Financial Findings And Statements For Fashion Clothing: An Analysis

Main financial findings

Write an essay on Fashion clothing.

Fashion clothing is a clothing company who is planning to set up the business with the business with the initial investment of $200,000. The company is looking to invest its funds and start its operation by dealing in clothes. The current information about the basis of issue of financial instruments is prepared in accordance with the policies and procedures.

The report also represents the additional set of information that which is not disclosed elsewhere in the report presented to the owners of fashion clothing but it is relevant in the understanding of issue of any such financial statement.

Fashion clothing presents a complete set of financial statements, which consists of information regarding the issue of various financial statements for the financial year of 2015. Fashion Clothing presents its report in the reporting period, which discloses the period covered in the issue of the financial statement and its findings. The report is prepare with the view of keeping in mind that the financial findings is presented with the review assuming that Fashion clothing is going concern and will continue to exists in operation for the foreseeable course of future (Hoskin et al 2014). The report is consists of presentations and classification of items in the financial findings which are used during the financial year of 2015.

The report also defines that any materiality changes and commitments which affects the financial position of the Fashion Clothing which have incurred during the course of financial year to the financial statement which is related to the financial statement of the report. This discloses the amount of the capital and the reason for such investment. The company established with the initial funds establish its functions of operations.

The statement of income states that the company plans to presents a projected cash flow of fashion clothing. As per the statement of income , the first item is the revenue that is approximated for the next six months with December as the actual end year. five years with 2015 as the actual end year.

The revenue refers to the amount acquired by the company from sales. The actual figure for the revenue during the month of July is recorded to be $225,000 which remains constant for the remaining period from august to December. Therefore, the financial projection for the year 2015  assumes increase in revenue if the company initial investments increases as currently due to its huge cost of investment in materials most part of the revenue are under accounts receivable. The revenue approximations for the subsequent month’s from the month of August to December forecast the same revenue because the cost of raw materials issued remains constant with the figure of $65000 for the rest of the financial year (Barton and Simko 2012.).

Financial accounting statements

The list of line items concerning the business report demonstrates the face of the financial position, which are as follows.

1. Cash
2. Tangible assets
3. Capital
4. Additional purchase of assets
5. Purchase of materials
6. Sales considerations
7. Sales considerations

Next object, which is approximated in the statement of income for the first six months, is the expenditure of sale of goods. The expenditure of sale of goods refers to the cost obtained during the purchase or else procuring the goods along with the services of the business. The expenditure of sale of goods obtained during the year 2015 stands at 145,000 for the month of July and remained constant for the rest of the month from July to December. There for the cost of goods sold does not shows any signs of upward rise.

Gross profit is usually catalogued after deducting the cost of goods sold from the revenue. In the year 2015, the tangible number of gross profit is recorded to be $80,000 Consequently, this number too is projected to ultimately remain constant for the rest of the period. However according to the financial terms such figures need to increase with the increase in sales (Mills and Yamamura 2013). The operational expenses for Fashion Clothing mainly include the marketing expenses as well as the general in addition to with the depreciation charge of 15000.

Profit earned after tax that is the PAT is obtained by deducting the costs of operating expense and provisions for tax as the share from the profit from diverse business operations of the corporation. The profit after tax stood for the month of July was 19167 and remained constant for the remaining period of financial year 2015. This number is not usually the procedure of listing up the quantity of cash generated by a particular company during a specific period. This is for the reason that the statement of profit and the loss also include diverse non-cash expends. . However, amount of tax to be paid by the company is also expected to increase with increase in the entire proceeds of the corporation in the subsequent periods.

The report also represents the additional set of information that which is not disclosed elsewhere in the report, which is relevant in the understanding of issue of the overdraft facilities. The business needs to consider the cash flow statement by deducting the available cash, which means that business with low capital investment will be overburdened with the repayment along with the risk profile. If the business is prepared to take higher risk and it will  be able to perform well with the high gearing ratio (Aghion et al 2014). As the business approaches for over draft facilities, bank may charge the fixed rate over the assets of the company. It will also the asks the owners to lent a personal guarantees and may implement a floating charge over the assets. Floating will be charged on the stock which is constant sold or replaced by the business.

Conclusion:

The owners of the business on receiving the report for information approves for negotiation of overdraft facilities for long term basis which will carry certain amount of the interest rate.  The owners of Fashion clothing  on the other hand approves that the profit and revenue earned after a period of six months on the parameters as indicated in this report.  In weighting this factor is has been considered that these financial statement be issued prior on the approval of owners of Fashion clothing.

