Financial Management Assessment

Financial
Management
Assessment

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
Question 2. Long term finance: Equity finance...............................................................................3
Number of the shares issued and ex-right price:.........................................................................3
Critically evaluating and discussion on advantages of scrip dividends in context of
shareholders and corporation:.....................................................................................................5
MAIN BODY...................................................................................................................................7
Question 3. Investment Appraisal Techniques................................................................................7
(a). Calculate by using following investment appraisal techniques............................................8
(b). Critically evaluate the advantages or disadvantages of different investment appraisal
techniques..................................................................................................................................12
CONCLUSION .............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Financial management implies to systematic and effective process relates to plan,
direction, regulate and manage fiscal functions such as collection, generation and utilisation of
multiple sources funds within enterprise. In simple terms this is structured usage of policies and
principles farmed by managing officials to to manage organisation's financial resources (Arianti,
2018). This study-report focuses on different characteristics and elements of financial
management which enable to find-out most efficacious right-issue for corporation and equity
option. It also discuss about advantages of option of scrip dividends with respect to corporation
as well as shareholders. This study-report highlighting calculations of no. of shares to be issued
by corporation Lexbel and EPS for showing most suited options concerned with right issues.
While later part of report evaluates benefits and drawbacks of multiple investment-appraisal
techniques.
TASK
Question 2. Long term finance: Equity finance
Number of the shares issued and ex-right price:
Right Issue: Term rights issue relates to manner though which a corporation can increase share
capital by issuing additional shares. Here notable aspect is in right issue is that rather than
issuing shares to general public corporation offers its current/existing shareholders a specific
right to get freshly issued shares/securities in pro-rata manner (Banerjee and et.al., 2016).
Curr
ent
mare
t
price
Right issue price £1.90 £1.80 £1.60 £1.40
Funds to be issued
£180,
000
£180,0
00
£180,00
0
£180,00
0New shares to be issued
(Funds to be issued/Right issue price) 94,73 100,00 112,500 128,571

7 0
Book value of ordinary shares
of £0.50
£300
,000
Numbers of shares
(Ordinary shares/price)
600,0
00
Current market value of the shares
(Number of shares*Current market
price)
£1,14
0,000
Funds raised through right
issus
£180,
000
Final value market
(Current market + Funds to be issued)
£
1,320,
000
Total new shares after right issue
( New shares issued+Number of shares)
694,7
37
700,00
0 712,500 728,571
Reserves shares
£
400,
000
Total value of the company
(Book value of shares+rezerved)
£
700,
000
Profit after tax (PAT)
(Value of the company*20%)
£
140,
000
Earning from new funds (20%)
(Funds to be issue*20%)
£
36,0
00
Total earnings after right issue
£
176,
000