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Evaluation of financial sources for Sweet Menu restaurant

   

Added on  2020-01-28

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Table of ContentsINTRODUCTION................................................................................................................................3TASK 1.................................................................................................................................................31.1 Available source of finances to Sweet Menu restaurant............................................................32.2 Legal, Financial and ownership implication of the financial sources. ......................................41.3 Evaluation of the most appropriate sources for Sweet Menu restaurant...................................6TASK 2.................................................................................................................................................62.1 Analysing cost of different sources of finances chosen by Sweet Menu restaurant..................62.2 Importance of financial planning within a business. ................................................................62.3 Assessment of information needs of decision makers...............................................................72.4 Impact of finance on the financial statements ..........................................................................8TASK 3.................................................................................................................................................83.1 Analysing budget and recommending........................................................................................83.2 Calculation of the unit costs i.e. the meal cost and making pricing decisions.........................83.3 Assessing by Investment appraisal technique............................................................................9TASK 4...............................................................................................................................................114.1 Discussion on the financial statements....................................................................................114.2 Comparison between financial formats used by different business.........................................124.3 Analysing Ratio........................................................................................................................12CONCLUSION..................................................................................................................................13REFERENCES...................................................................................................................................15

Index of TablesTable 1: Unit Cost...............................................................................................................................10Table 2: Proposal 1, Table 1................................................................................................................11Table 3: Proposal 1, Table 2................................................................................................................11Table 4: Proposal 2, Table 1...............................................................................................................12Table 5: Proposal 2, Table 2...............................................................................................................12Table 6: Ratio Analysis.......................................................................................................................14

INTRODUCTIONManaging financial resources is the method to procure and allocate financial resources aftera decision making process. Each business is required to conduct financial analysis to understand theprobability and risk attached to each financial decision. Business has to understand different typesof financial resources that are available to them (Barrett, 2007). Financial resource is the back bonefor every business. Thus, the financial manager is responsible to evaluate different sources of fundresources available and then evaluate them as to which sources best fits business's requirements.Thus, management of financial resources is interrelated to the decision making process. This isbecause of the reason that right decision making ability of the manager can help to boost thebusiness whereas one wrong decision can hamper the financial growth of a business. The report discusses about two restaurants and their financial decision. Sweet Menurestaurant wants to expand its trade by opening two new locations in Central London and Croydon(Bonham, 2008). In order to expand, the restaurant requires infusing €300,000 and €500,000respectively. On the other hand, Blue Island restaurant owners want to conduct financial study of itsrecords. Both of the restaurants require making legitimate and viable decision to raise financialresources and analyse business proposals. TASK 11.1 Available source of finances to Sweet Menu restaurantThe available resources are those resources that are currently accessible to the business.Financial manager is required to analyse these resources in order to select feasible resources forSweet Menu restaurant (Sources of finance, 2012). They to expand to two new locations located inCentral London and Croydon. In order to do that the available sources of finance are as followed: Long term Sources- These are those resources which are available to be used after a year.They are-Bank Loan- Loan is the debt taken from a financial institute or a bank. They requirestudying the strength of profit earned by the respective business. Banker asks for a guaranteewhich is a security deposit in proportion to the loan amount (Chazi,2010). Capital Market- This market refers to issue of new shares by a company. In this process, thecompany is required to issue new shares to the public or investors. With the purchase ofshare, the investors receive ownership right in the company as per the deed or the contract ofissue. Retained Earnings- Each year i.e. annually or semi annually the business is required to savean amount of money from the profits in the form of retained earnings. In simple terms,retained earnings are the profit re-invested in a business activity by them (Benedict, and

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