Managing Financial Resources and Decisions : Report
Added on 2020-01-16
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Managing Financial Resources andDecisions
TABLE OF CONTENTSIntroduction......................................................................................................................................3TASK 1............................................................................................................................................31.1.................................................................................................................................................31.2.................................................................................................................................................41.3.................................................................................................................................................4TASK 2............................................................................................................................................52.3.................................................................................................................................................62.4.................................................................................................................................................7TASK 3............................................................................................................................................73.1.................................................................................................................................................73.2.................................................................................................................................................83.3 ................................................................................................................................................9TASK 4..........................................................................................................................................104.1 ..............................................................................................................................................104.2...............................................................................................................................................104.3...............................................................................................................................................11CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................132
INTRODUCTIONFinance is all about money management and it plays a crucial role in fabrication of a newbusiness concern. It includes two aspects that are Procurement of funds and Effective Utilizationof funds. This leads an organization to identify its opportunities and grow in the competitivemarket. This research report is based on evaluation of financing options for Trustlis Ltd. Further,financial performance for Dixons Plc is evaluated through the report. This report also includesthe sources of finance available for any start up and what are its implications within the business.Evaluating the performance of the business and financial decisions which are to be taken are alsodiscussed in this report. TASK 11.1The sources of finance available for expansion of business operation of Trustlis Ltd are listedunderneath in detail. Equity capital: The organisation can issue equity capital to raise funds for expansion ofoperations. Acquisition of funds by way of equity capital do provide voting rights.However, it does not set any fixed obligation for regular payments. The equity capital isalways suitable to acquire funds for expansion of operations. Issue of debentures: The organization can issue corporate bonds or debentures so as toraise capital for long term. It helps in acquisition of funds at reasonable cost of capital. Bank Loans- The firm can take loan from the bank at a certain rate of interest. This isconsidered as one of the most flexible sources of finance but the applier need to agreeupon certain terms and conditions of the bank (Rostamkalaei, and Freel, 2016).Leasing- It is another option for acquiring capital asset, an agreement between the twoparties that is lessor and lessee is done. Lessor is the possessor of the capital asset andpermits the lessee to utilize it for the agreed period. The payment is made under the termsof the lease and for a specified period of time. The lessee is responsible for the upkeepand maintenance of the leased asset. Angel investors- The persons which are retired and wealthy and are willing to invest inany other firm in which they are already specialized in the past act as angels. These3
angels give advice and contribute their experiences so the new set up can work efficiently(Source of finance, 2014). 1.2Implications of different source of financing are-At the time of investing, one thing which should be kept in mind is that this money offamily and friends should be used cautiously. They do not charge any interest and returns for it.But it should be returned as early as possible so it does not affect the relations. For establishingthe business as soon as possible, it needs to acquire assets more quickly. This can be done byacquiring assets from hire seller and then purchaser can earn profit by selling it at high cost to theother party by purchasing that asset in future (Quattrone, 2016). The only thing that he has tokeep in mind is that, paying all the installments at their due dates else these assets can be ceasedany time by the vendor. This will provide him assistance for making a systematic business plan.The angels are already experienced in this so they can even help in getting a good staff oftrainees and employees. Although, the angels would charge a high amount of interest but itwould help in earning higher profits in the future. This would act as a best source of finance andit would provide assistance for forming the new business in a well designed way which willresult in reducing the complications.1.3Appropriate sources of finance suitable for a business project are-Equity capital:The organisation is raising funds for expanding operations whichdemands capital for long run. Henceforth, the equity capital is considered to be suitableoption. The financing option does not raise set a fixed obligation for interest payments.Further, no liability is set for re-payment of amount in long term. They share votingrights and proportion of profits into extended operations of the business. Business angel financing- Being new in the market and least knowledge, Trustlis Ltd.should avail the option of angel financing as it will provide him a better assistance.Selecting this option will set him free from making payments of interest and installmentson time. Also it will help him in reducing the complications in the future. BusinessAngels are free to make decisions quickly as there is no requirement of personal assets. It4
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