Finance For Non-Financial Managers Assignment Sample

Finance For Non-Financial Managers

INTRODUCTION - Finance For Non-Financial Managers

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Part A

1. Introduction

Recent year’s growth of startup business boosting the economy of the UK tremendously that impact positively on UK financial condition. Innovative and unique product or service related business produce more effective products for customers. Considering this aspect of startup business “Scooty world Ltd” would deliver the most effective electric Scooty to consumers. In this report, startups regarding different investment and financial activity would be discussed for evaluating each step of the startup business. Discussion about the investment approach to financial statements would deliver the possibilities and difficulties to run this startup.

2. Brief description about the product

Discussion about the product of the startup business it would explore possibilities in future growth and identify opportunities in business establishment at a wider level. In this startup business investment would be arranged by some potential investors who are interested to invest their money to inventive ideas. A recent trend of the automobile sector is focusing on electric Scooty where production of hybrid Scooty in the UK market would provide an extra edge to this startup business (Atrill, 2019). In fact using the hybrid Scooty concept would provide extra financial advantage regarding expenses of users due to no charging related expenditure. Moreover, this fact about hybrid Scooty is not available in the UK market where using this advantage in the automobile market segment this startup company will be able to establish a unique identity.

Production process

Additionally the production of hybrid Scooty in the UK, “Scooty world Ltd” would produce products will regenerate braking and internal combustion engines. This engine will produce energy automatically through the combustion engine facilities. In fact, using hybrid engine in Scooty products would create extra leverage to this startup business. This startup company would gain more advantage in the market to tackle comparative advantage. In fact, by producing hybrid products for customers, this organization would play an important role to deliver innovative products to customers (Felin et al. 2019). Additional information about hybrid Scooty is to produce power by own activity of products that would reduce cost of charging of products. Production of hybrid products in the UK will help to provide extra advantage to collect resources through local vendors. Furthermore, continuous research on hybrid engines would increase the productivity of scooters and deliver extra benefits to customers. Other facilities about products would be regarding mileage that would increase the productivity of Scooty.

3. Evaluation of the cost of setting

Scooty world Ltd
Cash Flow Statement for the first year (£'000)
Particulars	1st month	2nd month	3rd month	4th month	5th month	6th month	7th month	8th month	9th month	10th month	11th month	12th month	Amount (£)
Cash Flow from Operating Activities
Opening cash balance of each month	5578000	6574250	7661643	8867510.4	10188209	11628862.65	13219931	14960232.62	16872936	18963880	21259757
Cash Received from Customers	1000000	2000000	2200000	2420000	2662000	2928200	3221020	3543122	3897434.2	4287178	4715895.4	5187485	38062334.12
Credit sale	500000	525000	551250	578812.5	607753.13	638140.8	670047.8203	703550.2	738727.7219	775664.1	814447.31	855169.7	7958563.26
Total cash received	7000000	8103000	9325500	10660455	12137264	13754550	15519930.47	17466603	19596394.54	21935777	24494223	27302412	187296108.6
Cash Payment	0
Cash Paid to Creditors	500000	510000	520200	530604	541216.08	552040.4	563081.2096	574342.8	585829.6905	597546.3	609497.21	621687.2	6706044.864
Cash Paid for salaries	125000	125000	125000	125000	125000	125000	125000	125000	125000	125000	125000	125000	1500000
Cash Paid for Automobile Accessories	700000	810300	932550	1066046	1213726.4	1375455	1551993.047	1746660	1959639.454	2193578	2449422.3	2730241	18729610.86
Cash Paid for Loan Interest	25000	25000	25000	25000	25000	25000	25000	25000	25000	25000	25000	25000	300000
Cash Paid for Operating Expenses	5000	7500	9000	4150	5600	4500	35750
Net Cash Used for Operating Activities	5645000	6632700	7715250	8913806	10232321	11668055	13254856.21	14991450	16900925.4	18989053	21285303	23795983	10790928.4
Cash out Flow for other Activities
Purchase of Non Current Assets	52000	44200	37570	31934.5	27144.325	23072.68	19611.77481	16670.01	14169.5073	12044.08	10237.469	12796.84	301451.1785
Cash expenses for wastage	15000	14250	13537.5	12860.63	12217.594	11606.71	11026.37836	10475.06	9951.306469	9453.741	11817.176	14771.47	146967.5652
Payment of Repay loans and marketing	2500	1500	4750	4512.5	4286.875	4072.531	3868.904688	3675.459	3491.6865	4364.608	37022.56497
Net Cash Generated at end of month (A -( B+C))	5578000	6574250	7661643	8867510	10188209	11628863	13219931.18	14960233	16872935.68	18963880	21259757	23764050	159539261.6
Cash at the Beginning	5500000

Table 1: Cash Flow Statement of startup business

(Source: Created by learner)

Cash flow is being estimated for evaluation of expected cash balance at the end of each month. Through evaluation of cash balance of each month would help to project the requirement of cash for continuation of this startup business (Harris and Roark, 2019). In fact initial cash balances of the startup business are £ 5500000, which will be used to start the business at the initial stage. Use of the initial cash amount will be used to maintain first month cash expenses and deliver financial liquidity in business.