Statement of financial position

For the month of 1.7.2015 to 31.12.2015

Particulars	Amount	Amont
Tangible Assets	1,50,000
Less; Depreciatyion	15000	1,35,000
Intangible Assets
Other Non Current asserts		30000
Total non-current assets		1,65,000
Cuurent Assets
stocks
Purchase of Material	460000
Less Cost of materials	390000	70000
Debtors
Total sales	1350000
Less cash receipt	1175000
		175000
Total Current assets		245000
Total Assets		4,10,000
Non-current Liabilities		0
Current Liabilities
Trade Creditors
Bank Overdraft		95000
Total Currentrr Liabilities		95000
Total Liabilities		95000
Capital and Reserves
Capital		2,00,000
Porfit brought forward for current year		115000
Total equities and liabilites		4,10,000
Profit for current Year

Statement of Income Statement From 1.7.2015 to 31.12.2015
Particulars	July	Aug	Sept	Oct	Nov	Dec	Total
Sales	2,25,000	2,25,000	2,25,000	2,25,000	2,25,000	2,25,000	13,50,000
Cost of Materials	65000	65000	65000	65000	65000	65000	390000
Wages	80000	80000	80000	80000	80000	80000	480000
Total Cost of Sales	145000	145000	145000	145000	145000	145000	870000
Gross Profit (A)	80000	80000	80000	80000	80000	80000	480000
Other costs	55000	55000	55000	55000	55000	55000	330000
Depriciaions	2500	2500	2500	2500	2500	2500	15000
Total operating Expenses (B)	57500	57500	57500	57500	57500	57500	345000
Operating Income (A-B)	22500	22500	22500	22500	22500	22500	135000
Less: Provision for Tax	3333	3333	3333	3333	3333	3333	20000
Net Income after tax	19167	19167	19167	19167	19167	19167	115000

Statement of cash flow for fashion clothing

From the month of 1.07.2015 to 31.12.2015

Particulars	July	Aug	Sept	Oct	Nov	Dec	Total
CASH FROM OPERATION ACTIVITIES
Sales	150000	120000	150000	210000	260000	285000	1175000
Less: Cost of materials Purchased	120000	100000	60000	60000	60000	60000	460000
Other Exxpenses	55000	55000	55000	55000	55000	55000	330000
Labour Cost	80000	80000	80000	80000	80000	80000	480000
Tax Paid						20000	20000
Net Cash inflow from operational activity	-105000	-115000	-45000	15000	65000	70000	-115000
Cash flow from investment activity
Purchase of assets						-30000	-30000
Net cash inflow from investment activities	0	0	0	0	0	-30000	-30000
Cash flow from financing activity	0	0	0	0	0	0	0
Net cash increase / decrease	-105000	-115000	-45000	15000	65000	40000	-145000
opening balance	50000	-55000	-170000	-215000	-200000	-135000	50000
Closing balance	-55000	-170000	-215000	-200000	-135000	-95000	-95000

Projected cash flow from fashion clothing

From 1.07.2015 to 31.12.2015

(i) Cash flow from operating activities	July	Aug	Sep	Oct	Nov	Dec	Total
Profit After Tax	19167	19167	19167	19167	19167	19167	115000
Add : Depreciation	2500	2500	2500	2500	2500	2500	15000
Cash received from Sales	150000	120000	150000	210000	260000	285000	1175000
Cost of Material	65000	65000	65000	65000	65000	65000	390000
Less : Total Sales	2,25,000	2,25,000	2,25,000	2,25,000	2,25,000	2,25,000	1350000
Purchase of Material	120000	100000	60000	60000	60000	60000	460000
C. Cash generated from operations	-108333	-118333	-48333	11667	61667	86667	-115000
Cash flow from investment activity
Purchase of assets						-30000	-30000
Net cash inflow from investment activities	0	0	0	0	0	-30000	-30000
Cash flow from financing activity	0	0	0	0	0	0	0
(iv) Net increase/decrease in cash and cash equivalents	-108333	-118333	-48333	11667	61667	56667	-115000
Add: Cash and cash equivalent in the beginning of the year	50000	-58333	-176666	-224999	-213332	-151665	50000
Less: Cash and cash equivalent in the end of the year	-58333	-176666	-224999	-213332	-151665	-94998	–115000

Reference list:

Aghion, P., Bacchetta, P. and Banerjee, A., 2014. A corporate balance-sheet approach to currency crises. Journal of Economic theory, 119(1), pp.6-30.

AUDITED, U., 2008. Cash Flow Statement. Notes, 2015.

Barton, J. and Simko, P.J., 2012. The balance sheet as an earnings management constraint. The accounting review, 77(s-1), pp.1-27.

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