Financial Statement Analysis for Investment Decision
Added on 2019-12-18
16 Pages4065 Words151 Views
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Managing financialresources and decision
Table of ContentsIntroduction......................................................................................................................................3Task 1...............................................................................................................................................31.1 Sources of finance for business .............................................................................................31.2 Implication of the different sources of finance identified.....................................................41.3 Evaluating suitable sources of finance for Business project..................................................52.1 Analysing the cost of each of sources of finance which has been identified.........................52.2 Explaining the significance of financial planning ................................................................62.3 Identifying and measuring the information required for internal and external decisionmaker............................................................................................................................................62.4 Explaining the impact of finance on the financial statement.................................................73.1 Project cash and other budget................................................................................................83.2 Explaining the calculation of unit cost for making pricing decision.....................................93.3 Assessing the viability of chosen project...............................................................................9Task 2 ............................................................................................................................................114.1 Discussing the main financial statement by explaining it purposes....................................114.2 Describing and comparing the formats of main financial statements..................................124.3 Interpreting financial statement of Marriott and Hilton hotel .............................................13Conclusion.....................................................................................................................................13References......................................................................................................................................15.......................................................................................................................................................15
IntroductionThe business are designed to compete and come through in the marketplace through theuse of a Unique selling point. This enable business to stand at high position in competitivemarket and provide valid reason to customer for buying particular company products andservices. Therefore, for achieving success through unique selling point it need to matched withstrong financial management plan. Further financial management support an organization tocover different task and responsibility. The present report is based on Dream viewer organizationwho is launching its new business project which is demanding as well as rewarding. For thispurpose it need to understand different sources of finance for its business which have beendiscussed in this report. Further discussion has been done on importance of financial planning forselected business. Task 11.1 Sources of finance for business According to the given scenario, Dream viewer is launching new project for expansion ofits business which is demanding as well as rewarding. For this purpose, the organization need toraise finance from different sources which has been discussed below:There are two different type of sources of finance which the organization can used in order tolaunch new project. Equity share: Equity shares is one of the main sources of finance which dream regardingits new project. It can take finance from public in the form of equity share. Further, itrequired to pay dividend to its shareholder from its profit. Bank Loan: It is another type of sources of finance which is available for business.Further the organization can take loan from bank for short period and long period. At thetime of taking loan from bank Dream viewer required to keep some security in respect totake loan. In addition to this is also needed to pay fixed amount of interest every monthon loan amount. Retained profit: Retained profit it companies profit which Dream viewer can used anytime for any purpose. Further, there is no additional cost firm need to pay for using itsown money for new project. It also avoids the possibility of risk to pay amount to thirdparty if company may be suffer from loss.
Bank overdraft: Bank overdraft is one of the another short term sources of finance whichis available for business. Further, at the time if dream viewer take bank overdraft facilitythen in return it need to pay high interest rate. But it is beneficial for an organizationbecause company can easily raise fund from bank overdraft at any time. 1.2 Implication of the different sources of finance identifiedFrom the above discussion it has been identified that there are different type of sources offinance available for Dream viewer in order to launch new project. Beside this, the organizationneed to understand implication of all the sources of finance, so that it can easily make decisionwhich one is appropriate for launching its new business. Implication of different sources of finance are as follows:Sourcesoffinance Legal costFinancial costBankruptcyDilutionofcontrolBank overdraftBank overdraftcan be taken anytime. There is noneed to fulfil anylegal formalitiesHigh rate ofinterest is chargedby bank. It companiesbecomebankruptcy, thenit need to fulfil itsamount by sellingits assets. There is lowdilutionofcontrol. Retained profit Retained profit iscompany ownmoney, so it noneed to fulfil anylegal formalitiesfor using ownmoney.If company usedits own profitthen there is nofinancial costcharged. No dilution ofcontrol. Bank loanAt the time iforganization takeloan from bankthen it s need tofulfillegalformalities whichInterest amountneed to pay byorganization onloan amount if ittakes loan frombank. If an organizationbecomebankruptcy thenbank will payloan from itssecurity amountThere is less........
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