Finance Management and Control-Final

University Of Sunderland-Assignment Code-PGBM01-Level-M-Financial Management & Control
FINANCIAL MANAGEMENT & CONTROL
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FINANCIAL MANAGEMENT & CONTROL
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(University of Sunderland)
(Lecturer...........................)
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By:
(.....................)
Date Submitted /25/01/2019/

Table of Contents
1. INTRODUCTION----------------------------------------------------------------------------------------------------------------------- 5
1.1. BACKGROUND---------------------------------------------------------------------------------------------------------------------- 5
1.2 STATEMENT OF ANALYSIS------------------------------------------------------------------------------------------------------- 5
PART – A - PERFORMANCE REPORT OF M/S. FRIDGE FREEZE PLC-----------------------------------------------------------6
1. FINANCIAL STATEMENT ANALYSIS------------------------------------------------------------------------------------------------ 6
1.1 RATIO ANALYSIS--------------------------------------------------------------------------------------------------------------------- 7
1.1. PROFITABILITY RATIO--------------------------------------------------------------------------------------------------------------- 8
1.2. LIQUIDITY RATIO-------------------------------------------------------------------------------------------------------------------- 9
1.3. GEARING RATIO------------------------------------------------------------------------------------------------------------------- 10
1.4. ASSET UTILIZATION RATIO/EFFICIENCY RATIOS----------------------------------------------------------------------------------11
1.4.1 Accounts Receivable Turnover Ratio--------------------------------------------------------------------------------11
1.4.2 Fixed Assets Turnover Ratio------------------------------------------------------------------------------------------- 12
1.4.3 Sales Inventory Turnover Ratio--------------------------------------------------------------------------------------- 12
1.4.4 Accounts payable turnover ratio-------------------------------------------------------------------------------------12
1.5. INVESTOR POTENTIAL RATIO / PRICE RATIOS------------------------------------------------------------------------------------13
1.5.1. P/E Ratio (Price to Earnings Ratio)----------------------------------------------------------------------------------13
1.5.2. Peg Ratio----------------------------------------------------------------------------------------------------------------- 13
1.5.3. Price to Sale Ratio------------------------------------------------------------------------------------------------------ 13
1.5.4. Price to Bok Ratio (P/B)----------------------------------------------------------------------------------------------- 13
2. WORKING CAPITAL CYCLE OF M/S. FRIDGE FREEZE PLC------------------------------------------------------------------14
2.1. LIQUIDITY POSITION-------------------------------------------------------------------------------------------------------------- 14
3. EVALUATION OF THE LIMITATIONS OF RATIO ANALYSIS------------------------------------------------------------------14
3.1. CROSS SECTIONAL COMPARISON OF RATIO ANALYSIS---------------------------------------------------------------------------15
3.2. TIME SERIES COMPARISON OF RATIO ANALYSIS---------------------------------------------------------------------------------15
PART – B – BREAK-EVEN ANALYSIS OF M/S. WASH BUG LTD----------------------------------------------------------------15
1. ASSESSMENT AND DECISIONS IN BREAK-EVEN ANALYSIS----------------------------------------------------------------15
1.1. BREAK-EVEN POINT OF UNITS AND REVENUE-----------------------------------------------------------------------------------16
1.2. MARGIN OF SAFETY FOR UNITS AND REVENUE---------------------------------------------------------------------------------16
1.3. ASSESSING AND ANALYSIS OF BREAK-EVEN MODEL-----------------------------------------------------------------------------16
2.1. KEY ASSUMPTIONS OF BREAK-EVEN MODEL------------------------------------------------------------------------------------19
2.2. ASSESSMENT OF BREAK-EVEN MODEL AND DECISION--------------------------------------------------------------------------19
2.3. THE APPLICATION OF BREAK-EVEN MODEL IN GLOBAL BUSINESS ENVIRONMENT--------------------------------------------19
PART – C –INVESTMENT PLANS AND APPRAISAL TECHNIQUES------------------------------------------------------------20
1. VARIOUS SOURCES OF FUNDS--------------------------------------------------------------------------------------------------- 20
1.1. INTERNAL AND EXTERNAL SOURCES OF FUNDS----------------------------------------------------------------------------------20
1.2. IMPLICATION AND COST OF DIFFERENT SOURCES OF FINANCE------------------------------------------------------------------21
2. DIFFERENT INVESTMENT APPRAISAL TECHNIQUES------------------------------------------------------------------------21
2.1. INFORMATION REQUIRED FOR VARIOUS INVESTMENT DECISION MAKERS-----------------------------------------------------22
2.2. INFORMATION REQUIRED FOR VARIOUS FINANCIAL DECISIONS----------------------------------------------------------------22
2.3. ANALYSIS OF VARIOUS FINANCIAL STATEMENTS----------------------------------------------------------------------------------23
(THE BALANCE, 2019)------------------------------------------------------------------------------------------------------------------23
2.4. CAPITAL BUDGETING------------------------------------------------------------------------------------------------------------- 23
CONCLUSION---------------------------------------------------------------------------------------------------------------------------- 27
BIBLIOGRAPHY-------------------------------------------------------------------------------------------------------------------------- 27
BOOKS------------------------------------------------------------------------------------------------------------------------------------ 27
REPORTS--------------------------------------------------------------------------------------------------------------------------------- 27
JOURNAL ARTICLES-------------------------------------------------------------------------------------------------------------------- 27
WEB PAGES------------------------------------------------------------------------------------------------------------------------------ 27
LIST OF FIGURES------------------------------------------------------------------------------------------------------------------------ 27
LIST OF TABLES-------------------------------------------------------------------------------------------------------------------------- 27
Appendices------------------------------------------------------------------------------------------------------------------------------ 27
1. Introduction
1.1. Background

