Sources for Finance | Report
Added on 2020-01-28
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MANAGING FINANCIALRESOURCES AND DECISIONS1
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................31.1 Financing sources which are available for an enterprise.......................................................31.2 Assessing implications of financing sources.........................................................................31.3 Evaluation of suitable financing source.................................................................................4TASK 2............................................................................................................................................42.1 Cost of identified sources of finance.....................................................................................42.2 Significance of financial planning.........................................................................................52.3 Assessing information which are needed to take financing decisions...................................52.4 Influence of financing sources on financial statements.........................................................5TASK 3............................................................................................................................................63.1 Projected cash budget............................................................................................................63.2 Computing units cots and price..............................................................................................63.3 Assessing investment appraisal techniques...........................................................................7TASK 4............................................................................................................................................94.1 Key aspects of different financial statements........................................................................94.2 Comparison between financial statements.............................................................................94.3 Assessing business performance of Sainsbury’s Plc using financial ratios.........................10CONCLUSION..............................................................................................................................11REFERENCES..............................................................................................................................122
INTRODUCTIONFinance is an aspect of the firm which helps to entrepreneur to exist in the industry ormarket. Along with this, it is compulsory to take effectual business decisions in order to increasefinancial health of it. The current study is based on Iceland limited company which operates inretail sector or segment of UK at small level. The present report emphasises on various financingsources which helps to raise capital for business expansion. Further, it focuses on cash budget aswell as unit cost along with investment appraisal methods. It looks upon financial performanceof Sainsbury Plc from accounting period 2015 to 2016.TASK 11.1 Financing sources which are available for an enterpriseIn the present case Iceland limited is going to undertake a project for which it needsfinance. There are various sources of finance among them some are explained as below:For Incorporated or partnerships:Equity shares: In such type of source Iceland limited issue shares in the market with helpof stock market and these are purchased by shareholders (Zhao and Chu, 2016). Theamount of purchasing is to be used in the firm for expansion.Bank loan: As per this, bank provide sum of money which is known as bank loan. It iseasy and short process compare to equity but cost of bank loan is comparatively higher.Further, bank provide fund to Iceland limited after valuation of it in industry.Government grants: It is referred as financial award which is considered as eligiblegrantee. Governmentgrantsare not expected to be repaid and do not include technicalassistance or other financial assistance.Debentures: It is considered as debt instrument which is not secured in terms of physicalassets. It is also presented as reputation of issuer. It is mainly issues as a type of bond tosecure capital. 3
Bank overdraft: It is a situation in which money withdrawn and available balance in bankmarked as zero. If any kind of agreement is signed with holder then it will limit theoverdraft and interested is being charged. Venture capitalist: It is referred as investor who focuses mainly on funds providingactivities to start a new venture. By having an improved focus on such values the newbusiness aspects can be advanced effectively. Leasing: It is contract which is being highlighted in terms under which rent property isowned by another party. In this, tenant holds the accountability to access asset andguarantees the lessors. Hire purchase: It is a method of buying goods through which installment payments isbeing made for some time. Commercial paper: It is unsecured and short term debt which is issues by a corporation.It is mainly a financing of accounts receivables, investors, etc. Factoring: Financial intermediary is a aspect which is being referred as purchasereceivables from a company. It is funding source that agrees to provide value of invoiceless a discount for commission. For Unincorporated or sole traders:Sale of assets: It is a state in which organization assets are being sale to another party bythe bank. It is mainly taken into account at time of loan repayment issues.Borrowing from friends and family: It is referred as factor in which friends and familyoffers a financial sources in terms of sole traders. It is significant to ensure about pros andcons of borrowing. Retained profit: It is internal source where the sum of money which is remaining afterprovide dividend to shareholders is to used for financing the project.1.2 Assessing implications of financing sourcesSource of Implication in terms of Implication in terms Dilution of control4
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