4. Estimation of the cash flow analysis

According to facts about the startup business would require such initial expenses to continue business, where cash paid to creditors, automobile parts and salaries are being considered. Using this forecasted cash flow requirement of additional liquid cash for the startup business help to project expected cash balance after the end of one year activity. The essential fact of the business is being considered about expected sales of each month. As per the efficiency of hybrid Scooty would increase the sales of products by 10% growth from 3rd month of business. Another credit sale of this business has expected growth around 5% after one month of starting business. Through the cash flow, funds would be collected through investors where 40% would be arranged by investors. 15% of the rest of funds would be arranged through banking loans and the rest 45% would be provided by owners. Using this format of investment plan, interest for loans would be minimum due to 20% of the total investment. The fund for investment would be collected by investors to reduce “cost of capital” and the minimum percentage of the investment fund would be arranged by banking organizations to secure the ownership in this business (Banal-Estañol et al. 2019). Main part of investment fund is 40% of investment would be collected from investment that would secure owner stake with major stake of this start up business.

5. Simple profit and loss analysis

The preparation of the simple profit and loss analysis for the startup called Scooty world Ltd shall be prepared for one financial year. The assumptions taken for preparation of profit and loss analysis includes considering cost of sales as 55% of sales, and operating expenses as 15% of total sales. The finance costs, interest and taxes have been assumed to be 2%, 2% and 5% of the sales respectively. Following is the tabulated profit and loss statement for Scooty world divided across four quarters.

Statement of Profit and Loss for Scooty World
Particulars	Quarter 1Amount (£'000)	Quarter 2 Amount (£'000)	Quarter 3 Amount (£'000)	Quarter 4 Amount (£'000)	Total
Sales	24428500	36552268.43	52582928.41	73732411.78	187296108.6
Cost of Sales	12214250	18276134.22	26291464.21	36866205.89	93648054.31
Gross Profit	12214250	18276134.22	26291464.21	36866205.89	93648054.31
General Expenses	977140	1462090.737	2103317.136	2949296.471	7491844.345
Administration Expenses	732855	1096568.053	1577487.852	2211972.353	5618883.259
Lighting and Electricity	977140	1462090.737	2103317.136	2949296.471	7491844.345
Rent	977140	1462090.737	2103317.136	2949296.471	7491844.345
Operating Profits	8549975	12793293.95	18404024.94	25806344.12	65553638.02
Finance Costs and Interests	977140	1462090.737	2103317.136	2949296.471	7491844.345
Profit Before Taxes	7572835	11331203.21	16300707.81	22857047.65	58061793.67
Taxes	1221425	3655226.843	5258292.841	7373241.178	17508185.86
Net Profit	6351410	7675976.37	11042414.97	15483806.47	40553607.81

Table 2: Statement of Profit and Loss For Scooty World

(Source: Created by Learner)

The above table of projected statements of profit and loss for Scooty World has been prepared for the first financial year across four quarters. The quarter 1 net profit for Scooty world is estimated to be GBP 6351410, while the expected net profit for the second, third and fourth quarter is estimated to be 7675976.37, 11042414.97, 15483806.47 and 40553607.81 respectively.

6. Evaluation of the balance sheet

The evaluation of the balance sheet for the company concerned Scooty world is being considered by taking into account the following assumptions.

Current Assets

The assumptions for current assets mainly include items such as receivables, inventory, cash in hand and prepaid expenses. The numerical figures for receivables and cash are being calculated as GBP 38062334.12 and GBP 159539261.6 respectively. The assumed figures for inventory and prepaid expenses are assumed as GBP 1540000 and GBP 1000000 respectively.

Non-Current or Fixed Assets

The assumptions for fixed assets further consist of key components including machinery, furniture, land and building as well as plant. The assumed numerical figures for machinery and furniture are considered to be GBP 15600000 and GBP 458760000 respectively. The assumed figures for land and building and plant are considered to be GBP 25600000 and GBP 3514780000 respectively. 

Long term Liabilities

The assumptions for long term liabilities include debt as GBP 3920771988 and long term loan of 13890000 respectively.

Current Liabilities

The assumptions for current liabilities mainly include payables, outstanding expenses and bank overdraft. The numerical assumptions include payables as GBP 14180000, outstanding expenses as GBP 13680000 and bank overdraft as GBP 996000 respectively. 