This assignment was designed to demonstrate and report in view point of a Finance Analyst
to investigate the performance in relation to the ratio analysis, working capital, and liquidity
position. Besides that to carry out the break-even point and margin of safety and availability
of various sources of finance and investment appraisal techniques to compete in globalized
competitive business environment.
1.2 Statement of Analysis

The Financial Analyst has to perform the financial forecasting, reporting and operational
metrics tracking and analyze financial data to create financial models for decision making,
more over analyze previous financial statements and to perform variance analysis and
identify trends and suggest recommendations for improvements, besides that compares and
evaluate actual financial performance with plans and forecast and guide cost analysis to
enforce policies and forecasts, more over to perform capital budgeting and expenditure
planning process.
List of Table
Table 1- Income Statement - Horizontal Analysis...................................................................................................6
Table 2- Income Statement - Vertical Analysis........................................................................................................7
Table 3- Profitability Ratio of M/S. Fridge Freeze Plc-2018-2017..........................................................................8
Table 4-Profitability Ratio Analysis.........................................................................................................................8
Table 5- Liquidity Ratio Analysis Table...................................................................................................................9
Table 6- Gearing Ratio...........................................................................................................................................10
Table 7- Accounts Receivable Turnover Ratio.......................................................................................................11
Table 8- Fixed Assets Turnover Ratio....................................................................................................................12
Table 9- Sales- Inventory Turnover Ratio..............................................................................................................12
Table 10- Accounts Payable Turnover Ratio..........................................................................................................12
Table 11- Production and Sales details Wash Bug Ltd...........................................................................................16
Table 12- Marginal Cost Sheet - 2017....................................................................................................................17
Table 13- Marginal Cost Sheet - 2018....................................................................................................................17
Table 14- Evaluation - PV, BEP and MOS.............................................................................................................18
Table 15-Internal & External Sources of Funds.....................................................................................................20
Table 16- Appraisal Method & Information...........................................................................................................21
Table 17- Risk & Earning Based Performance......................................................................................................22
Table 18- Cash Flow Statement.............................................................................................................................23
Table 19- Decision Making In Cash Flow.............................................................................................................24
Table 20- Cash Flow Statement - Example Company...........................................................................................24
Table 21- Cumulative Cash Flow Statement..........................................................................................................25
Table 22- Summary of PAB, NPV & IRR..............................................................................................................25
Table 23- Decision Table Investment Decision......................................................................................................25

PART – A - Performance Report of M/S. Fridge Freeze PLC
1. Financial Statement Analysis

