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Assignment Of Finance | Sweet Menu Restaurant| Blue Island Restaurant

   

Added on  2020-01-28

22 Pages5590 Words99 Views
MFRD

Table of ContentsMFRD..............................................................................................................................................1Overview..........................................................................................................................................1TASK 1............................................................................................................................................11.1...........................................................................................................................................11.2...........................................................................................................................................21.3...........................................................................................................................................4Task 2...............................................................................................................................................62.1...........................................................................................................................................62.2...........................................................................................................................................62.3...........................................................................................................................................72.4...........................................................................................................................................8Task 3...............................................................................................................................................83.1...........................................................................................................................................83.2...........................................................................................................................................93.3.........................................................................................................................................12Task 4.............................................................................................................................................144.1.........................................................................................................................................144.2.........................................................................................................................................144.3 Calculation of various ratios to find out the best company............................................15CONCLUSION..............................................................................................................................19References......................................................................................................................................20

Overview Finance can be referred to a component of economics that deals with the management,acquisition, investment and distribution of resources among the available departments ofcompany. In other words, it could be state that finance includes the process of providing fund ineach and every projects and department properly. Finance deal with all types of matters that arerelated with the money and the market. The following project interprets different sources which can be used by the company inorder to increase the level of its capital with an aim to meet various requirement.Along with this,there are some of the best sources that can be used by Sweet with an aim to expand its company.In this report, implications of varied financial sources identified have been discussed. For thispurpose, benefits of planning financial activities to Sweet restaurant are discussed. In this report;different types of information needed by different stakeholder are also mentioned.In this report, cash budget of Blue Island is examined with an aim to discover the flow ofcash. In this two projects are analysed by undertaking the investment proficiency in order toidentify which proposal should be selected by Blue Island restaurant. Additionally, discussion onvaried form of financial statement are even been discussed. Along with this, the various types offinancial statements which need to be prepared by the different organization are interpreted. Atlast, ratios have been compared for the purpose to analyse which restaurant fiscal perspective isgood.TASK 11.1 Following are few of the financial sources that can be taken into account by organization for thepurpose of raising fund either externally or internally. INTERNAL SOURCES OF FINANCE Friends and familymembersA restaurant can increase its finance by adoption it from itsfriends or family members. This is one of the cheap methodthrough which company can raise its funds (Barnes and Pancost,2010). Normally, the firm is required to pay less rate of interest tofriends if they borrow from them.

Retained earningIt is a part of the profit which is deducted out of the net profitearned by the company. This part of profit is kept by the SweetMenu restaurant as a reserve in order to grab variousopportunities in future. Selling the unused assetsIt is another method by which Sweet menu restaurant can raise itscapital. This is a method in which company sell out his old andobsolescent assets. This source of fund can be taken into accountby the Sweet Menu restaurant for the purpose of meeting its shortand long-term requirements.EXTERNAL SOURCES OF FINANCEBank loanIn this, fund can be attained from bank with specific period ofrepay against the security deposits. In order to avail this facilitySweet Menu restaurant is required to submit collateral security tothe bank (Barnes and Pancost, 2010). In addition to this,company is also required to pay interest for the fund borrowed.Hire purchase/leasingIt is the method by which Sweet Menu restaurant can use assetand property without purchasing it. In this method, the firm paysthe pre decided instalments in order to use the asset for aparticular time period.Issue of stock certificateBy issuing stock certificate to the general investors the SweetMenu can also increment its funds. It is one of the best methodsto gain large amount of funds for short time period.1.2SourcesLegal AspectsRisk of BankruptcyDilutionFriends and familymembersIf company payinterest or issuesshares to the friendsthan the company isrequired to followlegalprocedure(Bhowmik and Saha,In case of bankruptcy,friends and familymembers can recovertheir money by sellingthe assets of thecompany.Ownership of thecapital borrowed bythe company changes.2

2013).Retained earningCompany is not at alloblige to adhere withany legal formalities. The condition ofbankruptcy will notoccur if retained profitis available with thecompany. Ownership of the fundremains with thecompany itself.Sale of assetsAt the time of sellingthe asset, the companyis required to followthe legal procedure.If situation ofbankruptcy arises thanin that case creditorscan recover theirmoney by selling theassets of the company(Brigham and Daves,2012).Ownership of theassets changes whenasset is sold out.Bank loanLegal procedure needto be followed by thecompany by simplyfilling up theapplication form.If condition ofbankruptcy arises thanin that case bankseizes the collateralsecurity provided bythe company.Ownership of the fundborrowed by thecompany changes.Hirepurchase/leasingAt the time of leasingany property or assets,the firm required tofollow a legalprocedure in order toform an agreement.If the situation ofbankruptcy arises thanin that case, companystops paying theinstalments to theowner of the assets.Ownership of theassets changes as andwhenalltheinstalments are paid upby the company.Issue of sharesIn order to issue sharesto the general publiccompany is required tofollow the legalprocedure.Company stopspaying the dividend tothe shareholders at thetime of bankruptcy.Ownership of the sharechanges when they areissued to generalpublic (Eccles andHolt, 2005).3

1.3 SourcesBenefitsLimitationSuitable For Issue of sharesThis method will aidthe Sweet menurestaurant to raiseample sum of capitalwithin a limited timeperiod(Efendi,SrivastavaandSwanson, 2007). Inaddition to this noorganisationarerequired to refund themoney taken.Sweet menu restaurantis required to pay thedividend to theinvestors from theprofit received by thethem. And no the otherhand profit earned bythe firm will reduce.This method is mostsuitable for thecompany who want toexpand its units.Bank loan Menu restaurant canraise its capital withina short period of time.This source will alsoaid the company tomeet up the urgentrequirement of fund.Owner of therestaurant is oblige togive high rate ofinterest to the bank.Along with this,company is alsorequired to submit thecollateral security.It is another sourcethat is suitable forpurchasing any newmachinery or property.In addition to this it isalso suitable forexpanding the businessunit. Retained earningSweet menu restaurantis not at all required torepay the fund usedback. Further, thecompany is notrequired to pay anyinterest.Once the fund is usedin that case, Sweetmenu restaurant willnot be able to grab anybetter opportunitieswhich can occurfurther.This is suitable forexpanding the newbusiness or to grab anybestopportunity(Elsevier, 2011). LeasingBy using this methodSweet menu restaurantOne of the biggestdisadvantage of usingThis method is suitablefor using the assets for4

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