Accounting For Next Generation Leaders Assignment Sample

Introduction Of Accounting For Next-Generation Leaders

Accounting is the main essence of all business entities. Business entities invest in the business to earn profit at the end of the day. Thus, keeping records of the transactions of the business is very important to determine profit and loss. The advancements in technology have made it easier to keep records of transactions. Thus, this report concentrates on the various aspects of the financial principles and its management. The advanced techniques of budgeting and techniques of investment appraisal to better the financial performance of the company have been discussed. The main idea of the report is to identify the loopholes in the company's financial strategies and to recommend better strategies to increase the efficiency of the company's financial performance.

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The analysis of the report is based on two companies. Here, the companies selected are from the banking sector. This implies that the companies are involved in the financial industry and selling and buying financial products. These companies are chosen to benefit the conceptualization of the topic of the report. Hence, Barclays Plc is the main company that has been taken to conduct the analysis of the report. HSBC is a company in the same sector dealing in the same business environment. Thus, the company is a major competitor of Barclay's Plc.

Barclays Plc is a restricted organization consolidated in 1690 under the laws of Britain and Grains. The Monetary Foundation is a worldwide bank. This bank is situated in London, UK. The pastry kitchen association is partitioned into two divisions, Barclays Overall and Barclays UK. Barclays Execution Administrations upholds your business by furnishing help with the administrations you really want. John Freem and Thomas Gould were the pioneers behind the bank. From November 1, 2021, Mr. C.S. Venkatakrishnan will be the ongoing President of the organization. The Prudential Controller issues licenses to banking elements, and the Monetary Lead Authority and the Prudential Controller manage the monetary activities of banks. This association is a UK bank that supports retail benefits for private organizations and clients. The Bank likewise supports associations with huge associations and enterprises and speculative financial help.

HSBC Holding Plc is a worldwide all-inclusive banking and monetary administration holding organization. It is the greatest bank in Europe by absolute resources, even ahead of BNP Paribas with US$2.953 trillion as of December 2021. The banking company is a British company founded by Thomas Sutherland in March 1865 in Hong Kong. The company is headquartered in London, United Kingdom. HSBC is short for the “Hongkong and Shanghai Banking Corporation Limited”. The present CEO of the banking company is Colin Bell since February 2021. The “Prudential Regulation Authority” issues HSBC's license, and the “Financial Conduct Authority and Prudential Regulation Authority” oversee the bank's financial operations. This bank wants to bring together the people, ideas, and money that can help advance humanity and make the world a better place by encouraging growth and development.

“Application of Financial and Management Accounting”

“Principles and Core Finance Strategies”

The Financial Reporting Standards, which are published by the Financial Reporting Council of the United Kingdom, define the current "Generally Accepted Accounting Practice" in the country. Guidelines of Bookkeeping allude to the arrangement of practices and strategies used to sort out accounting and other bookkeeping tasks across organizations and over the long haul (Al Muhairi, and Nobanee, 2019). The full breadth of the company's financial vision, which includes assets, liabilities, earnings, expenditures, and shareholders' equity, is covered by accounting standards.

According to the author, Napier et al. 2020, Acknowledgment and Measurement are accounting guidelines that characterize the standards of acknowledgement and assessment of specific financial resources, economic liabilities, and agreements for the purchase and sale of non-monetary items. During the financial emergency, the delay in recording credit misfortunes connected with advances and other economic instruments ended up being one of the greatest shortcomings of the ongoing accounting norms. The Barclay Group carries out the necessities of worldwide accounting guidelines and accounting norms endorsed by the European Association in the year 2005 (Napier et al. 2020). Previously, the gathering utilized the UK Accounting Standards distributed by the “UK Accounting Principles Board” and its “Urgent Issue Task Force”, the suggested practices of the “British Bankers Association” and the Finance and Leasing Association” and the accounting prerequisites set out in the “Companies Act 1985”. Furthermore, as IFRS 1 contains explicit arrangements that apply to “IAS 32” and “IAS 39”, Barclay involved those arrangements and the relative figures for 2004 are displayed previously. This chooses not to apply the norms and use UK GAAP. A significant reality about Barclays is that, alongside HSBC, it was the main bank in the UK not to acknowledge an administration bailout during the monetary emergency. Specifically, the UK government put £39 billion in the “Royal Bank of Scotland”, HBOS, TSB, and Lloyds to keep the area from falling. Consequently, the public authority got an enormous stake in the bank. Obviously, the English government acquainted new necessities with raising capital during the emergency, giving Barkley a motivating force to look for outside financing.