The financial statements of M/S. Fridge Freeze PLC was analysed and the process procedure
was of examine previous and present financial statements to gather the organization’s present
financial status and also it helps to evaluate the performance and financial position and it let
to estimate the future risks and potential, besides that allows to collect significant information
of trends and relationships, quality of earnings, more over about the strengths and weaknesses
of the organization’s financial position. (Accounting Tools, 2019)
The generally accepted auditing standards report of financial statements, auditors reports and
notes to the financial reports were examined and analyzed. Financial Statement Analysis
starts with establishing the objectives of the analysis such as to undertaken to allow a credit
or make an investstsment and for that the data collected from the financial statements and
outside sources were analyzed and results summarized and interpreted and the conclusions
forwarding for decision making. The financial analysis normally compares the financial
statements of one organization with another in same industry with present and previous year
financial statements. (Investopedia, 2019)
Table 1- Income Statement - Horizontal Analysis
Table 2- Income Statement - Vertical Analysis

1.1 Ratio Analysis
The financial statement ratios are another tools for analyse financial statements and it
discloses the relationship between the different heads of accounts appeared in the financial
statements. The financial ratios disclose the relationship between the different head of
accounts mentioned in the financial statements. (Tofier, 2019)
Figure 1-Analysis Tools
1.1. Profitability Ratio

The profitability ratio can be defined as it measures the profitability and performance of an
organization or profitability is the ability to make profit. The profit is the income gained after
deducted all costs and expenses. The profitability ratio can use to compare the company with
other companies in the same industry. Table -3 shows the profitability ratios of M/S. Fridge
Freeze Plc for two consecutive accounting periods of 2017 and 2018. (Study.com, 2019)
Table 3- Profitability Ratio of M/S. Fridge Freeze Plc-2018-2017
Table 4-Profitability Ratio Analysis
1.2. Liquidity Ratio

Liquidity Ratios used to measure the capability to meet the short term liabilities. It is
calculated by dividing cash and liquid assets by short term borrowings and current liabilities.
The assessment is the number of times obligations covered by cash and liquid assets. (Ready
Ratios, 2019).
Table 5- Liquidity Ratio Analysis Table
1.3. Gearing Ratio
Gearing or Leverage is the mix of debt and equity funding by a business uses to finance its
assets. The lenders are interested in gearing rates due to that the ratio reflects the degree to
which the business relies on funds supplied by outside by outside sources like banks and
suppliers. The formulae for gearing can be:-

Table 6- Gearing Ratio
1.4. Asset Utilization Ratio/Efficiency Ratios
It explains how efficiently one firm using its assets and liabilities using to gain revenue and
profit, likewise how better Accounts Receivables turned in to cash , repayment of liabilities,
quantity and usage of equity and usage of its machinery and inventory. Where higher the ratio
means that the business controls its assets efficiently. The common efficiency ratios are:-
1.4.1 Accounts Receivable Turnover Ratio

Table 7- Accounts Receivable Turnover Ratio
10 | P a g e (University Of Sunderland-Assignment Code-PGBM01-Level-M-Financial Management & Control)

1.4.2 Fixed Assets Turnover Ratio

Table 8- Fixed Assets Turnover Ratio
1.4.3 Sales Inventory Turnover Ratio
Table 9- Sales- Inventory Turnover Ratio
1.4.4 Accounts payable turnover ratio

Table 10- Accounts Payable Turnover Ratio

1.5. Investor Potential Ratio / Price Ratios
Price ratios help to know whether a stock price is reasonable or not. These are relative metrics
and useful when comparing one to another company’s ratio or same company’s previous year
ratio or with a benchmark. These ratios area significant to both stake holders and future
stakeholders and it shows the direction, potential and future of the firm in different aspects
and it helps the new investors whether to invest or not in the firm’s share.
1.5.1. P/E Ratio (Price to Earnings Ratio)

P/E Ratio = price per share / earnings per share
 Conclusion
 It is the price paid for £1 of earnings
 It is the true measure of profits
1.5.2. Peg Ratio

Peg Ratio = (P/E Ratio) / Projected Annual Growth in Earning Per Share
 Conclusion
 It take into account the future earnings growth
1.5.3. Price to Sale Ratio

Price to Sale Ratio = Price per Share/ Annual Price per Share
 Conclusion
 It is the price paid for £1 of sales
 Sales figure considered being reliable and the ratio considered as reliable.
1.5.4. Price to Bok Ratio (P/B)

