Prepare a report for the board of directors of Summer Bodysuit Ltd Coursework

Prepare a report for the board of directors of summer Bodysuit Ltd that analyses the problems faced by the caller and that sets - Coursework Example2. To study whether avows request for a real reduction in the overdraft facility granted to Summer Bodysuit Limited is reasonable. Structure of the organization The financial problems in a company arise mainly due to weakness in the body structure of the organization. Jill Dempsey and Mike crackle have good experience in the companys military control. The barter model, designing and manufacturing of casual and vacant clothes aiming particularly at the younger and higher-income market, is in line with their experience. However, the weakness in the organization structure lies in omit of proper system for financial management. Financial management is a specialized orbit which needs expertise for efficiency in business operations. Keeble brothers involvement in the day to day business activities has been very limited. The business h as grown well over the period of time and the order recently authentic from Arena, a chain of casual and sportswear stores is seen particularly important. The draft accounts from the Auditors confirm the companys success. But, lack of suitable system for working capital management and planning in capital investment has arrive the company in the current financial difficulties. Relationship with the bank and planning for the future The bank wants the company to reduce the overdraft by half over the next six months. The company had breached its overdraft limit on several(prenominal) occasions over the past few historic period. The management is aware of the fact that the patience of the bank has been vesture thin. The largest shareholder of the business is Keeble Estates Ltd, owned by David and John Keeble. Neither they are in a range to make further investments nor willing to accept investments from new investors, fearing loss of influence over the company. It is in this desktop the analysis is done to make suitable recommendations for taking necessary actions to overcome the current financial difficulties. lineage operations Dechow et al (2010) state, the quality of a ?rms earnings depends on both the ?rms ?nancial surgical process and on the accounting system that measures it. Prima facie the company has not accorded the deserved attention to accounting in the organization. The management has embarked on investment spree without making necessary arrangements for the additional working capital ask for its operations. David et al (2007) states that overcon?dent managers underestimate risk and therefore take actions with excessive risk. Evaluation of the business prospects involves analysis of several factors relating to the business. Schrand and Zechman (2009) state that the overconfident managers make optimistic forecasts and in order to meet these forecasts, edge higher levels of fraud and earnings management. Though the results do not in any way no minate fraud its management of finance calls for critical analysis. Gross profit margin during the last two years has been at 14.99% and 20.61% respectively which reflects the soundness of the business proposals of Jill Dempsey and Mike Greaves. The increase in capital investment and thus working capital required additional investments which are met primarily through bank overdraft. An overdraft facility enables businesses to go for short-term funding - although in theory the amount loaned is repayable on demand by the bank (Riley, 2012). The bankers are now asking the company to reduce the