Journl Topic1: centralization (400 words)
Journl Topic2: globalization strategy (400 words)
Discussion 1 Topic: Discuss the primary factors that motivate companies to expand internationally.( 400 words)
Discussion 2 Topic: Cash Flow and Financial Analysis( Part 1: Importance of Cash, Part 2: Application of Concepts/Financial Analysis) (450 words) (3 responses to students work, Please find the attachments – 250 words each)
APA format and references needed.
Managerial Finance
Discussion Topic: – Cash Flow and Financial Analysis
BA62070H419 Managerial Finance
Name: – Rohan Somaiya
ID: – 586077
Importance of cash
Cash is one of the important elements in business. Every business keeps the track of the cash flow in the organization. Cash generation is the fundamental responsibility of a business. Any company exists to make profit and try to expand using the money earned. Companies usually have long-term and short-term goals. In order to achieve those, the goals need to be funded properly. There are some long-term funds for which the investment happens for a larger period of time and the benefits are generated after a longer period of time. But there are some small term goals which are fulfilled using small investment for shorter period of time. They are usually instant investment. Companies with large piles of money are far more stable than the company whereas to the company where there is less money. Cash flow basically means the amount of money that goes in and come out of the company. There are companies which have positive cash flow but are still making loses and there are companies which have negative cash flow but still making profits. Companies pay close attention to their cash flow and monitor the ways by which cash flow can be generated.
Application of concepts/ Financial analysis
Financial analysis may be defined as understanding the financial performance of the company. To understand if the company if making profit, it is important that the company should look at the income statement. To understand the assets and liability of the company, balance sheet plays an important role. Financial ratios play an important role in analyzing the performance of the company. Many other factors which are considered to evaluate the financial statement are gross profits, operating margin, operating leverage and net margin. Balance sheet, cash flow and Income statement are used to analyze the whole picture together. Knowing the financial stability of the company, will help the company to make decisions regarding the investment and savings. Managers will know in advance the credibility of their firm and will expand accordingly. Some companies where the finances are not that strong, many assets or other aspects are sold out to get the money for the company.
References:
Kokemuller N. (n.d.). Importance of Cash Flow to a Business. Small Business – Chron.com. Retrieved from http://smallbusiness.chron.com/importance-cash-flow-business-57376.html
Carlson R. (2020, January 25) Is Cash Flow the Same as Profit?. Retrieved from https://www.thebalancesmb.com/are-a-firm-s-cash-flow-and-profit-different-393585
Lesonsky R. (2014, June 11) 12 Easy Ways to Successfully Manage Your Cash Flow. Retrieved from https://www.americanexpress.com/en-us/business/trends-and-insights/articles/12-easy-ways-to-successfully-manage-your-cash-flow/
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Discussion 2
· Himank Sharma
Part-1
Cash flow is one of the major indicators of financial health. It is defined as the overall change in the firm’s cash position in a particular period.
Having cash on hand ensures a much more stable position with increased buying power. It also helps maintain a buffer against loan defaults and/or foreclosures.
A healthy cash flow allows a firm to invest in growth. One can very well borrow money to invest in buildings, machinery, R&D, technology, training and inventory. Firms can also utilize cash as dividends dispersed to stakeholders or owners. A strong cash flow makes lenders much more accessible to a firm if it decides to take a debt sometime in the near future.
The Profit & Loss Standard (P&L) report truly vital to a firm’s needs on its own, although it does not provide a complete picture of its business. A statement of cash flows depicts where the money flowed in from and where it outflowed to on a daily basis, whereas the profit and loss statement simply shows what a company earned and spent. For example, a profit and loss statement doesn’t show items like credit card payments, owner’s draw etc. And although these are important from a business’s standpoint they aren’t termed as expenses under the accounting category. (Silven-Hoell, 2019)
Some of the ways in which companies manage cash flows are:
i) Use technology to your advantage: Using the cloud on sites like Dropbox so that they are easily accessible from anywhere
ii) Determine the break-even point: Estimating this metric doesn’t affect the current cash flow but the projection of the future one
iii) Maintain reserves: Companies tend to keep a healthy 3-4 month buffer for anomalies and bad projections (Shieldsmith, 2019)
iv) Sales boost: Many firms offer referral programs or contests to rapidly increase sales
Part-2
Analyzing financial statements help figure out the financial health of a firm. There are numerous reasons why this analysis is crucial for understanding the complete financial performance of a company:
i) Firm Liability review: Understanding the financial liabilities is important before a business is looking towards expansion via taking a loan. The financial statement analysis showcases what existing liabilities a firm might have, which might include credit lines, business loans etc. (Leonard, 2019)
ii) Inventory and Asset check: A vital part of the financial statement is a balance sheet. Firms can better forecast for the next few sales months by accurately measuring their current inventory stock. Extra inventory on hand keeps the money locked in, and not having enough may result in customer and market loss.