Equity Fund

The assumptions for the equity fund include share capital as GBP 178900000 and net profit is added with the equity fund.

Statement of Financial Position for Scooty World
Assets	Amount (GBP)
Fixed Assets
Machinery	15600000
Furniture	458760000
Land and Building	25600000
Plant	3514780000
Total Fixed Assets	4014740000
Current Assets
Cash	159539261.6
Inventory	1540000
Receivables	38062334.12
Prepaid Expenses	1000000
Total Current Assets	200141595.7
Total Assets	4214881596
Liabilities
Equity Fund
Equity Share Capital	178900000
Net Profit	40553607.81
Total Equity Fund	219453607.8
Current Liabilities
Payables	14180000
Outstanding expenses	13680000
Outstanding provision for doubtful debts
Bank Overdraft	996000
Total Current Liabilities	28856000
Long Term Liabilities
Bank Loan	45800000
Debt	3920771988
Total Long Term Liabilities	3966571988
Total Equity Fund and Liabilities	4214881596

Table 3: Statement of Financial Position or Balance Sheet

(Source: Created by Learner)

7. Analysis of the indicators

The analysis of the indicators for ascertaining the speculated financial position of the company Scooty World includes the statement of profit and analysis as well as the balance sheet. As per the expected balance sheet, profit for the first year is considered to be GBP 40553607.81. The calculations of profit after tax mainly consider appropriate distribution of all key operational and non-operational expenses for the business to justify feasible long run business prospects. As opined and illustrated by Ahmed et al. (2020), the prospects of profitability for a new establishment and business is considered to be a significant metric thereby allowing perpetual business succession in the near and distant future.

The additional impetus on the financial position has been determined by the help of preparing a balance sheet for the company. In the balance sheet, major emphasis was provided for highlighting the major components of current assets as well as total assets in the assets side. Moreover, the liabilities side of the balance sheet was also focussed upon deeply, in which the numerical figures for current liabilities, debt and equity capital have been assumed as well as calculated. The sum total of the balance sheet for total assets as well as liabilities and equities has been calculated as GBP 4214881596 respectively. As per explanations and narrations of Fleckenstein and Longstaff (2020), the prospects of a healthy balance sheet are considered to be favourable propositions for a business, which thereby determines strong financial position expectation in the market.

8. Conclusion

This report has discussed the financial implications for a new startup business considered as Scooty World. The relevance of financial implications in this report has been further justified with the help of cash flow statements, income statements as well as the preparation of a balance sheet. As per the cash flow statements, the scope of Scooty world gaining larger cash balances is considered to be in a positive state as the demand for electric scooters is considered to be significantly higher in the UK market. The favourable prospects of cash flow statements can be further translated to the favourable profit and loss statements as well as the balance sheet, which further determines a favourable expectancy from continuing business operations. 

Part B

Critically reflective essay

The company A. Edmonds & Co. Ltd. is a retail company which is involved in the selling of furniture. The financial pieces of information regarding its sales and budgets are observed to provide a reflective view. In my opinion, the company is running on an average note, due to the demand for the product. As opined by Xu et al. (2020), the company is old and has various marketing aspects to hold its customers and retain their interests. This shows the company follows all the business strategies to hence its business operations. I have observed that the company is also following the cash and accrual basis of accounting. The firm also facilitates credit sales and provides instalment payment services to its customers and their other retail sellers (Edmonds.uk.com, 2022). In my view, it is one of the most authentic and appropriate concepts that are used to keep the business in a better position. The bookkeeping and recording system of the events that are happening in the firm can be effective for the firm. As a junior accounting assistant, I think that this record-keeping system is one of the easiest and most authentic methods that must be followed in every kind of business organization. The products of the firm are made by “joinery, veneer and architectural metalwork” (Mustafa, 2021). The prices of the products are reasonable for their customers, and their selling and marketing techniques are also determined by the latest business segments. The company's service is also different from other ventures in the same business segment as they offer high-quality products to their customers.

As an accountant within A Edmonds & Co. Ltd, I came to know that the demand for high quality shopping is exclusive to the UK market. Application of the proper managerial activities and implementation of the sustainable financial policies would help in making sustainable growth within the business as it played a significant impact within the organization. I came to know the role of the accountant is effective within a business as they helped in fixing the total volume of the financial activities and marketing strategies of the organization. The possible evaluation and growth analysis and maintaining the price strategies within the business make a crucial impact into the financial evaluation of the business (Selvarajan and Rahim, 2020). Development of the business strategies and maintaining the crucial factors should need to be properly maintained as it facilitates in making development into the financial analysis and evaluation of the business.

