Informal Assessment

Question: Provide an informal assessment of what you see as The Bridge House's Thrift Stores financial strengths and potential weaknesses to mitigate. Formulate questions for Ms. Bentwood, as needed, that would assist you in budget preparation. Answer: Finance Financial strengths and potential weakness in the financial statement of Bridge House Bridge House believes in supporting individuals and families in achieved healthy environment. From the balance sheet of Bridge House, it is easy to predict that it needs to acquire more assets in the near future. Strengths in the financial statements of Bridge House Owners as well as managers of Bridge House require financial statements in order to take the financial decisions affecting the continuous operations .It is recommended to the Executive Director of Bridge House that financial analysis will help in detailed understanding of relevant of figures (Clark and Baker). From the balance sheet, acquisition of more assets is required for smooth functioning of business activities. Inventory control measures will help in meeting the day-to-day running of business activities. The net profit of the firm is on the higher side around (190,000) which can be of great beneficial for the firm. The gross profit margin of the firm is also on the higher side, (200000/250000*100) = 80 percent.Similarly, Net profit margin is also on the higher side, which is positive for the firm. Management of Bridge should make use of financial statements and provide reliable information to the stockholders. In other words, it is advisable for the employees of Bridge to make use of financial statements for the purpose of collective bargaining agreements on an overall manner. It is advisable to the Executive Director that expenses should be reduced in comparison with generation of revenue for future purpose. Prospective Investors believes in using financial statements that will help in assessing the viability issues in the most appropriate manner Current ratio of the firm is on the higher side, (around 2.5:1), which is a good sign for the firm. Weakness in the financial statements of Bride House From the financial statements, it leads to misleading information on income and expense terms. In other words, financial statements fail to meet the objectives and mentioning the financial position on an overall manner. Bridge House fails to manage its liabilities and share capital in an efficient manner (Fields). This particular company lacks inventory allocation and changes in the financial position on an adverse manner. This particular company fails to provide reliable information to its stakeholders. It is advisable to consider the business and economic activities for future purpose. Another basic weakness of the firm is lack of equity and balance between equity and debt. Equity is higher than debt. Formulation of questions in assisting the budget preparation Preparation of budget should indulge in steps that will help Ms. Bentwood. It is advisable to prepare budget for Bridge House that will solve related issues for future purpose. Steps for budget preparation are as follows: Financial Managers of Bridge House should update the budget assumptions on matters relating the business environment (Horngren). Updation is done based upon the last budget preparation on an overall manner. It is necessary to review at the constraints for generation of further sales for the company for future business activities The next step is to avail best-suited funding options prevailing in the budget period. This will enhance limiting the future growth plans on an overall manner. It is essential to create the budget package because actual expenses cause future costing information in the most appropriate way (Northington). Issuing the budget package is necessary because it funds with the limitations factor prevailing in the business constraints on an overall manner. It is necessary to obtain the relevant departmental budgets in accordance with the master budget plan in an effective way. Reference List Clark, Richard, and David Baker.Finance. Oxford: Oxford University Press, 2011. Print. Fields, Edward.The Essentials Of Finance And Accounting For Nonfinancial Managers. New York: American Management Association, 2011. Print. Horngren, Charles T.Accounting. Toronto: Pearson Prentice Hall, 2011. Print. Northington, Suzanne.Finance. New York, NY: Ferguson's, 2011. Print. Appendix Income Statement Particulars Amount Sales 250000 Gross Profit 200000 Operating Profit 10000 Net Profit before Tax 190000 Tax 10000 Profit After Tax 180000 Balance Sheet Particulars Amount Capital 320000 Net profit 180000 Current Liabilities 100000 Total Liabilities 600000 Assets Current Assets 250000 Total Non-Current Assts 350000 Total Assets 600000