Financial Management: Autotrader, COVID Impact, Dividend Cancellation

Financial Management
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Table of Contents
Introduction......................................................................................................................................3
Main Body.......................................................................................................................................3
A. Financial management of Autotrader.....................................................................................3
B. Impact of COVID on Financial management.........................................................................5
C. Impact of dividend cancellation on investors.........................................................................7
Conclusion.......................................................................................................................................9
References......................................................................................................................................10
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Introduction
Financial accounting involves recording and reporting financial transactions resulting
from business operations over a period of time (Baker and et.al., 2020). These transactions are
then summarized in the financial statements such as balance sheet, income statements and cash
flow statements. Companies makes plans and policies on the basis of the data available in final
statements. Unfortunate situations such as created by COVID disrupts the financial planning of
the company. This report is prepared to discuss and deal with disruptions in financial
management of companies. Discussed below are the ways with which Autotrader has raised
£200mn and the business behind it. From the perspective of Carfan Advertising presented below
are other ways in which Carfan can mitigate the impact of COVID on short term and long term
finances. Light has also been thrown upon the implications of cancelling dividend on investors of
the company.
Main Body
A. Financial management of Autotrader
Financial management involves application of general principles of management to the
financial possessions of an enterprise (Buil-Gil and et.al., 2020). Financial capital comprises of
assets, securities and cash. Autotrader is a British plc founded in 1975. It operates an automotive
classified advertising business and specialises in new and second hand automotive sales. Prior to
UK lock-down, it had allowed free advertising to car retailers during April and delayed payments
for March by 30 days. This payment holiday had led to almost 80% forfeiting of company's
monthly sales for April. While this sounds costly in short term, it proved a far sighted decision in
the long run. Because of this offer, dealers didn't pull their cars away from its website, to save
money during lock-down; which means that, its website was actually fully stocked when buyers
were at home surfing digitally and probably planning for their next vehicle. This was a good
move from competition point of view as well as it appears to support customers during their
period of crisis while shutting off any chance for its competitors to chase away their customers
and be a threat to their dominance.
To strengthen its balance sheet during the COVID crisis, it has raised £200mn in the form
of 46.5 million new shares which is worth 5% of its equity share capital. Company believes that
raised equity will allow it resume its existing capital return policy at the earliest prudent
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