Bottom Line Impact

Barclays PLC is a global provider of financial services with headquarters in London, UK, and operations in more than 40 nations. Barclays is obligated to adhere to a number of accounting and financial principles that have an effect on its bottom line because it is a publicly traded company. In this essay, the researchers will talk about Barclays' accounting policies and financial principles and how they affect the company at the macro level (Weetman, 2019). The principle of profitability is one of Barclays' primary financial guiding principles. It is stated in this principle that a business must generate profit in order to be sustainable and viable. Barclays must focus on profitability in order to remain competitive in the highly competitive financial services industry. In 2020, Barclays revealed a benefit of £3.1 billion, down from £6.2 billion in 2019, to a great extent because of the effect of the Coronavirus pandemic. The pandemic essentially affects the worldwide economy, and subsequently, numerous monetary administration organizations, including Barclays, have needed to change their activities to stay beneficial. Risk management is another financial principle that Barclays adheres to. Barclays faces a variety of risks as a financial services company, including operational risk, market risk, and credit risk. Barclays has put in place a robust risk management framework that includes risk identification, assessment, risk mitigation, and monitoring to manage these risks (Tondeur, et al 2019). This structure assists the organization with recognizing and overseeing gambles successfully, diminishing the effect of these dangers on its primary concern.

Additionally, Barclays adheres to a number of accounting policies and standards that have an effect on its financial statements. One of the essential bookkeeping strategies that Barclays follows is the Global Monetary Revealing Principles. Companies in more than 140 nations, including the United Kingdom, adhere to the accounting standards known as IFRS. Financial statements produced in accordance with these guidelines are guaranteed to be comparable between businesses and industries and to be honest and trustworthy (Rodriguez, et al 2019). Since it operates in the US market, Barclays also adheres to Generally Accepted Accounting Principles (GAAP). In many ways, GAAP and IFRS are similar accounting standards used in the United States. However, there are significant distinctions between IFRS and GAAP that may have an effect on the financial statements of businesses that conduct business in other nations as well as the United States. The fair value accounting principle is yet another accounting policy that Barclays adheres to. In fair value accounting, assets and liabilities are valued at their current market value as opposed to their historical cost. The current value of the company's assets and liabilities, which can have an effect on the financial statements, is more accurately reflected by this method. The fair value accounting approach, for instance, would result in a decrease in the asset's value on the company's balance sheet if the asset's market value decreased (Garcia, et al 2019). This could have an effect on the profitability of the business.

Henceforth, it could easily be stated that monetary standards and bookkeeping strategies assume a huge part in the outcome of organizations like Barclays PLC. The standards of benefit and hazard the board are basic for organizations working in the monetary administration industry, and the adherence to bookkeeping principles, for example, IFRS and GAAP guarantees that financial reports are straightforward, solid, and practically identical across organizations and enterprises. Because it provides a more accurate reflection of the current value of the company's assets and liabilities, the principle of fair value accounting also contributes to the accuracy of the financial statements (Shahin, et al 2020). In general, adherence to these standards and strategies assists organizations with enjoying Barclays to explore the full-scale climate and stay practical and economical in the long run of the business.

The company's net income is a measure of its profitability, which is defined as its capacity to return investments. Interest income, fee income, and trading income are Barclays Plc's primary sources of income. The company's return on equity, return on assets, and return on capital employed is then measured using these income components. The capacity of a company to meet its short-term financial obligations is known as liquidity. The majority of Barclays Plc's liquidity comes from borrowings, marketable securities, and cash. To make sure it has enough cash on hand to fulfil its obligations, the business needs to keep an eye on its liquidity position. In addition, Barclays Plc must evaluate the cost of borrowing to ensure that it does not incur excessive interest costs. Barclays Plc's financial principles and impact on the bottom line are crucial to the company's success (Mori Junior, et al 2019). It is highly unlikely that the business will be able to turn a profit if it is unable to return on its investments. In a similar vein, the business may be forced to default on its obligations if it is unable to maintain adequate liquidity, which could result in financial distress. Therefore, for Barclays Plc to continue being profitable and liquid, it is essential that the company effectively manages its financial principles and impacts the bottom line.

