the year and it has been better at the end of the year. In addition, the accounts receivable budget of the company explains about the huge credit sales and good collection strategy of the company. At the same time, the accounts payable budget also explains about the average payment strategy of the company. It explains that the company is managing the strategies in a good manner (Brigham Ehrhardt, (2013). Though, the company is required to manage and maintain the cash position of the company in a better way. The current cash position explains about the average liquid position of the company. And the break even sales of the comapny is 513 units whereas the average sales of the company is 530 units in lean season and average 750 units in peak season. It explains that it is quite difficult for the company to achieve the break even sales. Though, the sales of the company is quite lower and thus it is suggested to the company to enhance the level of sales and the price so that the profitability level of the company could be more. Further, the company is also required to make few more changes to comfortable achieve the level of break even sales always (Brigham Houston, 2012). Conclusion: Thus, through the above analysis, it has been found that the financial performance of the company is average. It is required by the management of the company to adopt new strategies and policies to make the financial performance better. References: Brigham, E. F., Ehrhardt, M. C. (2013).Financial management: Theory practice. Cengage Learning. Brigham, E. F., Houston, J. F. (2012).Fundamentals of financial management. Cengage Learning. Higgins, R. C. (2012).Analysis for financial management. McGraw-Hill/Irwin. Hilton, R. W., Platt, D. E. (2013).Managerial accounting: creating value in a dynamic business environment. McGraw-Hill Education. Renz, D. O., Herman, R. D. (2016).The Jossey-Bass handbook of nonprofit leadership and management. John Wiley Sons. Schaltegger, S., Burritt, R. (2017).Contemporary environmental accounting: issues, concepts and practice. Routledge. Ward, K. (2012).Strategic management accounting. Routledge. Zimmerman, J. L., Yahya-Zadeh, M. (2011). Accounting for decision making and control.Issues in Accounting Education,26(1), 258-259.