Assignment on Management Theories - FedEx

Added on - 22 Nov 2020

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BUSINESS REPORTBRIEF
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1Long Term Sources of Finance and their Risk/Return Characteristics........................................1Relevant Theories that help determine the risk/characteristics of long-term financial sources. .3Different Sources of Finance used by FedEx and its application to the relevant theories...........4TASK 2............................................................................................................................................4Working Capital Management Theories......................................................................................4Computation and Evaluation of Ratios in the context of FedEx.................................................5TASK 3............................................................................................................................................6Management Theories of Capital Structure.................................................................................6TASK 4............................................................................................................................................7PESTLE Analysis of FedEx.........................................................................................................7Minsky analysis of FedEx...........................................................................................................8CONCLUSION................................................................................................................................8REFERENCES................................................................................................................................9
INTRODUCTIONFinancing activity is an important part of a business that aims to achieve its expansionaryneeds and other working capital related requirements(Freeman, 2016). This business report aimsto provide an in-depth analysis and application of various management theories that areessentially related to Working Capital, Optimal Capital Structure as well as dividend in thecontext of FedEx. In addition to this, calculation and evaluation of various ratios have beencarried out. Lastly, PESTLE and Minsky Analysis have been undertaken to understand theexternal environment of FedEx and its financial capitalism.TASK 1Long Term Sources of Finance and their Risk/Return CharacteristicsAn organization may have different alternatives available to them based on the type ofbusiness it conducts, the risk taking ability of the business in addition to the size and nature ofthe organization. These alternatives can be mainly classified as Short-term and Long-TermSources of Finance. Short-term Sources of Financing are those which have are taken up by acompany to meet its day-to-day operations(Guariglia and Liu, 2014). These are mainly related tothe fulfilment of Working Capital Requirements. On the other hand, Long-Term Sources ofFinance are those that are, as the name suggests, utilized by a business that fulfil its capitalproject requirements and carrying out operations that are of expansionary nature.The main sources of Long-Term Finance include internal equity, market debt, convertibledebt and shares. These have been explained as under:Internal Equity Financing:Itis mainly related to the utilization of reserves and surplusthat are present with a given entity in the form of retained earnings, excess capitalinvestments from parent firms and intra-firm borrowings. They are a cheap alternativepresent for the company, especially in comparison to debt and external equity financingwhich may be affected by taxation lot more than this source.Loans:Another source of finance are loans. These are financing options that areprovided by Banks and other financial institutions to fund a business' short and long-termneeds. This again forms the part of fixed liability undertaken by business which involvesinterest payments of constant nature over a given period of time.1
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