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ManAGING FINANCIAL RESOURCES TABLE OF CONTENTS INTRODUCTION 1 TASK 11 1.1 Identification of the sources of finance available to business

   

Added on  2020-01-16

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MANAGING FINANCIALRESOURCES

TABLE OF CONTENTSINTRODUCTION..........................................................................................................................................................1TASK 1...........................................................................................................................................................................11.1Identifying the sources of finance which is available to business........................................................................11.2Assesing the implications of different sources ....................................................................................................21.3Evauating the most appropriate sources of finance in business ..........................................................................3TASK 2...........................................................................................................................................................................42.1Analysing the cost of two different sources of finance........................................................................................42.2Importance of financial planning with respect to Clariton Antiques Limited .....................................................42.3Assesment of the information that will be required to make decisions on financing...........................................52.4Explain the impact on the financial statements of Clariton Antiques Limited....................................................6TASK 3...........................................................................................................................................................................73.1Analyse the cash budget.......................................................................................................................................73.2Assessing unit cost and making pricing decisions...............................................................................................93.3Evaluating the viability of proposed by using investment appraisals techniques .............................................10TASK 4...........................................................................................................................................................................24.1Discussing key components of financial statements............................................................................................24.2Comparing the financial statements of the different types of business organisation...........................................34.3Interpretation of ratios..........................................................................................................................................3CONCLUSION...............................................................................................................................................................3REFERENCES................................................................................................................................................................4

INTRODUCTIONManagement of finance is considered as an important part of business which is highlyrequired to get success in the competitive environment of business. In an organisation, there isneed of appropriate amount of funds for the purpose of implementing different plans. Other thanthis, business enterprises are required to focus on carrying out optimum utilisation of thefinancial resources (Albrecht and Steinrücke, 2016). Present report is based on Clariton AntiquesLimited which is offering different types of antique products to large number of customers. Thestated business is started by four partners in London and it is planning to launch another branchin Birmingham for earning high level of profit. The report will provide clear understanding ofdifferent sources of finance that are used by the partnership firm. Other than this, it will alsodescribe importance of tools of capital budgeting along with financial planning for makingdecisions. TASK 11.1Identifying the sources of finance which is available to businessIn the given case scenario of Clariton Antiques Ltd, it requires 0.5 million pound toexpand the functioning and operations of the business. In context of this, there are some of thesources of finance which are available to unincorporated and incorporated businesses and aredescribed below:Unincorporated business-This type of business are established by one or more people to attainsome of the goals and objectives (Baños-Caballero, García-Teruel and Martínez-Solano, 2014). Hire purchase-It is considered as another source which can be adopted by the sole traders. Inthis, at the time of starting business unit they can take possession of assets by making downpayment. The payment is made by them in instalments with an aim to carry out smoothfunctioning of business.Venture Capital- In order to raise fund, the business can approach venture capitalist. They arethe one who invest their money in business which is highly profitable as well as growing.Therefore, with the help of venture capital, the business unit can implement their ideas. Leasing- For the purpose of starting a venture in unincorporated business and in this all of theactivities are node by taking assets on lease. Moreover, it provides opportunity to business formaking use of assets by paying rent to the owner of assets (Bhowmik and Saha, 2013).

Incorporated business- This type of business provides advantages over the partnership and italso gives required funds to firm through selling of assets. Partnership- This is considered as an external source of finance in which the business takes helpfrom outside business. Thus, it can be stated that partnership gives outcomes in sharing funds aswell as resources. Bank Loan- Clariton can also take loan from bank for meeting demands of finance which arerequired at the business. In this, they can generate funds through institution by carrying out somelegal formalities. 1.2Assesing the implications of different sources It is essential for the business to select an appropriate source of finance which has directimpact on different types of activities of business. Further, it is required to check the capabilitiesof sources at various parameters which help in developing benefits and owner can take decisionsregarding development of enterprise (DRURY, 2013). There are some of the implication of theidentified sources of finance of business enterprise as mentioned below:Criteria Venture Capital PartnershipFinancial implicationAt Clariton, they can takefunds from venture capitalfirms with an aim of meetingthe requirement of funds. In order to carry out businesspractices, the stated businesscan form partnership withother business enterprise.Legal implicationThis type of sources of financeis considered as the legalizedsources and registered at law. This source of finance isrecognized by law and thepartnership formed by peopleand they also get relief fromthe side of government andboth of the entities areregistered at law (Fassin,2012). Control The business is required tocontrol the different processAll the partners have equalrights and plays important role

which includes formulation ofstrategies along with decisionmaking. in taking decisions of thecompany. 1.3Evauating the most appropriate sources of finance in business There are some of advantages and disadvantages of appropriate sources of finance forClariton Antique Limited are mentioned below:PartnershipAdvantagesFinancial support- There are different financial resources which are used by the business forenhancing the level of business and they are able to make improvement in the businessperformance. Flexibility- With the help of partnership, there are few restrictions with respect to laws and thepartners are flexible at the time of managing their work in business.DisadvantageInterest- The amount of profit which is generated by business will be shared among all of theparties in an equal ratio and if there is no partnership deed then the legal authority will interferein the business. Taxation- This is considered as another limitation of partnership in which all partners arerequired to pay taxes which is same as the sole traders (Götze, Northcott and Schuster, 2015). Venture CapitalAdvantages Additional sources-It is essential for developing business and in some of the areas where venturecapital provides support such as taxes and personnel matters. Connections-It is beneficial for business as the venture capitalists are more involved in varioustypes of activities in the business. Disadvantages

Decision-making- The business enterprise are not able to take appropriate decisions as there aredifferent people who are involved in the new business (Hogan, 2012). Less control- This is another disadvantage of venture capital as there is less control on thedifferent types of activities. Further, there are different issues which are faced by entity whilecarrying out the activities of business practices. TASK 22.1Analysing the cost of two different sources of financeCriteria PartnershipVenture Capital Dividend There is appropriate amount ofdividend is provided to thepartners who activelyparticipate in the dailyactivities. Venture capitalist providingappropriate resources in theenterprise as there is no risk incontext of paying dividend. Interest With the help of partnershipdeed it helps in identifying thepercentage of profit that is tobe shared among the partners. The contribution of capitalistin financial resources andenterprise will also take part inmanaging new business interms of stake in particularpercentage that is decided bythe both of the firms. TaxThe new business are notbound to pay taxes and it isconsidered as null that issupported by the partners(Hubbard and et.al., 2014). There is appropriate support isprovided to the venturecapitalist as the burden oftaxes are not on the newbusiness. 2.2Importance of financial planning with respect to Clariton Antiques Limited Financial planning can be termed as framework which gives proper approach to theenterprise regarding funds that is needed for meeting the level of competition. Clarion AntiquesLimited are required to focus on developing plans that helps to fulfil the aims and objectives of

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