Effective evaluation and managerial analysis of the business are directly involved in assessing the financial position of the company. During my working hours within A Edmonds & Co. Ltd, my role is to check the creditworthiness of the vouchers and based on this I need to evaluate the financial conduction of the business. I learned from the business evaluation that the changes should be developed within the business associated to derive the financial growth into the financial activities of the business. Based on the information and facts learned about the financial status of the business, it can be said that a company can be able to collect money as a debt up to 200% of the total volume of its equity (Nasreen et al. 2020). I noticed that maintaining the capital structure of a business for a stipulated period of time is also observed as essential to develop financial growth of the business.

Classification of the business techniques and proper projection about the financial growth analysis are observed as two most important parts of the business which will help in measuring the financial growth movement within the organization. The improvisation of the business techniques and growth analysis should need to be properly maintained that helped in evaluating the financial development within the financial development of the organization. Proper evaluation of the business techniques and maintenance of the financial analysis is observed as one of the most crucial parts to assess financial growth of the business over a given period of time (Edmonds.uk.com, 2022). Certain financial techniques and proper financial growth maintenance are also observed as one of the crucial factors that can be effective in maintaining the financial development within the business. The utilization of the financial strategies should have to be maintained to assess the financial policies of A Edmonds & Co. Ltd.

The financial techniques of the business and managerial techniques should need to be developed and the financial policies and policies have to be maintained. The increase into the financial strategies and policies need to be maintained that can be effective in maintaining the financial volume of the organization. The change into the business policies and the factors need to be evaluated to develop the curricula factors within the business. The estimation of the business policies and evaluation of the financial factors are required to assess the business development over a fixed period of time. I came to know that resource management is one of the suitable parts within the organization that can be effective enough to visualize the basic requirements of the organization over a fixed period. The mitigation of the financial techniques and effective improvisation of the financial tools are helped in maintaining a significant impact within the organization (Edmonds.uk.com, 2022).

I observed that the improvisation into the profitability and implementing the liquidity position over a certain period of time has played a crucial impact within the business. I also learned that maintaining the financial volume and classifying the strategic evaluation are helped in developing the crucial factors within the business. Based on the evaluation of the marginal techniques and growth development should need to be maintained as it helped in developing the financial status of the business (Edmonds.uk.com, 2022). The projection about the business status and the financial analysis are said to be two main areas that helped in making the sustainable development of the business over a stipulated period of time. I believed that certain policies should need to be changed as it plays a positive impact in improving the financial status of the business. Implementation of the total volume of the profitability has played the role of the incubator to develop the financial growth of A Edmonds & Co. Ltd (Edmonds.uk.com, 2022).

Reference list

Journals

Ahmad, N., Naveed, A., Ahmad, S. and Butt, I., 2020. Banking sector performance, profitability, and efficiency: a citation?based systematic literature review. Journal of Economic Surveys, 34(1), pp.185-218.

Atrill, P. (2019). Financial Management for Decision Makers. 9^thedition. Pearson Education.

Banal-Estañol, A., Macho-Stadler, I., Nieto-Postigo, J. and Pérez-Castrillo, J.D., 2019. Early Individual Stakeholders, First Venture Capital Investment, and Exit in the UK Startup Ecosystem. GSE, Graduate School of Economics.

Felin, T., Gambardella, A., Stern, S. and Zenger, T., 2019. Lean startup and the business model: Experimentation revisited. Forthcoming in Long Range Planning (Open Access).

Fleckenstein, M. and Longstaff, F.A., 2020. Renting balance sheet space: Intermediary balance sheet rental costs and the valuation of derivatives. The Review of Financial Studies, 33(11), pp.5051-5091.

Harris, C. and Roark, S., 2019. Cash flow risk and capital structure decisions. Finance Research Letters, 29, pp.393-397.

Mustafa, M., 2021. The Technology of Mobile Banking and Its Impact on the Financial Growth during the Covid-19 Pandemic in the Gulf Region. Turkish Journal of Computer and Mathematics Education (TURCOMAT), 12(9), pp.389-398.

Nasreen, S., Mahalik, M.K., Shahbaz, M. and Abbas, Q., 2020. How do financial globalization, institutions and economic growth impact financial sector development in European countries?. Research in International Business and Finance, 54, p.101247.

Qamruzzaman, M. and Jianguo, W., 2018. Nexus between financial innovation and economic growth in South Asia: evidence from ARDL and nonlinear ARDL approaches. Financial innovation, 4(1), pp.1-19.

Selvarajan, S.K. and Ab-Rahim, R., 2020. Financial Integration and Economic Growth. Journal of Economic Integration, 35(1), pp.191-213.

Xu, X.L., Sun, C., Li, Y. and Zhou, N., 2020. The effects of environmental management and debt financing on sustainable financial growth in the tourism industry. SAGE Open, 10(3), p.2158244020948530.