Sources of Business Finance- Report
Added on 2020-01-28
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Table of ContentsINTRODUTION........................................................................................................................3TASK 1......................................................................................................................................31.1 Sources of finance available to the business organization...............................................31.2 Assessing the implications of different financial sources................................................31.3 Selecting and evaluating the suitability of sources..........................................................52.1 Identifying the cost of varied source of finance...............................................................52.2 Presenting the significance of financial planning for business entity..............................62.3 Assessing the information need of internal and external decision maker........................62.4 Finding the impact of financial sources on final accounts...............................................73.1 Preparing cash budget and analyzing it for making suitable decisions............................73.2 Determining unit cost and making pricing decision........................................................93.3 Evaluating the viability of proposed investment through investment appraisal..............9TASK 2....................................................................................................................................114.1 Assessing the main financial statements prepared by Sainsbury...................................114.2 Distinguishing the financial statements of Sainsbury with other kind of firms.............114.3 Analyzing financial statements of Sainsbury through the means of ratio analysis........11CONCLUSION........................................................................................................................12REFERENCES.........................................................................................................................13APPENDIX..............................................................................................................................14
INTRODUTIONIn the present times, effective management and control of financial resources arehighly required to attain success in the competitive business environment. The rationalebehind this, at each level of operations business unit has to incur money to satisfy the needsand wants of customers. Thus, it is highly required for the manager to wisely take decisionsby undertaking the monetary tools and techniques. The present report is based on Hair styleSalon namely ‘Stylish’. Hence, by considering the government support business entity hastaken decision in relation to start venture. In this, report will shed light on the tools andtechniques that can be undertaken by an entrepreneur for decision making which in turnensures smooth functioning of operations. TASK 11.1 Sources of finance available to the business organization Internal source Personal savings: Entrepreneur can start venture by using personal savings or funds.Moreover, each business entity saves some amount of funds for meeting the futurerequirements. Sales of unused assets: Business entities have several assets which are not used bythem in other productive activities (Topa and Herrador-Alcaide, 2016). Thus, byselling unused land and equipments owner of Hair Salon can generate funds.External sources Bank loan: Financial institution offers both long and short term loan to the businessorganizations whose business plan is highly competent. Hence, by approaching tobanking institution owner of Hair salon can raise funds. Leasing: By taking fixed assets such as land, equipments on lease business entity canfulfill the financial needs. Government grant: In the recent times, government has taken several initiatives foroffering support to the entrepreneurs (Shortall and et.al., 2016). Hence, by preparingand presenting sound business plan in front of the government authority owner canraise finance.
1.2 Assessing the implications of different financial sourcesSources offinance FinancialimplicationsLegal Dilution ofcontrol (High,limited andlower)Bankruptcy (Priority level ingetting funds)Internal sources of finance Personal savingsOpportunitycost: Loss ofinterest oncapital -_ Least Sales of assets Registry andother expenses Transfer ofownership fromseller to buyer. --External sources of finance Bank loan Interest on bankloan Fulfilment ofdocumentaryformalities ishighly required.Limited Financialinstitutionenjoys priorityin gettingpayment of loanalong with theinterest amount. Leasing Rent on leasedassets In the case ofleasing, leaseholder is obligedto make use ofassets accordingto contractualterms (Herbenerand Rapp,2016). Limited Lease providerhas right to getback assets atthe time ofbankruptcy.Governmentgrant Interest amountcharged bygovernmentinstitution In accordancewith the legalaspects, businessunit is obliged tomake use ofmoney in theactivities forwhich it isgranted.Limited Moderate 1.3 Selecting and evaluating the suitability of sourcesOwner of Hair Salon should undertake following sources to meet the monetaryrequirements are:Bank loan: It is highly suitable source of finance which in turn offers tax benefits tothe owner of hair salon. Further, government is always ready to offer loan in against
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