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[PDF] Financial Management : Assignment

   

Added on  2021-01-02

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FinancialManagement Analysis
[PDF] Financial Management : Assignment_1

TABLE OF CONTENTSINTRODUCTION...........................................................................................................................11. Describing external sources of finance to organisations....................................................12. Enumerating considerations to be taken into account when choosing right type of finance..6RECOMMENDATIONS.................................................................................................................8CONCLUSION................................................................................................................................9REFERENCES..............................................................................................................................10
[PDF] Financial Management : Assignment_2

INTRODUCTIONPurpose-Main purpose is to evaluate source of finance available to company and also optimumcapital structure. Furthermore, to conduct ratio analysis for assessing soundness in terms ofsolvency. Aim-To assess importance of capital structure of company in meeting finance requirements.Scope-The scope of this project is that capital structure of both insurance organisations areassessed and outcome can be attained that mix of debt and equity should be present in overallcost of capital.Methodology-Secondary data is used from annual reports of two companies for conducting ratioanalysis.Limitations-The limitation of ratio analysis is that it is based on past data. Future analysis cannot bemade because past financial data is used. 1. Describing external sources of finance to organisationsClassification of financeThe finance is needed to be raised by organisation so that it may be able to attainoperational requirements quite effectually (Burtonshaw-Gunn, 2017.). Legal & General Plc andStandard Life Aberdeen Plc are two biggest insurance companies headquartered in UK and arethe oldest firms listed on LSE (London Stock Exchange). These insurance service provider giantsmeet the demand of customers in an effective manner. Finance is classified in two elements suchas private and public finance. Firm uses business finance which is an integral part of private oneto raise funds. On the other hand, public finance is mainly for providing funds to organisation foruplifting public welfare. Common StockCommon stock is also termed as equity shares which is one of the common sources offinance raised by firm. Legal & General Plc can effectively raise funds by issuing to public andattain requirements with ease. Equity financing is the safest source for attracting desired funds so1
[PDF] Financial Management : Assignment_3

that financial needs can be fulfilled. This will help to attain necessary funding for gainingoperational tasks without any difficulty. Moreover, no liability arises to pay shareholders as theyare the owners and not creditors of organisation. AdvantagesIt helps to absorb shocks which might be caused by worsening of economic conditions.Financial risks are minimised as compared to funds raised by issuing bonds.Large scale companies such as Standard Life Aberdeen Plc and Legal & General Plc caneasily trade and attain desired operations because of high liquidity. Legal compliances are minimum on the behalf of firm and no action can be taken byshareholders excluding financial investment (Advantages and Disadvantages of CommonStock. 2018). Pre-emptive rights of shareholders are not violated as they are provided with right tosubscribe to additional shares, even before they are issued to public. DisadvantagesMarket price of shares of Legal & General Plc may fall leading to dissatisfaction amongshareholders and as a result, market share also gets affected. It is one of the expensive sources of finance for funds purpose in comparison to debtfinance. Moreover, shareholders are suffered the most in case of company becomesfinancially unsound. Dividends are paid on the basis of effective performance of company. If economicconditions become worse, then downsizing of dividends takes place affecting the holdersof common stock. Another disadvantage of common stock is that investors are given with limited rights toparticipate in management. Furthermore, financial statements are not understandable tothem and they rely on consultants for making investment and increases costsunnecessarily on their investment.BondsBonds are one of the useful external form of raising finance that are generally backed byterms and conditions (McPherson and Pincus, 2017). It carries certificate of indebtednessbecause issuer is obliged to repay the principal amount under contract. In other words, debtsecurity is provided to bondholders who give funds to company. Moreover, interest accrued (on2
[PDF] Financial Management : Assignment_4

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