Price to Bok Ratio = Price per Share/ Book Value per Share
 Conclusion
 The share holder’s equity in balance sheet dividing number of shares
outstanding gives book value per share
2. Working Capital Cycle of M/S. Fridge Freeze PLC

The working capital cycle in an organization is the period of time to convert the net working
capital (Current Asset – Current Liability) in to cash. This can manage by selling inventory
early and collecting Accounts Receivables quickly and pay bills slowly to maximise cash
flow.
2.1. Liquidity Position
The liquidity position is how well an organization can liquidate the assets to meet the present
obligations. The current ratio or working capital ratio measures the liquidity of an
organization.
3. Evaluation of the Limitations of Ratio Analysis

The ratio analysis is a technique used to visualize and extract the information from financial
statements and it focus on the ratios of the business entity about profitability, liquidity,
efficiency, leverage including other information and the ratio analysis made horizontally
(Table-1) or vertically (Table-2), but it has limitations also and the major limitations are :-
1. Historical Information: - The information obtained and used are from the real past
results from the financial reports, so the ratio analysis metrics not represent the future
performance.
2. Inflationary effects: - The financial reports are publishing periodically and the time
difference in between inflation may happen and due to that real price not reflected in
financial statements, therefore it is not comparable across time if not adjusted
inflation variations.
3. Changes in accounting policies: - The changes in accounting policies and procedures

affect the financial reporting, therefore after the change taken place not comparable.
4. Operational Changes: - If any vital operational changes take place in supply chain
strategy to the product, the comparison of financial metrics prior and after operational
changes mislead the conclusion of the performance of the organization.
5. Seasonal effects: - The seasonal factors that affects the financial up and downs affect
the ratio analysis, if not adjusted this may leads to the false interpretations of the final
result from the ratio analysis.

6. Manipulation of financial statements: - If any purposeful manipulation on financial

statements to present the company in better result may lead to false analysis results.
(CFI, 2019)
3.1. Cross Sectional Comparison of Ratio Analysis
The cross sectional analysis is the ratio comparison of data analysed and conducts by an
investor, analyst or a portfolio manager in relation with one company’s industry or
competitors in same industry with intention of assess performance or investing opportunities.
3.2. Time Series Comparison of Ratio Analysis
Time series analysis is useful to observe how an asset or economic variable

changes over time and it also used for examine how changes connected with the
selected data point compare to shifts in other variables over the similar period.
PART – B – Break-even Analysis of M/S. Wash bug Ltd
1. Assessment and Decisions in Break-even Analysis

Break- Even Analysis is a financial tool which determine at what stage a product, service or a
firm will be profitable, in other words BEP is a financial calculation to decide the number of
units or services a firm to sell to cover its costs. BEP is a point or situation, there is no profit
or loss but all costs are covered. It is the relation between variable cost, fixed cost and
revenue.
1.1. Break-even Point of Units and Revenue
The Components of Break-Even Analysis are:-
1. Fixed Costs: - Fixed Costs or overhead costs are happen in beginning of an economic
activity and these costs directly connected to the level of production and not to the quantity of
units’ production. These overheads expenses are fixed and not a matter to how much sold.
2. Variable Costs: - The Variable Costs are directly connected with the production volume and
it increase or decrease depends on the quantity of production. These costs are includes the

cost of raw-material, packaging expenses, fuel and other costs that directly connected with
the production process.
1.2. Margin of Safety for Units and Revenue
BEP in units deals with the contribution margin of a product and the excess between the
selling unit price and total of the variable unit costs is the contribution margin per unit.
For example: - Product price per unit is 100 – variable cost per unit 60 = 40 is the
contribution of per unit and it is the per unit revenue collected to cover the fixed costs.
1.3. Assessing and Analysis of Break-even Model

Table 11- Production and Sales details Wash Bug Ltd
M/S. Wash bug Ltd – A domestic washing machine production and selling specialised
Table 12- Marginal Cost Sheet - 2017

Table 13- Marginal Cost Sheet - 2018
2. Evaluation and Assumption of Break-even Model

Table 14- Evaluation - PV, BEP and MOS
YEAR PV RATIO BREAKEVEN POINT MARGIN OF SAFETY

Units Revenue Units Revenue
2018 51% 29 £10,566 44,971 £16,189,083
2017 42% 44 £13,034 44,956 £13,486,966

