Tuba Qutab

 Financial Decision Making Table of Contents Introduction2 Section I2 Part 12 Part 23 Section II5 Conclusion1 References2 Introduction In the case of Panini LTD, it is a medium – sized company headquartered in the United Kingdom. In the light of the trends in place, the company is set to expand in order to achieve the success. This paper is aimed to analyze the ideas associated with financial statement in a precise manner. In this particular case, the areas that are taken into account include the analysis of the importance associated with Accounting and Finance, the investigation of sources of finance through which small and medium sized enterprises can expand and the scrutiny of the financial statement in a critical manner in order to ensure the derivation of results of value. Section I Part 1 In the present time, accounting and finance are called a part and parcel of the business operations. The importance in the case of accounting and finance can be summarized as follows (Javier, 2014). Through accounting, a company gets a chance to maintain a record of the financial activities as a result of which a company can track the ideas such as expenses and income. This information plays a role to analyze financial future on the right time. The company gets a chance to enjoy a better grip on the cash flow as well which aids financial future (Julian, 2014). In addition, through a financial record, the company can avoid legal problems. Through accounting, audits can be avoided which can put the company in a critical state. This practice helps the company to decide on the matters such as the expenses that needs to be deducted and the taxes that need to be paid as well which are important for the success. The efficiency of these decisions led to an increase in efficiency of the business operations (Michael, 2019). As a result of accounting, it is a fact that a company can come up with a budget which plays an important role to keep the company on track. Along with the fact that the company avoids interruptions, budget incorporates a room in the case of unexpected adjustments. The adjustment helps the company to improve in the case of risk management. The investment in the field of accounting and finance serve to lay a footprint as a result of which an improvement in growth can result. The company can enjoy stability which is important to achieve the success (Richard, 2019). In addition, there is no denying that a review of the financial performance on the regular basis is important for the derivation of results of value. Through accounting and finance, the company can take into account historical data along with current data associated with the facts such as assets and liabilities. This data serves as a blueprint through which the companies can gain insight from their past mistakes. This knowledge can help to make informed decisions (Robert, 2014). Through accounting and finance, it is a fact that a company can enjoy an improvement in the case of internal communication and external communication as well (Sabyasachi, 2017). Through accounting and finance, a company can enjoy an increase in efficiency of the internal communication. As a result of finance, a company can communicate to the internalized stakeholders. The employees need to be informed as they are interested in profit sharing. The company can make the teams aware of the financial status as well. As a result of this understanding, bonus structure can be tied up the use of which can be done in the derivation of the productivity incentives (Sampson, 2017). Through accounting and finance, a company can enjoy an increase in efficiency of the external communication. This communication is important in cases such as the attraction of investors and the payment of loans. Through the provision of information in a transparent manner, the company can bounce on right opportunities as a result of which the company can enjoy a regulation of operations (Sampson, 2017). In the light of the facts in place, it can be deduced that accounting and finance are called a part and parcel of the business operations. In the present time, it is important for the companies to mange financial records in a precise manner. The company manages to keep a track of the financial health which is important to make informed decisions. In addition, a track in place can help the company in spheres such as change management along with risk management. The company gets a chance to increase the efficiency in the case of planning, controlling and decision making. These factors serve to lay the foundation of an effective strategy as a result of which one can serve the decisions of value (Thomas, 2018). Part 2 In the present time, the companies are in a race to expand in order to increase the chances of the long – term survival in the global market amid to an increase in competition. In this particular case, the sources of finance small and medium sized enterprises can use in an attempt to expand are as follows (Javier, 2014). In the primary case, a company which falls in the category of small and medium sized enterprise (SME) can seek help through business angel, an individual who is wealthy and who is ready to take the risk of investment in SME. The investment could be sought through convertible debt. In addition, the option of exchange of equity is present as well. However, in order to find business angel, a company needs an innovative idea ta least. He is not easy to find (Julian, 2014). In the secondary case, a company which falls in the category of small and medium sized enterprise (SME) can seek help through factoring, a process in which a company sells accounts receivables. The company sells at a discounted rate. This source can help to meet the needs associated with immediate cash. The company can gain the amount on the basis of the future sales which is a positive sign. However, it is assumed that factoring is expensive to undertake. In addition, it is inefficient in the case of long – term finance (Michael, 2019). In the tertiary place, a company which falls in the category of small and medium sized enterprise (SME) can seek help through leasing, a process in which instead of acquisition, the company take the assets on rent as much as possible. The company gets ready to leave the ownership as a result of which the assets are used in a lower rate through which one can save enough money to make right investments. There is no need to bring an increase in the capital cost. However, it is assumed that leasing cannot leave the company with a large amount as a result of which the