Financial Analysis and Management for AB Plc

Running head: FINANCIAL ANALYSIS AND MANAGEMENT
Financial Analysis and Management
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Author’s Note

1FINANCIAL ANALYSIS AND MANAGEMENT
Table of Contents
Introduction......................................................................................................................................2
Discussion........................................................................................................................................2
Alternative Sources of Financing................................................................................................2
Factors which are to be Considered for Raising Capital.............................................................6
Sustainability of Funds for AB plc..............................................................................................7
Link between Financing and Investments decisions.................................................................10
Recommendation.......................................................................................................................11
Conclusion.................................................................................................................................12
Reference.......................................................................................................................................13

2FINANCIAL ANALYSIS AND MANAGEMENT
Introduction
The main purpose of the assessment is to analyse the financing conditions of the AB Plc
which is engaged in the business of providing residential construction project. The management
of AB plc is considering acquisition of an unlisted company so that the geographical scale of
operation for the business can expand. As per the current situation, the management of the
company has only been reliant on equity financing for different projects. However, in case of
acquisition of the unlisted company, the management does not have much internal funds to
proceed and therefore needs to select an appropriate source of funding so that the acquisition can
be undertaken without a hitch (Rossi 2014). The report would be suggesting to the management
of AB plc regarding the alternative choices which the business has in terms of meeting their
financing needs. The assessment would further try to establish a link between the financing
source which is selected by the management and the investment decisions which are to be taken
by the management of the company (Bruton et al. 2015). The report would be concluding with a
decision regarding the best source of financing which is available to the management of the
company for the purpose of meeting the acquisition proposal of the unlisted company.
Discussion
Alternative Sources of Financing
In a business, the activities which are carried on by the management are the main revenue
generating source for the business. In order to carry out the activities of the business
appropriately all the businesses need to have access to appropriate funds so that the management
is able to meet the obligations of the business. In the case of AB plc, the management of the
company needs to have appropriate amount of funds so that they can use the same for settling the

3FINANCIAL ANALYSIS AND MANAGEMENT
acquisition of the unlisted business which the management wants to acquire for the purpose of
expansion and growth. The financing requirements of the business can be effectively met by
either choosing debt or equity source of capital (Barringer 2015). In most of the business, debt or
equity sources of capital are popularly used by management for the purpose of meeting the day
to day expenses of the business.
The alternative sources of financing which can be considered by the management of AB
plc are listed below in details:
Equity Financing:
The first option which is available to a business is equity financing which can be used by
the management of the company for the purpose of drawing out appropriate funds from the
capital market. If a business wants to draw capital from the capital market, it must be a listed
company and the company be registered with stock exchanges. This will give access to the
business to lot of funds from the capital market as more and more investors start to invest in the
company. This is considered to be the most common mode for financing the acquisition or
merger process of another business (Schwienbacher 2015). In this process, the management of
the company would be issuing new shares to the public for application and from such a process
draw out capital which is required by the business. A common assumption which is made when a
company intends to acquire a new business is that the former has a sound balance sheet and
strong capital market conditions. These are important facts which needs to be considered by the
management of the company so that they can draw in capital from the market. This option is safe
as the level of risks for such type of financing can be distributed equally among the owners of the
business.