Relevance of Budgets

Budgeting Techniques

Traditional Budget

According to Rahi, and Maelah, 2023, the key factor for which the traditional budget is criticized is due to its limitations, which include hazy information regarding the budget expenditure and other expenses. The author voices that there is an alternative too of this system which, is known as the “Program and Performance Budget” (PPB). according to the author, the traditional budget has suffered from various issues that are represented in impeding communication with the goals of the governments. PPB is determined by concentrating on the procedure of the planning as the forthcoming situation is predicted by it (Rahi, and Maelah, 2023). The programs and the project can be defined by the government institution. The author emphasizes the reason for making the traditional budget comparatively weak. The researcher opines that blind reliance without making any kind of development into a particular program and the target makes the entire budget system inefficient. In this paper, it is mentioned that, as an outcome of the development of the operational practice of the fiscal performance in the banking sector like Barclay Plc along with the diversity that is constructed on the dynamic system amplifies the need for changes of the traditional budget.

The techniques of traditional budgeting have for quite some time been the standard in huge associations, developing planning procedures have arisen as the business environment develops and hierarchical requirements change. The reason for this basic examination is to look at recent concerns and ideas connected with the investigation of existing traditional budget planning practices and modern-era budget planning strategies in huge associations.

One of the most serious issues with traditional budget plans is their inflexible and rigid nature. Traditional budget plans are normally founded on supportable information and utilize a steady process, making them unacceptable for dynamic business conditions (Ebrahimnejad, et al 2023). This absence of adaptability debilitates the capacity of the organization to respond rapidly to changes in the market, mechanical turns of events, and competitive tensions.

All things considered, modern-era budget planning procedures offer a more versatile and adaptable process. For instance, “zero-based planning” or ZBB requires support for all financial plans things and evades the preference to change past spending plans. This technique empowers a more careful assessment of the asset portion, which works with cost enhancement (Kishwar, and Ullah, 2019). Additionally, “action-based planning” or ABB centers around the expense drivers of various exercises, working on cost administration and asset allotment in view of significant value-added exercises.

One more huge issue with traditional budgeting plans is that they will generally energize momentary reasoning and choices. In plans of traditional budgeting, departmental or practical objectives frequently overshadow more extensive authoritative objectives. This limited centre can frustrate coordinated effort, advancement, and long-haul key drives.

Modern-era budget planning procedures tackle that issue by working with cross-departmental coordinated efforts and adjusting spending plans to vital needs. For instance, moving forecasts deliver regular updates on anticipated execution and permit to change or redistribute of assets in view of evolving conditions (Ghosh, et al 2020). As well as planning, there are different processes that stress decentralization, enable directors to decide, and advance readiness and responsibility all through the association.

Moreover, traditional budgeting plans can need exactness and unwavering quality. Traditional budgeting planning and the processes of management are in many cases tedious and in light of appraisals and suspicions that can immediately become obsolete. This can prompt budgetary plan imperatives that do not show the truth of the business environment, prompting wasteful resource assignment and less decision-making.

Alternative budget planning procedures take care of this issue by utilizing an additional information-driven approach. Administrative planning, for instance, centres around distinguishing key business drivers and their relationship to economic execution (Pavlidis, et al 2021). This innovation empowers more precise determining and planning in view of execution factors, going with financial plan choices more dependable.

The recent concerns and ideas connected with the investigation of traditional budgeting planning and Modern-era budget planning techniques in huge associations are the requirement for flexibility, vital arrangement, cross-departmental cooperation, and information-driven navigation.

Impact of Budgeting on Organizational Performance

The impacts of connecting budgeting strategies to full operational strategies and the making of the decision in the association can be found, overcoming improved operational performance. By adjusting budgeting plans and functional techniques, associations can go with better choices, further develop asset distribution and encourage a culture of consistent improvement.