process of expansion cannot be managed in an effective manner (Stuart and Warner, 2017). In the quaternary case, a company which falls in the category of small and medium sized enterprise (SME) can seek help through bank finance. It is a fact that banks can offer overdraft. In addition, a company can apply for loan in the light of assets in place such as land. However, the idea that needs to be taken into account is that banks are conservative. It makes medium – term financing difficult. In case of a defaulted loan, a company needs a variety of good loans through which the loss can be recovered. In a precise manner, it can be said that poor matching is there which is called maturity gap. The company mismatches maturity associated with assets and liabilities as a result of which an increase in sufferings can take place. In addition, owner – manager is supposed to undertake personal risks to get the loan approved (Thomas, 2018). In the quinary case, a company which falls in the category of small and medium sized enterprise (SME) can seek help through crowdfunding, a process through which the people invest in a new initiative over internet. In the present time, a boom in the use of crowdfunding has taken place. In 2013, crowdfunding helped to raise US$5 billion. However, to make the people invest through internet, a company is required to employ innovative ideas at least. The company needs to offer the investor a value which can be difficult to maintain. In addition, crowdfunding cannot work at times as well (Thomas, 2018). In the light of the facts in place, it can be declared that the sources of finance small and medium sized enterprises can use in an attempt to expand are broad. However, the achievement of funds seems a difficult task as a result of the fact that small and medium sized enterprises are in the middle of growth at a stagnant rate. However, through expansion, a company can make the process of survival easier in the global market (William, 2017). Section II Gross Profit Margin Gross Profit Margin = - 35% 28.39% Operating Profit Margin Operating Profit Margin = - 27.65% 20.04% Return on Capital Employed Return on Capital Employed = - 31.58% 22.57% Current Ratio Current Ratio = - 1.2 Times 4.12 Times Quick Ratio Quick Ratio = - 0.85 Times 2.80 Times Inventory Turnover Days Inventory Turnover Days = - 19.65 Days 22.69 Days Receivable Collection Period Receivable Collection Period = - 27.74 Days 33.33 Days Payables Payment Period Payables Payment Period = - 49.02 Days 30.17 Days Through the consideration of statistics, the comments will be made on the company’s performance. The ideas of value are summarized as follows. In the primary case, in 2018 and in 2019, gross profit margin and operating profit margin were high and were low in the respective manner. There could be reasons to it. The company could be selling the product at a lower price. In this particular case, an increase in present in cost of goods sold (COGS). In addition, as a result of COVID – 19, an increase in prices of labor and of raw material justifies an increase in cost as well. In addition, through competition, the company could be experiencing a decrease in margins (Julian, 2014). In the secondary case, in 2018 and in 2019, return on capital employed (ROCE) were high and were low in the respective manner. There could be reasons to it. The company is unable to make efficient use of the capital resources. In addition, the company is failing to achieve profit margins of interest. Along with this fact, shareholder’s equity could be at a higher rate as well (Paul, 2018). In the tertiary case, in 2018 and in 2019, current ratio and quick ratio were high and were low in the respective manner. There could be reasons to it. In the current ratio, it is expected that the firm took finances on credit. In addition, the company is in the middle of the management of lower inventory levels. In the case of debtors, they are offered credit terms at a shorter period. In the quick ratio, due to an inefficiency in the profit margin, the company is experiencing a rejection from long – term financers. Along with this fact, running finances are there for the company (Robert, 2014). In the quaternary case, in 2018 and in 2019, inventory turnover days and receivable collection period were less and were more in the respective manner. There could be reasons to it. In the inventory turnover days, the company is in a state where the goods are selling at a good speed as a result of which a company is in the middle of high demand. In the receivable collection period, the company represents an inefficiency in the cash flow. The company needs to decrease the time of the bill collection for which effective communication with debtors is important (Sampson, 2017). In the quinary place, in 2018 and in 2019, payables payment period was less and was more in the respective manner. There could be reasons to it. The company could be paying obligations soon. The company represents a state in which an inefficiency is present at purchase of the new goods on credit in a precise manner (Thomas, 2018). On the grounds of the facts in place, it can be assumed that company’s performance in 2018 was quite better. In 2019, the company suffered with high cost and low profit as a result of which it is a fact that the company failed to manage the efficiency of interest. The reason is definitely COVID – 19 as well that led to an era of the economic recession. However, in the end of 2020, it is clear that COVID – 19 is ready to turn in a new normal. A decline in uncertainty can help the company to flourish (William, 2017). Conclusion In the case of Panini LTD, it is a medium – sized company headquartered in the United Kingdom. In the light of the trends in place, the company is set to expand in order to achieve the success. This paper was aimed to analyze the ideas associated with financial statement in a precise manner. In the particular case, the areas that were taken into account included the analysis of the importance associated with Accounting and Finance, the investigation of sources of finance through which small and medium sized enterprises can expand and the scrutiny of the financial statement in a critical manner in order to ensure the derivation of results of value. References Javier, M. N., 2014. Contemporary issues in Business and Economics. Routledge. Julian, H. C., 2014. Macmillan Dictionary of International Finance. 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Federal Accounting Standard Advisory Board: Management Discussion and Perspectives. Diane Publishing.