Financial Resources Management

FINANCIAL RESOURCES
MANAGEMENT.

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1.1 Identification of source of finance....................................................................................3
1.2 Implications of different sources of finance.....................................................................4
1.3 Evaluation.........................................................................................................................4
TASK 2............................................................................................................................................5
2.1Analyse the cost of funding...............................................................................................5
2.2.The importance of financial planning...............................................................................6
2.3 assessment of the information needs for financial decision making...............................6
2.4 the impact of suggested financing option on the financial statement...............................7
TASK3.............................................................................................................................................7
3.1 The importance of budgets for variation..........................................................................7
3.2 Calculation of unit cost and pricing decisions..................................................................8
3.3 Assessment of investment appraisal techniques...............................................................9
TASK4...........................................................................................................................................10
4.1Income Statements, Statement of Cash Flows and the Statement of Financial Position.10
4.2 Comparing the formats of financial statements..............................................................12
4.3 Interpreting the financial statements of a public limited company and a private limited
company...............................................................................................................................13
CONCLUSION..............................................................................................................................15
REFERENCE.................................................................................................................................16

INTRODUCTION
Financial resource management is highly concerned with making effective and optimum use of
money. The rationale behind this, in business monetary resources is one of the main factors that
have high level of impact on the effectual execution of plan. In this, financial tools and
techniques have high level of significance which in turn helps in making control on
overspending. Hence, technique of budgeting control provides deeper insight about the
performance level of each department. Moreover, by making comparison of the actual
performance with the standard aspects business unit can assess the deviations take place in the
financial aspects (Broadbent, Cullen, 2012). In this way, by taking corrective measure business
unit can make profit.
TASK 1
1.1 Identification of source of finance.
Financing and raising of funds is crucial to start a business and elevate it as a profit
earning entity. There are numerous sources to be taken into consideration while raising funds.
Radisson Plc. can consider for sources and categories them into two main categories: Debt
Financing and Equity Financing. Before that Radisson Plc (Chandra, 2008). need to consider
how much money it will need and when they will need it. The financial needs of a business will
vary according to the type and size. The best alternatives for Radisson Plc are:
Equity Financing:
Personal savings: Personal resources include cash in hand, personal bank balances, private
properties/real estate etc. which is being maintained by the owner or Radisson Plc for its further
establishment. The first option for financing is owner's or Radisson Plc's savings or equity.
Profit earned/Retained Earnings. – Profit earned during the normal course of a business is the
second option i.e., by reinvesting this amount for expansion of Radisson Plc.
Venture Capital: Financing from individuals or companies, investing in young and private
businesses in exchange for an ownership share of the business. Venture capital firms usually
participate in the businesses that have a competitive edge or a strong financial worth (Khan,
2008).

Angel Investors: Individual professionals and businesses who are interested in helping small
businesses to survive and grow gradually. Entrepreneurial skills and own funds of these business
angel are devoted into business of RadissonPlc. So, the objective is more than just focusing on
fiscal returns, and can be called as an informal venture capital.
Share capital (Equity Offerings) – Radisson Plc sells stock(shares) directly to the public which
have a nominal/face value on which shareholders claims dividend after a given period or at times
of extra profit.
Debt Financing:
Banks loans and Other Commercial Lenders: Most lenders require a solid business plan, positive
track record, and plenty of collateral. Funds lend by Radisson Plc, provided in exchange of
security can be on small, medium and long-term basis and the bank will fix the time sets and
rate of interest (Petty, 2015).
Bank O/D: A short term loan facility when bank balance of Radisson Plc becomes zero or below
the bank allows withdrawal of an agreed amount limit on which interest is charged.
1.2 Implications of different sources of finance
Four factors determines how Radisson Plc gets financial support: its fiscal potential, the
maturity, the types of assets held by Radisson Plc and the preferences of the owner(s) between
debt and equity. And there are three privileges which deliver the choice between debt financing
and equity financing: Radisson Plc's budding profitability, financial risks, and voting power.
Bank Loans (debt) rather than issuing shares (owner’s equity) increases the probability of higher
rates of return to the owners. But debt finance exposes the owners to greater financial risk. On
the other hand, if Radisson Plc issues stock rather than bank loans/bank overdrafts, it reduces the
potential rates of return and entreats them to give up some voting control in order to reduce risk
(Whittington, Delaney, 2011).
1.3 Evaluation.
It requires the awareness of financial sources to match the finance which Radisson Plc
will need:
 Establishing the company – financial investors like venture/angel investors are the best
choice.