 In 217 the Profit Volume Ratio shows the amount contribution per one pound of sale
is 42 % and in 2018 there is an increase in 20% of selling price and PV Ratio
increased to 51%.
 The point of no profit and no loss units is 44 and 29 and revenue is 13034 and 10566
in 2017 and 2018 respectively.
 Margin of safety units or the amount of sales or unit of sale that covered all the fixed
and variable costs are 44,956 and 44,971 and 13,486,966 and 16,189,083 in 2017 and
2018 respectively and a 20% of increase in selling price for the year 2018.
2.1. Key Assumptions of Break-even Model
The break-even analysis used for when starting a new business, creating a new product or
changing the business model. It is very useful to decide whether there is any unused capacity
when obtained BEP and whether automation needed or not, besides that helps to decide
change in profits when the selling price is altered and amount of loss that could be sustained
if a sales downturn taken place. (Clear Tax, 2019)
2.2. Assessment of Break-even Model and decision

The benefits of break-even analysis are:-
 Helps to catch missing expenses
 Set revenue targets
 To take smarter decisions
 To decide funding to business
 To decide better pricing
 Helps to cover all the fixed costs
2.3. The Application of Break-even Model in Global Business Environment
The globalized business environment opened opportunities in global market and at the same
time business organizations facing price war and existing problems, therefore to check overall
strategy and significant attention to pricing, production and financial planning. Therefore
break- even analysis vital to let an organization survive in the globalized market. The
application of Break-even model helps to decide the point of profitability such as, how much
revenue need to generate to cover the expenses, which product and services are sold at a loss.

The Break-Even analysis let organizations to implement better strategy to move forward. The
existing policies to be examined and analyzed to improve the steps that existed earlier for
lower expenses and increase revenue and it to be analyzed for future strategy to drive to
better future. The profitability of products determine the success and if used break-even
analysis and break-even point of each product or service provide a better timeline for the
business and it can implemented to a better overall finance strategy that should be fits the
predicted costs and profits. (Business.com, 2019)
PART – C –Investment Plans and Appraisal Techniques
1. Various Sources of Funds
There are different sources of funds available to find finance for the business; those are
classified into basis of time, ownership, control and sources of generation. It may be long
term, medium term or short term and the ownership may own or borrowed and the source
will be internal or external. The (Figure-2) explained the clear visualisation of the sources of
funds below and every source of fund to raise needs formal legal and financial paper works
except for personal finance. (e-finance management, 2019)
Figure 2- Sources of Funds

1.1. Internal and External Sources of Funds
There are internal and external sources of funds and it classified into own source of money,
ownership capital and non ownership capital. The table below (Table) explains the internal
and external sources of funds.
Table 15-Internal & External Sources of Funds
1.2. Implication and Cost of different sources of Finance
The cost of different sources of capital will be different levels and the control and ownership
may be diluted, more over the determination of the amount requirement to met the tasks
affects various factors and the suitable approach to decide the additional capital requirement
can use the increased amount of assets in predicted expansion project and minuses by the
projected increase in liabilities with increase in the retained earnings of the organization and
it will be helping for decision of additional finance requirement of expansion.
2. Different Investment Appraisal Techniques

The investment should be made for value and before investment assess the effects with
capital budgeting or investment appraisal. The main appraisal techniques and methods used,
information used and the time period covered explained in (Table 16) below.
Table 16- Appraisal Method & Information

Investing fund in a business entity have many benefits, such it provide flexibility and quality
of production and faster to market get a bigger market share, more over can improve
company image, better HR morale, job satisfaction and better productivity and strength in
decision making due to good availability of information. Over all it contributes to strategic
objectives and new opportunities arises by these alternative tests of techniques.
2.1. Information Required for Various Investment Decision Makers
The investment decision makers required information for investment decisions, that means
put money in various asset classes for protecting and increasing wealth and it involved many
risk factors and it should be addressed and need knowledge and information such as :-
 Financial and economic theory