One of the main impacts is the improvement of strategic alignment. Traditional budget planning techniques frequently centre around transient economic objectives that may not line up with a more extensive business procedure of the organization. In any case, by utilizing modern-era budget planning methods, associations can guarantee that budgeting plan choices support vital objectives (Ide, et al 2021). For instance, if an operational approach that tasks system centres around market extension through new item improvement, utilizing budgeting planning methods like “zero-based planning” or ZBB and “action-based planning” or ABB can assist with lessening development drives and is worth adding exercises and simpler to assign assets. This arrangement assists associations in adjusting choices to long-haul vital objectives and further developing activities.

Figure 1: Impacts of Budgeting

(Source: Self-created in MS Word)

Moreover, connecting budget planning to their functional procedure can further develop asset designation. Traditional budget planning frequently utilizes verifiable information and gradual changes that may not reflect changing functional requirements. Modern-era budget planning methods permit associations to reexamine a portion of assets in light of current needs and economic situations (Chillakuri, 2020). For instance, rolling forecasts give continuous updates on expected execution with the goal that associations can all the more really distribute assets and change their functional systems as requirements. This adaptability in asset distribution streamlines the usage of assets, increments effectiveness, and further develops activities.

Another advantage is the better process of decision-making. Traditional budget planning is much of the time described by hierarchical independent direction, which restricts the information and includes the frontline workers. Alternative planning methods empower decentralized independent direction and permit representatives to contribute their insight and mastery. This commitment cultivates a culture of joint effort and development that empowers associations to go with additional educated choices and further develop tasks (O'Reilly, and Binns, 2019). By including workers in the planning and dynamic cycle, organizations can use their insight and imagination, prompting better functional methods and improved results.

Smart Technologies of Budgeting

The advanced and smart innovation essentially affects the whole budgeting process, particularly forecasting and control management. These innovations, like machine learning,computer-based intelligence or AI, and advanced analytics of data, are changing traditional practices of budgeting, bringing about additional precise estimates and better administration control. The principal impact is an improvement in controlling the management.

Forecasting accuracy and smart technology advances empower continuous or close ongoing investigation of a lot of external and internal information, empowering better estimating of future monetary and functional execution (Mei, 2020). These innovations can give more solid figures utilizing authentic information, market patterns, consumer ways of behaving, and other important variables. This exactness permits associations to settle on more educated budgeting plan choices and allot assets all the more effectively, bringing about better monetary execution.

Moreover, more intelligent innovation robotizes and smoothes out the budgeting system, diminishing the time and exertion expected to gather, examine and cover information. The learning of machine algorithms can break down verifiable examples and connections in information, distinguish patterns and make forecasts without broad manual mediation. This computerization saves time, yet in addition diminishes the risk of human mistakes in the budgeting system. By opening up assets recently utilized for manual errands, associations can focus in their endeavours on more essential, value-added exercises.

Similarly, these advancements further develop coordinated effort and correspondence between stakeholders associated with the spending budget process. Cloud-related platforms and joint effort tools empower constant data sharing, consistent cooperation, and repeating spending plan cycles (Moll, and Yigitbasioglu, 2019). It works with a joint effort between divisions, advances transparency, and works on the exactness and unwavering quality of spending plan information.

Mainly, it means quite a bit to take note of that to effectively execute more brilliant advancements in the budgeting system, associations should address difficulties like information quality, information administration and protection, and abilities gaps. The associations should guarantee excellent admittance to data, make sound data on the executive's systems, and put resources into data safety efforts.

Performance Review

Ratio Analysis

Liquidity Ratio

The "Liquidity Ratio" is the percentage used to break down an organization's cash position. Used to evaluate an organization's capacity to support its momentary obligation. One will have an easier time paying off the debt and avoiding instalment payments if this percentage is higher.

The "current ratio" and the "quick ratio" are the two primary types of "liquidity ratios." The ratio that determines the relationship between "current assets" and "current liabilities" is called the "current ratio” (Zaki, M., 2019). As a result, the company's "current assets" are proportional to the ratio. The "acid-test" ratio is another name for the "quick ratio." This ratio considers all “current assets” except the inventories. This is on the grounds that the inventories include the expense of products sold and subsequently, the merchandise principal not be sold right away.

