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MANAGING FINANCIAL RRESOURCES AND DECISIONS IN BUSINESS

   

Added on  2020-01-23

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MANAGING FINANCIALRESOURCES ANDDECISIONS

INTRODUCTIONAt the workplace of an organisation there are several numbers of resources are availableand among them very significant are financial resources. When the organisation has the financialresources then it is highly necessary to manage them in appropriate way which will support toimprove profitability at the year ending. Along with this, to take effectual decisions is also one ofthe key aspect and process of the company. In this the government of UK provide 3 Billion GBPextra amount up to the FY 2020 to those firms which operate at the small level. In the currentstudy RL Maynard business entity is chosen which operates at the small scale in constructionsector of the UK. When the company going to raise fund for expanding business then there aremany financing sources are available which are analysed through present case. In the second partof the report it shows cost imposes by financing sources along with its effect the company'sfinancial statements. At the task third there is cash budget. Cost and price of one unit are shownand analysed. At the end of respective report, various financial statements of MarriottInternational hotel are to be analysed on the basis of financial ratios. TASK 11.1 Variety of source of financial available for RL Maynard companyExternal and Internal source are main source of finance they are:External Source are source from which company arrange its financial need to run business.Finance is lifeline of any company without finance no business even can start. So Some Externalsources of finance are: Bank Loan,Equity Financing and personal savings.Bank loan:If in any business financial needs arises entrepreneur go for business loan frombanks. Interest rates are decent as compared to personal financing. last 3 yr balance sheet andproperty papers presented against loan manager for approval of business loan (The 12 BestSources of Business Financing, 2010). There are few types of Bank loan are:Bank loan on basis of guarantee: For businessman they should have proper plan andexperience in particular field. Bank to secure itself against loan they take grantee from guarantorit could be anything like third person guarantor, security deposits or property papers is guaranteewhich banks demand. So for companies like RL Maynard which is construction company canrepresent property papers for approval of business loan..1

Consortium Bank loan : If firm want huge amount then banks to minimise risk two corporatebanks get together and approve a loan to owners.Equity financing: It is source of financing where to raise capital company sells its equity to itsinvestors. In need of finance company either opt for equity or debts. In equity financing to raisecapital company sells a portion of capital in form of stocks to shareholders in exchange of cash.So for RL Maynard company its majority of financing is in equity stocks (Siano, Kitchen andGiovanna Confetto, 2010).Personal Savings: Personal Savings are in form of Bank balance,Term deposits , Investments inproperty, Assets and properties.1.2 Implications and impact of source of finance on RL MaynardSourcesFinancialImplicationsLegalImplicationsDilution ofcontrolBankruptcyEquity SourceCompany havehuge burden ofcost of equity soif no. of shares ishuge thendividend cost willalso going to behigh.Company have toobey StockExchange rulesand regulationthey need to firstlist on stockexchange thenafter they canissue shares. Theyare abide by lawsof Company act,in terms ofcapitalization,profitability etc(Hayre, 2015).As no. of sharesincrease thepower ofshareholdersdilute. Meansownership incompany splitsamongshareholders.In bankruptcyfirst company payits creditors andbanks, then aftercompany is liableto pay preferenceshare holder andlastly companypays to its equityshare holders.Bank loansCost of bankloans are alsohight as fileBanking normsand laws areincluded in it.No dilution ofcontrolsNo impact2

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