 Financial intelligence
 Historical performance
Table 17- Risk & Earning Based Performance
2.2. Information Required for Various Financial Decisions
The decisions that taken connected with in respect of capital structure are financing decisions.
The financing decision involves investment decision, financing decision and dividend

decisions. The factors that involves with these decisions are cash flow, shareholder’s choice,
taxes, stock market, access to capital market and contractual and legal constraints.
The investment decision involves many factors, such as cash flow of the company and profit
and investment criteria. The financial decision involves wise decisions about when, where
and how a business acquires fund and the factors affecting this are risk, cash flow position,
control and condition of the market.
Dividend decision is the distribution of profits and decides whether to distribute or not to
share holders and the factors connected to this are earnings, dependability in earnings,
balancing dividends and development opportunity. (Toppr, 2019)
2.3. Analysis of various financial statements
Financial statements analysis is the process of reviewing and analysing financial statements
like income statement, balance sheet, statement of cash flow and statement of changes in
equity. Example of self explanatory financial statements as follows below.
1. The income statement: - it shows the performance and summarizes all the revenue and
expenses for a financial period; it shows the company’s performance and financial position.
Revenue – Expenses = Net Income
2. The Balance Sheet: - It is a statement of the financial position and shows the Assets,
Liabilities and Owner’s Equity for a particular period and it illustrates the Business Net
Worth,
Assets = Liabilities + Equity
3. The Cash Flow Statement: - The Cash Flow Statement is a financial statement that sum
up cash and cash equivalents that entered and left for a particular period. The elements
involved in cash flow statements and how adding and subtracting the each financial
element clearly shows in the (Table-18) example.
(The Balance, 2019)

Table 18- Cash Flow Statement

Source: - Investopedia
2.4. Capital Budgeting
Capital Budgeting is a method that analyzing and comparing for future investments or
expenditure to decide whether worth or not. Such as what investment alternative make more
benefit to the company for the fund to be invested. The projects ranked with the potential
future return. (My Accounting Course , 2019)
Table 19- Decision Making In Cash Flow

Typical Example of Cash Flow Statement of Example Company

Table 20- Cash Flow Statement - Example Company
Typical Example of Cumulative Cash Flow Statement of Example Company

Table 21- Cumulative Cash Flow Statement
Pay Back, NPV and IRR of Example Company

Table 22- Summary of PAB, NPV & IRR
Table 23- Decision Table Investment Decision
Conclusion
To recapitulate, the successful leading of an organization in globalized context, the leaders
need not only leadership qualities but also deep knowledge in financial decision making
skills, these financial decision making tools and techniques are vital and unavoidable to
survive in the globalized market environment.

Bibliography
Accounting Tools, 2019. ACCOUNTING CPE COURSES & BOOKS. [Online]
Available at: https://www.accountingtools.com/articles/2017/5/14/financial-statement-
analysis
[Accessed 10 January 2019].
Business.com, 2019. business.com. [Online]
Available at: https://www.business.com/articles/in-pursuit-of-profit-applications-and-uses-of-
breakeven-analysis/
CFI, 2019. Corporate Finance Institute. [Online]
Available at: https://corporatefinanceinstitute.com/resources/knowledge/finance/limitations-
ratio-analysis/
Clear Tax, 2019. cleartax.in. [Online]
Available at: https://cleartax.in/s/break-even-analysis
e-finance management, 2019. Sources of Finanace. [Online]
Available at: https://efinancemanagement.com/sources-of-finance
Investopedia, 2019. investopedia.com. [Online]
Available at: https://www.investopedia.com/terms/g/gaas.asp
My Accounting Course , 2019. myaccountingcourse.com. [Online]
Available at: https://www.myaccountingcourse.com/accounting-dictionary/capital-budgeting
Neusoft, 2019. neusoft.com. [Online]
Available at: https://www.neusoft.com/products&platform/1336/
Ready Ratios, 2019. www.readyratios.com. [Online]
Available at: https://www.readyratios.com/reference/liquidity/
Study.com, 2019. study.com. [Online]
Available at: https://study.com/academy/lesson/profitability-ratio-definition-formula-analysis-
example.html
The Balance, 2019. The Balance - Small Business. [Online]
Available at: https://www.thebalancesmb.com/balance-sheet-definition-2946947
Tofier, 2019. tofler.in. [Online]
Available at: https://www.tofler.in/blog/indian-company-basics/tools-and-techniques-of-
financial-statement-analysis/
Toppr, 2019. toppr.com. [Online]
Available at: https://www.toppr.com/guides/business-studies/financial-
management/financing-decision/
Traders, E., 2019. eagletraders.com. [Online]
Available at:
http://www.eagletraders.com/advice/securities/financial_statements_analysis.php
Woelfe, C. J., n.d. Encyclopedia of Banking & Finance. In: Banking & Finance. 9 ed. s.l.:s.n.
List of Figures
Figure 1-Analysis Tools.............................................................................................................7
Figure 2- Sources of Funds......................................................................................................18
List of Tables
Appendices
Appendix-1
Appendix-2

