Managing Financial Resources and Decisions PDF
Added on 2020-01-28
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MANAGING FINANCIALRESOURCES ANDDECISIONS
Table of ContentsINTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................31.1 Sources of Finance to the business........................................................................................31.2 Assessment of implication of the various sources of finance..............................................41.3 Evaluation of the different sources of finance......................................................................52.1 Analysed the cost of different source of finance...................................................................52.2 Importance of financial planning..........................................................................................62.3 Assessing the information available to the Decision maker.................................................72.4 Impact of finance on the financial statements.......................................................................73.1Analyse the budget and make necessary decision..................................................................83.2 unit cost calculation...............................................................................................................93.3 Assessing the viability of the project through investment appraisal tool............................10TASK 2..........................................................................................................................................124.1 Main financial statements...................................................................................................124.2 Compare the financial statements of different businesses..................................................134.3 Interpretation of the financial statement using ratios.........................................................14CONCLUSION..............................................................................................................................15REFERENCES..............................................................................................................................16
INTRODUCTIONThis project is about the small business that how they are managing their financialresources and to make the decision regarding the growth of the businesses. This report containone of the company of the UK J sainsbury plc, that shows that how they are managing theirfinance for their business. The various source of finance available for the company and itsimplication are the major highlight of the business. The cost of financing the source areevaluated properly and decision are made on the basis of the financial statements. It also containthe various budget for the six month and the interpretation is done accordingly. The properexplanation about the various statement prepared by the company J sainsbury plc with theirutilisation in their business. The formats of the main financial statement for the different types ofthe businesses are included under this project.The information collected under this based on the proper assumption taken by thecompany in their managing their financial business of the company.TASK 11.1 Sources of Finance to the businessFinance : It is the amount required to carry out the business activity like sales,compensation etc. (Brigham and Ehrhardt 2013). to perform the function of the business weneed resource which are derived from the money. In simple words it the management of theamount of cash which are use in the daily course of the business. The every business involves theamount of cash directly or indirectly.As a entrepreneur the amount available to him was minimum for the business and the resthe has to borrows from the different sources like :1.Internal sourcesRetained profit sale of existing assetsCut down Stock level2.External sourcesA. Long term B. Medium Term C. Short term
Shares Leasing BankDebentures Hire Purchase OverdraftLong term bank loan Medium term loan Bank loanGrants creditorsAccording to the situation of the exist in front of the entrepreneur of the shortage of thefund he had the option of above mentioned sources (Brigham and Houston 2012). As from mypoint of view he can go with the external sources which he have variates of the option availableto them in the form of long term ,medium and short term . He can raise the finance through usingthe short term finance as bank loan and the credit amount of the short period of time. In the minwhile he can take the Grants of the government and the issuing shares if available with him.Leasing facilities are also available with the person if he has any kind of property which can betaken on lease for certain time then the option is available to start the project .1.2 Assessment of implication of the various sources of finance.The project of the business are mainly depend on the type of finance and the varioussources from were they can use it in their operation(Chandra 2011). In the above explaindifferent sources the major part of the finance is generated from the external part because theyhave the variate of option available in the form of long term short term.The main source are Banks ,private investors , credit unions and the other are incomefrom share and the rented assets.Every part of the financial sources have their own implications:If the fund is borrowed from the Bank , then the amount they need to be paid in the formof interest on the principle value , the penalty is being charged if the late payment is madeIn the case of the credit union the procedure is almost the same as explain under theBanking system but the amount of interest to be pay is much less as compare to thebanks(DRURY 2013).For the private investors the legal agreement is signed between the buyers and the sellerin the form of verbal contract sometimes.In the rent of the property and the share are in the form of practical and profitable. Theseseams to be various ups and down under this type of agreement.
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