(Doc) Introduction to Finance Assignment
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Added on 2021-02-22
(Doc) Introduction to Finance Assignment
Added on 2021-02-22
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INTRODUCTION TOFINANCE
Table of ContentsINTRODUCTION...........................................................................................................................1QUESTION 1...................................................................................................................................1a. Various corporate governance codes which may prevent corporate scandals and collapses...1b. Advantages for an organisation of registering as a sole trader................................................1QUESTION 2...................................................................................................................................2a. Preparing Production Budget for the period:...........................................................................2b. Calculation of Target Selling Price:.........................................................................................3c. Preparing a statement of Cash Budget of Z Ltd. of four months:............................................3d. Disadvantages of using Zero-based Budgeting System:..........................................................4QUESTION 3...................................................................................................................................4a. Calculation of total fixed costs per month...............................................................................5b. Calculation of variable cost per month....................................................................................5c. Calculation of contribution per month.....................................................................................5d. Break even number of consultations required per month........................................................5e. Strengths and weaknesses of cost volume profit analysis........................................................6QUESTION 4...................................................................................................................................7a. Various Funding Options in terms of Debt and Equity available to the entrepreneur.............7b. Key Differences between discounted and non-discounted methods of investment appraisal.8CONCLUSION................................................................................................................................8REFERENCES................................................................................................................................9
INTRODUCTIONFinance can be defined as the monetary resources that are required by all the businessentities in order to execute business operations. For all the organisations it is very important tomanage funds appropriately so that business goals such as profit and sales maximisation could beachieved (Brealey and et.al., 2012). If managers in companies are not able to manage it properlythen it creates problems such as lack of financial resources which interrupt execution of businessactivities. This report is based upon analysis of different topics such as various corporate codeswhich can help to prevent corporate scandals, advantages for an organisation of registering as ssole trader etc. Along with this, formulation of different budgets, calculation of various costs anddifferent investment appraisal methods are also covered under this report. QUESTION 1a. Various corporate governance codes which may prevent corporate scandals and collapsesCorporate governance: It can be defined as the collection of different types of rules,regulation and principles that are imposed by legal authority of a country for all the businessentities that are executing business in a country. For all the companies it is very important tocomply with them in order to ignore corporate scandals and collapses. Some of its codes are asfollows:Organisation for economic cooperation and development principles: It states that allthe business entities or corporations are required to follow specific guidelines that are made forfinancial reporting and auditing. It helps to prevent corporate scandals because it can help tokeep track record of operations which will be beneficial for managers to form strategic decisionsto reduce possibility to corporate scandals (Frino, Hill and Chen, 2015). It adds different featuresto the final accounts such as transparency, full disclosure etc.Stock exchange listing standards: According to this code of corporate governance it isvery important for a company who is offering shares to public to list itself on a registered stockexchange. With the help of it corporate collapses could be reduced because it will help todecrease the possibility of governmental interference in business operations.b. Advantages for an organisation of registering as a sole traderIf an organisation register itself as a sole trader, then there are various benefits for it tothat enterprise. All the advantages of it are as follows:1
If a company is registered as a sole trader, then the owner will be the only boss andpower of decision making is not required to be shared with other partners of peoplewithin the organisation.In sole trader, owner keeps all the profits so if an organisation is registered as a soletrader then all the profits could be kept by single person who is the owner of business.A sole trader business could be established easily due to lack of limitations of recording,reporting and legal structures (Gitman, Juchau and Flanagan, 2015). And theorganisations structure is also not required to be followed in this type of business as asingle person executes all the business activities.If an organisation gets registered as a sole trader, then there is one main benefit of it tothe company is that there is no legal implication regarding sharing information withpublic regarding business activities.The business structure of a sole trader could be changed easily because if the owner plansto expand business in future then it could be done easily.QUESTION 2Budgetary Information from Z Ltd. (Given):Particulars£Production Output40000 units5Labour Hours (Skilled) 2 (hrs per unit)18Labour Hours (Unskilled) 1.5 (hrs per unit)9Expenses35% of total labour costFixed Costs for period10000a. Preparing Production Budget for the period:ParticularsUnits£ per unit£Total Cost4000052000001Add: (Skilled) Labour Cost @ 2hours per unit40000181440000Add: (Unskilled) Labour Cost @1.5 hours per unit400009540000322180000Add: Expenses400009.45693000Add: Fixed Costs400000.2510000Budgeted Production Cost4000072.07528830002
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