Appendix-3

Appendix-4
Appendix-5
Appendix-6


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University Of Sunderland-Assignment Code-PGBM01-Level-M-Financial Management & Control

FINANCIAL MANAGEMENT & CONTROL

1|Page (University Of Sunderland-Assignment Code-PGBM01-Level-M-Financial Management & Control)

FINANCIAL MANAGEMENT & CONTROL

Date Submitted /25/01/2019/

2|Page (University Of Sunderland-Assignment Code-PGBM01-Level-M-Financial Management & Control)

4|Page (University Of Sunderland-Assignment Code-PGBM01-Level-M-Financial Management & Control)

1.2 Statement of Analysis

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PART – A - Performance Report of M/S. Fridge Freeze PLC

1. Financial Statement Analysis

Table 2- Income Statement - Vertical Analysis

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1.1 Ratio Analysis

1.1. Profitability Ratio

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Table 4-Profitability Ratio Analysis

1.2. Liquidity Ratio

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Table 5- Liquidity Ratio Analysis Table

1.3. Gearing Ratio

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Table 6- Gearing Ratio

1.4. Asset Utilization Ratio/Efficiency Ratios

1.4.1 Accounts Receivable Turnover Ratio

10 | P a g e (University Of Sunderland-Assignment Code-PGBM01-Level-M-Financial Management & Control)

1.4.2 Fixed Assets Turnover Ratio

1.4.3 Sales Inventory Turnover Ratio

Table 9- Sales- Inventory Turnover Ratio

1.4.4 Accounts payable turnover ratio

11 | P a g e (University Of Sunderland-Assignment Code-PGBM01-Level-M-Financial Management & Control)

1.5. Investor Potential Ratio / Price Ratios

1.5.1. P/E Ratio (Price to Earnings Ratio)

1.5.2. Peg Ratio

1.5.3. Price to Sale Ratio

1.5.4. Price to Bok Ratio (P/B)

2. Working Capital Cycle of M/S. Fridge Freeze PLC

12 | P a g e (University Of Sunderland-Assignment Code-PGBM01-Level-M-Financial Management & Control)

2.1. Liquidity Position

3. Evaluation of the Limitations of Ratio Analysis

3. Changes in accounting policies: - The changes in accounting policies and procedures

13 | P a g e (University Of Sunderland-Assignment Code-PGBM01-Level-M-Financial Management & Control)

6. Manipulation of financial statements: - If any purposeful manipulation on financial

3.1. Cross Sectional Comparison of Ratio Analysis

3.2. Time Series Comparison of Ratio Analysis

Time series analysis is useful to observe how an asset or economic variable

PART – B – Break-even Analysis of M/S. Wash bug Ltd

1. Assessment and Decisions in Break-even Analysis

1.1. Break-even Point of Units and Revenue

The Components of Break-Even Analysis are:-

14 | P a g e (University Of Sunderland-Assignment Code-PGBM01-Level-M-Financial Management & Control)

1.2. Margin of Safety for Units and Revenue

1.3. Assessing and Analysis of Break-even Model

Table 12- Marginal Cost Sheet - 2017

15 | P a g e (University Of Sunderland-Assignment Code-PGBM01-Level-M-Financial Management & Control)

Table 13- Marginal Cost Sheet - 2018

2. Evaluation and Assumption of Break-even Model

YEAR PV RATIO BREAKEVEN POINT MARGIN OF SAFETY

16 | P a g e (University Of Sunderland-Assignment Code-PGBM01-Level-M-Financial Management & Control)

2.1. Key Assumptions of Break-even Model

2.2. Assessment of Break-even Model and decision

2.3. The Application of Break-even Model in Global Business Environment

17 | P a g e (University Of Sunderland-Assignment Code-PGBM01-Level-M-Financial Management & Control)