The above-attached table is representing the Liquidity ratio of the company named Barclays Plc. Through this table, the current ratio has been displayed. The data that had been taken is from the year 2018-2019. The formulas for bringing out the result have also been shown in the table. The quick ratio result is 1.52 for the year 2018 and 1.48 for the year 2019. The current liabilities and current assets are shown in the above-attached table.

The above mentioned table shows the estimation of the Liquidity ratio of HSBC. Two kinds of ratios are being estimated in this section. The current ratio for the year 2018 resulted in 0.91 and for the year 2019 is resulted in 0.90. The quick ratio for the organization in the year 2018 is about 0.91 and for the year 2019 is about 0.90. The formulas had been displayed throughout the table.

The above mentioned picture displays the current ratio status of the two organizations. The organizations are Barclay's Plc and HSBC. Two different statuses for two different years had been provided. For the year, 2019 and 2018, the organization named Barclay's Plc resulting in 1.4. For the company named HSBC, the quick ratio is pointing to 0.8.

The clustered column bar graph snippet above represents the comparisons of the quick ratios between the two chosen companies. The 1^st organization is Barclay's Plc and the 2^nd organization is HSBC for the years 2018 and 2019. It had been observed through this snippet that BARCLAY'S Plc's ratio is higher than HSBC's ratio. Therefore it can be concluded that HSBC's liquidity condition is poorer than the other chosen company.

Profitability Ratio

The table furnished above exhibits the computation of the “profitability ratio” of Barclay's Plc. Here, two types of ratios are obtained. The “net profit ratio” of the company shows that the percentage of profit has fallen from 6.60 in 2018 to 15.13 in 2019. The “operating ratio” has increased from 4.572 in 2018 to 5.473 in 2019. The table provided above demonstrates the analysis of the “profitability ratio” of HSBC. Here, two types of ratios are obtained. The “net profit ratio” of the company shows that the percentage of profit has risen from 6.60 in 2018 to 15.13 in 2019. The “operating ratio” has increased from 0.16 in 2018 to 0.20 in 2019.

This part helps to know about the profitability of the chosen company named HSBC, a competitor of Barclays. The operating profit for the company in the year 2018 is 26.37 and for the year 2019 is almost about 16.14.

The above represented a comparison graph of the “net profit ratio” of Barclay's Plc and HSBC. The comparison discloses that in 2019 the percentage of the profit of both companies is almost the same. Though, in 2018, its profit was too low for Barclay's Plc. It is observed that on a year-on-year basis, the profit of HSBC has increased and that of Barclay's has decreased.

The above attached clustered bar chart illustrates and compares the “operating profit” of Barclay's Plc and HSBC. The profit against operation has shown that the profit percentage of Barclay's is negligible in comparison to HSBC's. Through this snippet, the operating profit ratio of the HSBC Company has only been illustrated.

Capital Structure and Financial Risk Ratio

The ratios that are obtained to evaluate the intensity of risks involved in a company is known as the “capital structure and financial risks ratio”

The table that has been displayed above projects the computation of the ratios obtained to analyze the capital structure of Barclay's Plc and the risks that are associated with the company. These ratios are mostly analyzed to share the solvency capacity of the company to attract more investors. The “debt-equity ratio” was 9.84 in 2018 and 9.10 in 2019. The “long-term debt to total assets” ratio is observed to be 0.28 in 2018 and 0.26 in 2019.

The table that is illustrated above entails the analysis of the ratios conducted to analyze the capital structure of HSBC and the risk intensity of the company. These ratios are mostly analyzed to share the solvency capacity of the company to attract more investors. The “debt-equity ratio” was a fall from 2.29 in 2018 to 2.66 in 2019. The “long-term debt to total assets” ratio is observed to be 0.04 in 2018 and 0.05 in 2019.

The figure that is demonstrated above projects the comparison graph of the “debt-equity ratio”. It is evident from the above-stated column bar chart that Barclay's capital structure is much better than HSBC's. In fact, it is also observed that HSBC's ratio has fallen in 2019 from 2018.

