Concept Of Financial Management | Assignment
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Added on 2020-02-12
Concept Of Financial Management | Assignment
Added on 2020-02-12
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MANAGING FINANCIALRESOURCES 1
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................31.1 Determination of the financial sources available to the business..........................................31.2 Implications of the several sources of finance that are determined.......................................41.3 Appropriate sources of finance for the business project........................................................52.1 Finding cost of different sources of finance .........................................................................52.2 Presenting the importance of financial planning ..................................................................52.3 Information need of internal and external decision makers .................................................62.4 Explaining the impact of sources on final accounts...............................................................63.1 Projection of cash and other budget and their analysis..........................................................73.2 Calculation of unit cost for the contract chosen and making pricing decision......................93.3 Viability of the varied investment appraisal tool for making sure project is funded properly....................................................................................................................................................10TASK 2..........................................................................................................................................124.1 Assessing the main financial statements which are prepared by Dixon Carphone Plc ......124.2 Comparing the statements of different types of business organization ..............................134.3 Interpreting financial statements of Dixon Carphone Plc by doing ratio analysis .............13CONCLUSION .............................................................................................................................15REFERENCES .............................................................................................................................162
INTRODUCTIONThe concept of financial management is regarded as appropriate source that act as an aidin management of the funds in an effective manner. Such leads to achievement of the objectivesof the firm in particular time span. It is considered as specialized function which is associatedwith high authority level (Gaunt, 2014). The business executive consider several decisions forthe sake of making sure the growth and success of the firm in an effective manner. This is theconcept that is dealing with planning, organizing, directing and control over the activities offinance in relation to acquiring and using the funds. In the present study management of financialresources has been discussed with respect medium size business. The report includesdetermining the financial sources that present to the organization. Along with this it involvesimplications of various sources of finance for the business project. TASK 11.1 Determination of the financial sources available to the businessOn the basis of internal sources of financial resources can be collected through operatingactivities. It assist in eliminating the long term and short term need of the finance. The financialsources existing for the firm are stated in the manner as under:Retained profit: The business can invest the amount of own saving in an effectivemanner. Such is because of the reason that business needs to make repayment of moneywith respect to use of amount of personal saving. This can be provided at cheaper rate. Bank loan: The fashion store can borrow funds from bank for the purpose of satisfyingthe long term needs. In order to attain the loan the business is required to keep someassets in form of security within the bank (Advantages & Disadvantages of Bank Loans,2016.). Along with this the bank also charge certain rate of interest against the amount ofloan attained. Hire purchase: Under such the Fashion store can take the asset through payment of someamount in form of down payment. Further after making payment of final installment thefirm is given the possession of the commodity. Leasing: There is existence of some equipments that are considered expensive. In case oflaunch of the new outlet of fashion the business can acquire the asset on lease for some3
duration of time. In this regard rent needs to be paid to the leasing business withinspecified duration of time. 1.2 Implications of the several sources of finance that are determinedThere is presence of some implications associated with financial resources assessed. Suchare stated in the manner as under:Retained earning: There is lack of financial implication in relation to such. Along withthis there no legal implication associated with retained earning. Here the control lies inthe owners hand. The bankruptcy situation does not take place and also the amountutilized is not to be repaid (Rehan and et.al., 2015). The implication related with suchsource is associated with the lose of control over the funds which are kept in fulfilling theuncertainties for future. Therefore such cannot be utilized in future course of time asbusiness loses control on such kind of funds. Leasing: Rent payment in relation to usage of asset is considered as the financialobligation in this case. In situation the rent is not being paid within specific span of timethen leasing business can take legal actions against the organization (Irwin and Scott,2010). With respect to leasing there is absence of aspect associated with diluting thecontrol. Within leasing situation of bankruptcy do not exist. Loan from bank: In case of bank loan interest payment is regarded as the financialimplication. In situation of delay in payment, bank can take legal actions against theorganization. Such has huge influence on the business credit rating to a greater extent.With respect to loan there is absence of dilution of control. Moreover in situation of lackof payment company's assets can be seized by the financial institution. In addition to thisin case the amount is not being recovered by means of assets then organization can beconsidered as insolvent or bankrupt. Hire purchase: In the interest payment is required to be made which is regarded as thefinancial obligation (Altfest, 2016). In situation the business is not paying installmentwithin time then assets can be taken back. Here in case of hire purchase there is lack ofdilution of control. The business needs to make payment to the vendor in case ofbankruptcy. 4
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