References
Silven-Hoell Kirsten (2019). Differences Between a Cash Flow Statement and Profit and Loss. Retrieved from
https://bizfluent.com/info-8785546-differences-flow-statement-profit-loss.html
Shieldsmith, John (2019). 10 tips for using cash flow management to grow your business. Retrieved from
https://quickbooks.intuit.com/r/financial-management/10-tips-managing-cash-flow/
Leonard, Kimberlee (2019). Advantages of a Financial Statement Analysis. Retrieved from
https://smallbusiness.chron.com/advantages-financial-statement-analysis-4124.html
Running head:
DISCUSSION 2
2
DISCUSSION 2 2
DISCUSSION 2
GANTULGA GANBAATAR
BA 620 – MANAGERIAL FINANCE
CAMPBELLSVILLE UNIVERSITY
JANUARY 26, 2020
Part 1- Importance of cash
Cash is significant in light of the fact that it furnishes people and families with liquidity. This implies you can take care of your commitments on time regardless of whether terrible occasions hit. How about we think about a couple with just a single salary and no obligations – no charge card balance. I realize this may not sensible but rather we should be moderate. So, what occurs if the acquiring accomplice is laid off for a few months? In what capacity will the lease and bills be paid? Two or three choices incorporate taking out a transient advance, dunk into overdraft assurance, use Visas, or get cash from relatives. Be that as it may, what is the probability of a jobless couple, even one with no obligation, meeting all requirements for a credit. Too, any of these alternatives accompany robust expenses – in any event, acquiring from your relatives.
Liquidity is likewise basic for unexpected medical problems that may emerge. For instance, for most dental work the patient is required to make installment forthright and is then repaid their protection supplier. On the off chance that you’ve at any point had dental issues you realize that when the torment strikes you need quick treatment. By and by, obviously the costs can be charged to Mastercard’s, and so forth. In any case, if there are installment issues from your insurance agency, they won’t cover your advantage charges. Additionally, health related crises can be increasingly serious and costly then this and in spite of the fact that we couldn’t in any way, shape or form be prepared for the entirety of life’s adversities we can attempt to battle a few. (Ewart, 2010)
The significance of cash is lined up with the centrality of having a secret stash. As recently underscored, it is basic, particularly in the present economy, to have a secret stash set up. It is similarly imperative to have most, around 80%, of your rainy-day account in real cash or cash comparable instruments. This permits you liquidity so as to meet commitments regardless of whether you are confronted with critical conditions. (Assaf, 2007)
Part 2 – Financial analysis
Before starting the way toward dissecting a fiscal summary, it is imperative to comprehend the various sorts of budget summaries, how they are readied, and how solid the data contained in them might be. The introductory letter of a fiscal report should disclose to you how the budget report was readied; contingent upon the sort, we can all the more likely comprehend to what level the data was confirmed for our dependence on the data gave. The kinds of fiscal summaries that you are probably going to see, arranged by least expensive and least dependable, are inner, ordered, assessed, and reviewed budget reports. The following is a progressively exhaustive clarification of these kinds of explanations.