The figure that is displayed above shows the comparison graph of the “debt to total assets ratio”. It is evident from the above-stated column bar chart that HSBC's capital structure is much poorer than Barclay's. In fact, it is also observed that Barclay's ratio has improved in 2019 from 2018.

Working Capital Ratio

The ratio that is obtained to estimate the company's capacity to meet day-to-day expenses to conduct its business is known as the “working capital ratio”.

The table provided shows the estimations of the “working capital ratio”. The ratio is observed to have increased from 11.16 in 2018 to 10.31 in 2019.

The above table has been provided to show the estimated “working capital ratio”. The ratios for both years are observed in negative. However, the ratio was -2.27 in 2018 and -2.45 in 2019.

The above visual provided bar graph represents the efficiency of the company to carry out the regular expenses of the business activities of the company. Barclay's Plc has been observed to be stable but HSBC's condition is miserable.

“Impact of External Operating Environment on Financial Performance”

The external factors hold the same importance as the internal factors or even more as the internal factors are controllable but the external factors are not controllable. Thus, it is very important to analyze and scrutinize external factors often and keep track of those factors. The most important external factors for Barclays Plc being a global banking institution are - technological factors, global factors, economic factors, and political and legal factors.

Figure 9: External Factors

(Source: Self-created in MS Word)

Firstly, Barclay's Plc uses its own Barclays Execution Services for the technical assistance it requires. The banking institution is a global financial entity that is in need of continuous requirements of technological upgradation. Financial transactions are now mostly done through technology-based systems all over the world (Hoffmeister, 2021). Thus, it is very important to keep updated on the technology. Secondly, the economic factor is of great concern these days considering the turmoil going on worldwide. The different countries follow different denominations of money and thus, the economic conditions vary from one country to another country. Therefore, the banking company needs to keep updated on all fluctuations happening in the economy to ensure that the company can take the most advantage of opportunities that may arrive. Thirdly, global factors. Global factors refer to keeping track of various aspects like cultural variations, customer trends, economic variations, demographic variations, etc. These are important that a global company should assess often. The global issues affect the company revenues directly. Fourthly and lastly, the political and legal factors. This is a major factor of concern because different country has different laws implemented to protect its interest. Barclay's Plc, a financial institution has to follow different accounting as per the rules of the operating locations of the company (Felch, et al 2019). The taxation policies, intellectual property law, employment rules, and tariffs differ from country to country.

Financial Strategies to Improve Organizational Sustainability

Barclay's Plc is a global banking institution. The company is based in the United Kingdom and thus, has operations in and around Europe. The company's main objective is to increase its strength in the investment sector and to expand in the sectors of high growth. The uniqueness of the bank is that maintains the savings accounts with utmost sincerity. The bank provides personal loans and credit cards but does not suggest checking accounts and various other lending products. Thus, the company has to make more efforts to structure definitive strategies that could facilitate the company to develop a financial position for the improvement of the sustainability of the company.

According to Kumar, 2022, in 2020, sustainable bonds performed ahead of conventional bonds due to different factors and influences of the external elements that are involved in the sustainability of the organization. The sustainability structure requires more infrastructural developments to meet the needs of sustainability (Kumar, 2022). The author illustrated various evidence from the pre-existing literature and other sources and moreover, the study has focused on emphasizing the benefits and the importance of such bonds in the promotion of the market of sustainable bond market.

Thus, the strategy the banking company used is the implementation of sustainability programs that include various bonds facilitating the sustainable cause. The company must imply some financial strategies to support the sustainable strategy that is - the development of wealth management systems, the acquisition of definite sources of funds, budgeting of expenses necessary to support sustainability, attaching purchase of green bonds with upgradation of accounts held in the bank, etc.

Investment Appraisal Techniques

Importance of Investment Appraisal Techniques

The appraisal techniques of investments are financial analysis tools that examine the profitability of an investment. Investment appraisal is a very important factor in the sector of finance. This is because the trading and transactions are related to financial products. The importance of the appraisal techniques is to be discussed here. Firstly, to measure the profitability of an investment. Any investment is made keeping in view the returns that could be achieved and thus, the estimations of the profits are done based on the invested amount. Secondly, to compare the parity between the return and the investment (Goian, et al 2019). This essentially implies the percentage of return above the invested amount that is to be earned. Precisely, it depicts the worth of the investment. Thirdly, to compare prospective investment opportunities. This implies that various contracts or projects can be compared to identify the most profitable and prospective project. Fourthly, it enables the investor to make effective decisions. The evaluation techniques identify the most effective project. Thereby, it helps the investor to make a wise decision regarding the investment plan or project to be chosen.

