Financial Management - Mid Term - 1375 Words

Financial Management - Mid Term (Term Paper Sample) Content: Financial Management Name of student Institution of Learning City/state Date of Submission Table of Contents  TOC \o "1-3" \h \z \u  HYPERLINK \l "_Toc364778387"
Analysis of Accounts  PAGEREF _Toc364778387 \h
2  HYPERLINK \l "_Toc364778388"
Vertical Analysis  PAGEREF _Toc364778388 \h
7  HYPERLINK \l "_Toc364778389"
Elements of Vertical analysis  PAGEREF _Toc364778389 \h
8  HYPERLINK \l "_Toc364778390"
Horizontal analysis  PAGEREF _Toc364778390 \h
9  HYPERLINK \l "_Toc364778391"
Vertical and Horizontal Analyses  PAGEREF _Toc364778391 \h
10  HYPERLINK \l "_Toc364778392"
Cash Flow Statement  PAGEREF _Toc364778392 \h
11  HYPERLINK \l "_Toc364778393"
Summary  PAGEREF _Toc364778393 \h
13  HYPERLINK \l "_Toc364778394"
Bibliography  PAGEREF _Toc364778394 \h
14  Analysis of Accounts Analysis of financial statements is essential and helps many parties, when it comes to decision makin g to those interested in the companies. The analysis helps to give the users the best approach that will help to come up with the best possible approach in the development. This part of the paper is actually important, since it gives the most common elements that are in terms of vertical and horizontal analysis. This is quite essential for the development process of the company, as well as satisfying the interests of the investors and other parties. 1 Debit Sales account credit Creditors 5,000 bank 15,000 Debit Creditors account credit Sales 5,000 2 Dr bank account cr Machinery 1,500 Insurance 500 Sales 15,000 Dividend 7,000 Building 500,000 Research 20,000 Purchases 6,000 3 Dr machinery account cr Bank 1500 4 Dr wages account cr Accrual 500 Dr accruals account cr Wages 500 Electricity 100 5 Dr electricity account cr Accrual 100 6 Dr bad debts account cr 7 Dr dividend account cr Bank 7,000 8 Dr research costs account cr Bank 20,000 9 Dr purchase account cr Bank 6,000 10 Dr withdrawal account cr Loan 1,000 11 Dr building account cr Bank 500,000 Vertical Analysis This is the first part of the analysis that involves filling the accounts as per the given information. This requires the company to develop the best approach that are best used to give the best results used to analyze the highest scores useful in analyzing the impacts of the internal develop the best approach to investors. The investors are given the ability to vertically analyze the overall changes that are affecting the performance of the company. In most cases, the best development plans are always acquired to give the best approach in the long run. The vertical analysis helps the existing customers who allow them to decide on the best approach that will be measured in terms of growth. The local investors are always allowed to improve on their investment plans. The analysis helps to increase the potential investors who are interested in investing in the company. This is the case, since they acquire all relevant skills as they create the understanding of the company of interest. This is quite crucial in the long run since there a re possible areas that are subject to weakness and which can be corrected in advance. Vertical analysis helps the government to check on the performance of the company, since most of the details of the company performance are included in the vertical analysis. This is necessary to analyze the general results in the company. In the current analysis of the company, the government is able to determine the minimum costs in terms of taxation that will make the company operate at the vertical analysis, also creates a better way to the government to establish the most common approaches that are essential to measure. Elements of Vertical Analysis The vertical analysis of this company will be essential as it helps to improve the general performance of the company. The essential elements that are clearly mentioned are discussed below in form of vertical analysis: Amount $ percent Sales 83,523,330 100% Cost of goods sold 51,970,244 12.22% Gross profit 31,553,086 14.55% Sel ling expenses 27,300,248 21.15% Amortization of goodwill 134,201 10.23% Income from operations 4,417,811 54.12% Interest income 8,416 2.44% Income tax expense 3,883,535 12.12% The vertical analysis ensures that there is success, when it comes to measurement of the profits of the company. The best approach thus gives maximum profits to the company. Horizontal Analysis The horizontal analysis helps the company to see its progress in terms of financial periods. The basis is quite essential, as it creates a better technique to analyze these impacts in the long run. In most cases, the horizontal analysis becomes quite essential to the whole organization, since increased costs reduce the general profits. The estimated avenues for the company benefit the entire society in terms of all essential parties. This leads to an increase in income, as the potential investors are encouraged to improve the actual progress in measuring the growth of the company. The following is a deta iled check that will ensure that the proper and accurate results are given. The following data will be quite necessary, as it will give the entire operations of the company that will help investors determine their net worth in the company. This is the main factor that may lead to improved access to the company matter. The horizontal analysis is best known to reduce the overall plans that can make the investors change their mind. The comparison in terms of years creates a wide range of development plans for the company. In most cases, these developments are best achieved to motivate the potential customers, as well as the development and maintenance of existing customers. These values are best attained by the local players, as they create a minimum cost for the company hence more profits realized in long-run. 2012 2011 Change in percent Dollars change Sales 83,523,330 73,339,591 123,449 12% Cost of goods sold 51,970,244 47048,370 345,627 11.66% Gross profit 31,553,086 26,291,221 159,734 18.56% Selling expenses 27,300,248 25,168,893 12,344 32.45% Amortization 134,201 430,807 4,321 09.54% Interest income 8,416 4,659 3,423 33.44% Interest expense 15,969 1,170 14,190 12.44% Net income 2,626,200 457,499 135,626 55.78% Vertical and Horizontal Analyses These two analyses allow the company to attract most of its customers who are able to access more facilities within the company. In most cases, the basic elements in the analysis are best attained by creating a retrogressive approach in the way the business issues are tackled. The most common procedures are attained and this requires the company to improve on its ability to attract more customers, as well as investors. In the long run, t...