Inner budget reports are set up by individuals from the business without the help or affirmation of any outside sources, for example, a CPA firm. These sorts of proclamations may likewise be alluded to as the board arranged or “in-house” budget reports. Inside fiscal summaries would likely not accompany an introductory letter or notes. This kind of cash related data is frequently produced from in-house bookkeeping programming, for example, Quick-Books or Sage, and is just as dependable as the data being entered by the client. For some littler organizations, this might be the main kind of budget report accessible. Different kinds of financials incorporate a cost/charge paid to the preparer and may not be sought after in the event that it has not been explicitly mentioned by a cashlender or speculator. There is no confirmation that data created on inside budget summaries is precise. Saying this doesn’t imply that this data can’t be helpful, yet it would require an appraisal of the character and skill of the source so as to all the more likely survey how solid data conveyed in this configuration might be. Ordered budget reports will include the help of a bookkeeping expert or CPA, yet their administrations are just to confirm that the information is displayed in an arrangement predictable with expertly arranged fiscal summaries. The expenses are considerably less than a survey or review, as there will have been pretty much nothing, assuming any, endeavors to confirm the hidden monetary data. Accordingly, the unwavering quality of the data would lay intensely on the character and skill of the individual and business delivering the data similarly likewise with an in-house fiscal report. (Kwok, 2013)
Investigated budget summaries are turning out to be increasingly more typical with little to fair sized organizations in the U.S. A budget summary survey isn’t as intensive or solid as a review, yet the expense for an audit would be less, and therefore an audit might be additionally speaking to the substance taking care of the expense of setting up the fiscal reports than would an all the more exorbitant review. Evaluated budget summaries are set up by an ensured open bookkeeper (CPA) and an exertion is made to confirm a significant part of the data. The extent of a survey will fluctuate by firm or condition. A careful survey may incorporate a considerable lot of a similar check exercises that would exist in a review. An audit would almost certainly incorporate proportion examination, examinations of irregularities of significant diary sections, a survey of records, follow up inquiries from past audits, and a survey of bookkeeping and different strategic policies. A survey would not require the bookkeeper to increase any critical confirmation of interior controls, evaluate misrepresentation chance, or different kinds of review strategies. An audit would likewise not require a CPA firm to express a feeling on the legitimacy of the fiscal summaries, which expels the firm from any responsibility in case of extortion or miss-spoke to data. Evaluated fiscal summaries are the most dependable type of budget reports. An inspected fiscal summary would require the CPA firm setting up the announcement to express a feeling on the unwavering quality of the data contained in the announcements. There are three kinds of assessments that might be communicated: inadequate supposition, qualified conclusion, and an antagonistic sentiment. In an unfit sentiment, the firm directing the review speaks to that the data is exhibited reasonably, in every single material regard, and effectively speaks to the cash related situation of the business being examined. This is the language you need to find in the introductory letter of your evaluated fiscal summaries.
A certified feeling will have recognized a particular territory wherein the firm directing the review was not ready to affirm that the data communicated was in consistence with either organization arrangements and controls, or the bookkeeping approaches administering the review. This may not mean the data is wrong or can’t be depended upon, however you should look to comprehend the conditions and subtleties of a certified conclusion to decide whether the capability would fundamentally modify the evaluation of the monetary data and your credit investigation. The expressions “with the exception of” or “subject to” utilized in the introductory letter after the evaluating firm speaks to that the data is displayed decently, are for the most part reference focuses about why the sentiment is qualified. An unfriendly assessment would imply that data was not ready to be confirmed and may demonstrate misrepresentation or different issues. This could likewise speak to that the bookkeeper or firm directing the review was not ready to confirm that the subject of the review has the budgetary fortitude to be viewed as a going concern and keep on working its business. An unfavorable supposition is uncommon, and any dependence on cash related data conveying an unfriendly feeling may not be fitting. (Helfer, 2001)
References
Assaf Disorder. (2007). The Importance of Cash-Flow News for Financially Distressed Firms. Financial Management, 36(3), 33. Retrieved from
http://search.ebscohost.com/login.aspx?direct=true&AuthType=sso&db=edsjsr&AN=edsjsr.30136007
Ewart, G. (2010). Law and Financial Markets Review Practitioner Perspectives the Importance of Control When Taking a Charge over Cash. Law and Financial Markets Review, 4(6), 549–552. Retrieved from
http://search.ebscohost.com/login.aspx?direct=true&AuthType=sso&db=edshol&AN=edshol.hein.journals.lawfinancmr4.66
Helfer, E. A. (2001). Financial Analysis: Tools and Techniques: A Guide for Managers. New York: McGraw-Hill Professional. Retrieved from
http://search.ebscohost.com/login.aspx?direct=true&AuthType=sso&db=nlebk&AN=65949
Kwok, B. K. B. (2013). Financial Analysis in Hong Kong: Qualitative Examination of Financial Statements for CEOs and Board Members (Vol. Second edition). [Self]: The Chinese University of Hong Kong Press. Retrieved from
http://search.ebscohost.com/login.aspx?direct=true&AuthType=sso&db=nlebk&AN=2171732