Discounted and Non-discounted Cash Flow

Limited pay requires a monetary strategy that utilizes the time worth of money to esteem undertakings, organizations, assets, or security. Speculation and procurement finance, land advancement, business financial matters, executives, and patent valuation all utilize limited income gauges. Hence, the idea of the time worth of cash in the monetary field is critical to evaluate monetary open doors and the worth of cash precisely.

The table given above shows the “discounted cash flow” of Barclay's Plc. The company is a banking institution and thus, has to deal with numerous financial transactions on a regular basis. Barclay's Plc does not handle the finances of its customers but it also sells financial products. Thus, the company prepares a presentation of the various schemes it has. Then, the marketers of the company pitch it to the prospective customers. This method is very widely used to present the customers with the present value of the money that the customers will get in the future in comparison to the investments they will be making in the present time (Burritt, et al 2019). This also provides important insights into the schemes of the financial products and thus, helps the customers to make effective decisions regarding financial investments.

There are several techniques to analyze the investment schemes using the technique of discounting method the time value of money method namely, internal rate of return, period, discounted pay-bak period, discounted cash flow, net present value, profitability index, cost-benefit analysis, sensitivity analysis. These techniques are mostly related to the analysis of investments relating to major acquisitions or investment plans.

The table that has been displayed above projects the “non-discounted cash flow”. This type of cash flow does take into consideration the concept of the time value of money. This is not a very approachable technique considered to evaluate the potentiality of an investment. The method shows the value of money to be the same in the present and in the future. The money value does not show the accurate rate of return it may fetch. Barclay's Plc does not use this technique in any estimations of the schemes (Mack, et al 2020). This is because of the variations in the value of the present value of money and the future value of money are not clarified here. There are two types of pay-back and accounting rate of return.

Investment Appraisal Techniques

There are several techniques of investment appraisal that are employed to assess the worth of the investment plans to choose the most effective investment plan. The techniques are -

Accounting Rate of Return

It is a technique of non-discounted estimation of the return that could be fetched from an investment. This method is used when the return each year is constant.

Payback Period

The payback period is a technique to estimate the time period within which the invested amount would be recovered during the life of the project.

Discounted Payback Period

This technique of estimation of the time period within which the invested amount could be recovered considering the time value technique of money.

“Internal Rate of Return”

In financial analysis, the “inside pace of return” is an approach to estimating the expected benefit of speculation. IRR is the exchange value that addresses the aggregate sum of pay thought about in compelled pay examination.

Profitability Index

The index of profitability is a measurement of an undertaking or investment's potential. The index of profitability is computed by diverging the current value of future anticipated cash flows with the initial value of an investment in the project.

There are many more techniques of investment appraisal that are used to evaluate the worthiness of an investment (Astrachan, et al 2020). Here, some of the techniques were mentioned.

Summary

UK's Barclays, a worldwide general bank, is in the main twenty-seven banks. The Prudential Strategy Authority approves this monetary association and the Monetary Head Authority and the Prudential Directing Power address the Bank's depository exercises. Clients and independent ventures get assets from the organization through private financial administrations. Moreover, the Bank works with bigger associations and associations with corporate and speculative financial help. The report has analyzed all the financial aspects of the bank. The accounting standards that are followed by the bank and the effectiveness of the accounting standards in facilitating the business activities of the bank. Further, the implications of bottom-line impacts on the bank and decision-making of the bank. The various budgeting techniques have been discussed and compared. The financial statements of the company and its competitor HSBC have been analyzed using the ratio analysis tool. The analysis has revealed that the performance of Barclays Plc is much better than the performance of HSBC. Barclay's Plc has a stable financial position and the intensity of risk is also very amiable. Further, the various types of investment appraisal techniques have been evaluated and discussed. The report has met all the requirements. Thus, has been concluded successfully.

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