Financial Resources of Clariton Antiques Ltd - Report
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Added on 2020-01-16
Financial Resources of Clariton Antiques Ltd - Report
Added on 2020-01-16
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MANAGING FINANCIALRESOURCES
Table of ContentsINTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................31.1 Different sources of finance..................................................................................................31.2 Implications for using different sources of finance...............................................................41.3 Evaluation of most appropriate sources for financing..........................................................5TASK 2............................................................................................................................................52.1 Cost of financial sources.......................................................................................................52.2 Importance of financial planning..........................................................................................62.3 Assessment of business information for making business decision......................................72.4 Impacts on financial statements............................................................................................8TASK 3............................................................................................................................................83.1 Formation of cash budget......................................................................................................83.2 Unit cost and pricing.............................................................................................................93.3 Analysis of investments using investment appraisal techniques.........................................10TASK 4 .........................................................................................................................................114.1 Key components of financial statements.............................................................................114.2 Comparison between financial statements adopted by two firms.......................................114.3 Financial ratios of Clariton company..................................................................................12CONCLUSION..............................................................................................................................13REFERENCES..............................................................................................................................14
INTRODUCTIONIn the market, the organizations are been established with a motive to earn high profitsand attain greater market share in the industry. Further, for the incorporation as well as to run thebusiness they require sufficient amount of funds to perform there activities in an efficientmanner. Thus, there is a requirements of adequate financial management which will ensure withthe adequate amount of funds to achieve the objectives (Baranov, 2015). Thus, it is highlyimportant to evaluate with the places and means from which the amount can be acquired and takemeasure to efficiently utilize them to get the maximum results out of it. In the present report, thecase study of Clariton Antiques Ltd is been taken into account for developing with the efficientmanagement of financial resources in the organization. There are several parts involved wherethe different sources of finance are been discussed which are most opt for the company. Inaddition to this, they are also focusing on the expansion of there business. Further, variousdecisions are made for acquiring with the sources of finance and for it different plans are beendeveloped.TASK 11.1 Different sources of financeUnincorporated businessIt refers to an organization which is been owned and managed by one or more people istermed as unincorporated business unit. Further, under this they are not having with thereisolated legal entity so the liability of the owner increases with it. In this, sole proprietorship andthe family businesses are mainly involved (Brignall and Modell, 2011). The available sources offunds for unincorporated businesses are bank loan, overdraft from bank, personal funds, friendsand relatives, retained profits, sales of assets etc. When these kinds of companies apply for bankloan, the bank uses their personal assets and credit score as a base with the aim of find out thecredit worthiness of business. Unincorporated businesses can arrange funds by friends andrelatives for the short time frame at low interest rate as compare to bank loan interest rates. Incorporated businessIt is a type of business that offers various benefits to employer as compare to being a soleproprietor or partnership. Under this, these types of organizations have to paid liability and tax. It
has included private and public limited companies where there are several sources of financehave available for these businesses. With the help of venture capital, companies get theassistance in terms of operational, finance and strategic advices. In this, firms do not need torepay the money to venture capitalists. Along with this, by issues private and public shares,incorporate businesses can easily raise the funds in easier manner. Further, bank loans are themost important source of longer term business finance. 1.2 Implications for using different sources of financeInternal resourcesRetained capital- It is also free by the implications made legally and do not bear with anytype of loss in the power of the owner. It is due to the fact that retained earning are thepart of left over profits of the total revenue earned by the organization (Crosby andHenneberry, 2016). Thus, in this the complete ownership is in the hands of proprietor andthey serve with all the rights to make the decisions without getting any type implicationsrelated to the financial and legal norms.Personal funding- It refers to the internal source of funds which is been attained by thepersonal income of person which he has saved for the establishment of the business.Moreover, it can also be acquired by there family members, relative and friends. Further,the major implication of the personal saving which is lost when the company is beenstarted. Moreover, by this it will have no implications in terms of legal norms. They arebeen controlled individually and have to bear losses if the company do not give positiveresponse.External sourcesBank Loan- In this the person can acquire with the funds by the banks which involveswith large number of formalities. It mainly includes the documentation regarding theproof for the bank against the sanctioning of amount. Further, these details assist thebanks to get the details of the company and there value in the market. In this theimplicated in context to the financial norms is low as the entire company is responsiblefor the payment of the interest to the banks. Debentures- For acquiring with the funds, the company can issue with the debentures tothe people. In this both the parties make the legal agreement to develop with the bond.Thus, the company is liable to pay a fixed rate of interest to them against the purchase of
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