Financial Management in Business
Added on 2020-01-23
17 Pages4623 Words189 Views
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Managing Financial Resources andDecisions
TABLE OF CONTENTSIntroduction..........................................................................................................................................1Task 1...................................................................................................................................................11.1 Identifying the source of finance currently available for different businesses......................11.2 Assessing the implications of each source including the relative advantages anddisadvantages...............................................................................................................................21.3 Providing three case study.....................................................................................................3Task 2...................................................................................................................................................32.1 Analyzing the cost of different sources of Finance...............................................................32.2 Explaining the key aspects /importance of financial planning..............................................42.3 Highlighting the types of financial information required for decision making purposes......42.4 Explaining the impact of finance on the financial statements...............................................5Task 3...................................................................................................................................................53.1 Evaluation of cash flow forecast and sales budget and presenting present findings andrecommendations in a formal written report to the Directors of ABC Manufacturing Ltd.........53.3 Application of different investment appraisal tactics and recommendation..........................53.2 Explaining the calculation of unit costs and make pricing decisions using relevantinformation...................................................................................................................................7Task 4.................................................................................................................................................124.1 Discussing the main financial statements............................................................................124.2 Comparing appropriate formats of financial statements for different types of business.....124.3. Interpreting financial statements using appropriate ratios and comparisons, both internaland external................................................................................................................................13Conclusion..........................................................................................................................................14References..........................................................................................................................................15
INDEX OF TABLESTable 1: Calculation of payback period...........................................................................................6Table 2: Calculation of Net present value.......................................................................................6Table 3: Calculation of internal rate of return.................................................................................6Table 4: calculation of unit costs.....................................................................................................7Table 5: Calculation of profit and BEP by varying the sales price.................................................8Table 6: Calculation of BEP by varying the fixed cost...................................................................9Table 7: Calculation of BEP by varying the material Cost...........................................................10Table 8: Calculation of BEP by varying the labour cost...............................................................10Table 9: Calculation of total profit................................................................................................11Table 10: Calculation of ratios of XYZ co....................................................................................13
INTRODUCTIONThe success of an organization is greatly affected by its ability of the management ofwide range of financial resources as per the distinct business requirements. In this process, themanagers of business requires to consider different tools of accounting and financialmanagement such as ratios, income statements, cash flow statements, costing, break evenanalysis, etc (Galloway and Deakins, 2012). All these tools assist managers in the collection ofwide range of financial data through which management is able to take appropriate decisionsregarding the assessment and usage of wide range of accounting data. This report is going to discuss different aspects of financial management and businessdecision making process. In this process, report examines the role of different investmentappraisals in investment decisions of an organization. Apart from that, this report will use ratioanalysis for evaluating the business performance. TASK 1 1.1 Identifying the source of finance currently available for different businessesFor handling different business requirements, an organization uses a wide range offinancial source for the attainment of different business objectives. Some important sources offunds are examined as below: Bank loan: It is one of the most common tools which are used by each type oforganization, that is, new or old as well as large or small. New companies take bank loanfor business start up and existing firms take bank loans for different businessrequirements such as short term finance for the liquidity management (Brigham, 2011).On the other hand, long term bank loans are used for the long term business decisions.Equity shares: It is considered as an important source of finance for large companies.This is because; small companies are not able to expand the capital of company throughequity shares. It provides significant support to large companies while taking majorexpansion decisions along with the mergers or acquisition (Collis and Jarvis, 2002). Inthis process, risk on investment is managed by investors. Retained earnings: Every organization saves some portion of profit for the attainment ofdistinct business requirements. It is called as retained earnings through whichorganization is able to manage short and long term requirement of funds. This source of1
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