Corporate Financial Management- PDF

CORPORATE FINANCIAL
MANAGEMENT

EXECUTIVE SUMMARY
This project report is based on the business expansion proposal of Stylised Hotel which
intended to plan for choosing appropriate opportunity to invest in one among the two resorts.
This decision is affected by calculating NPV and IRR in which the profitability and future
efficiency are identified which helps business enterprise to take the best decisions. Higher ratio
of NPV and IRR is helpful for an enterprise to choose appropriate project. An entrepreneur will
consider not only profit and loss from that project but also focus on attaining profit from the
investment. The generated positive returns are not important but the thing which is important is
its time period in which these returns are produced.

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................4
Key financial ideas.................................................................................................................4
Analysis..................................................................................................................................5
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
Corporate finance focuses on identifying varied sources of fund and the capital structure
of corporation so that overall value of organization can be enhanced. It is one of the effective
tools that can be used for analysing the financial ability of an enterprise to allocate its financial
resources in an optimum manner. Stylised Hotel has been selected for this project report which is
analysing two different options in order to expand their business. This project report is all about
using different capital budgeting techniques to assess the viability of two business projects.
Key financial ideas
Financial management is efficiently used in an enterprise for planning and directing the
use of company's financial resources (Harjoto and Laksmana, 2016). It generates cash through
various operations and the capital is obtained by inviting investors and sponsors to assist an
enterprise financially.
There are different aspects of financial management used by Stylised hotel who are
intended to expand its existing business by choosing one project from the available two, that is,
Cliff Top and Rain Forest Resorts which are explained as given below:
Cash management- The primary aim of an enterprise is to manage its cash in order
increase their cash inflow by eliminating all its unnecessary costs. Preparation of cash flow
statement and cash budget is helpful for stylised hotel to improve their cash balance by
controlling all its costs by setting priorities. The current cash inflow of two resorts is higher as it
shows the total cash inflow of 20 villas of Cliff Top and 30 villas of Rain Forest.
Planning and forecasting- Another important part of financial management is that it
helps in financial planning which involves accurately forecasting the company's revenues,
expenses and net income (Su, Peng and Cheung, 2016). Different budgets have been prepared to
forecast all kinds of cash flows and unnecessary costs by adjusting within the same period. The
control is imposed on an enterprise to eliminate all negative variances occurred in an enterprise
by converting them into positive one. All the expenses of current case study are further
bifurcated into Cliff Top and Rain Forest Resorts.
Financial reporting- A management is required to timely report to the owner by forming
accurate reports in order to make future decisions (What is financial planning, 2016). The
workers of business are responsible for financial management to determine the key pieces of
information which is relevant for an organisation. Key financial matters are reported to the