Introduction to Finance

Introduction to
Finance

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Question 1....................................................................................................................................3
Question 2........................................................................................................................................5
Question 3..................................................................................................................................10
Question 4..................................................................................................................................12
Conclusion.....................................................................................................................................15
References......................................................................................................................................16

INTRODUCTION
Finance is a broad concept that includes practises relating to financial, debt or borrowing,
investing, capital markets, funds and equity. Basically, finance demonstrates the administration
of funds and the process for collecting the requisite funds (Tripathi, 2019). The function of
financing is to ensuring that there are adequate resources to operate and the business is able to
manage and retain the capital. This assessment is based on four distinct types of questions
involving the sources of funding, the estimation of the averages for the measurement of the
financial performance of the company and the use of investment appraisal methods to determine
the feasibility of the various alternatives. In addition, description of the position of a number of
diverse regulatory system entities and address the role of the audit board.
MAIN BODY
Question 1
(a) Measurement of EOQ-
Economic ordering quantity: √2*annual usage*Ordering cost/Carrying or holding cost
Annual usage: 27000 KG
Carrying or holding cost: $1.75 @ per KG of year
Ordering cost: $0.9
Hence,
EOQ: √2*27000*0.9/1.75
= √48600/1.75
= √27771.43
= 166.65 Or 167
(b) Calculation of annual cost-

Buying cost: 27000Kg @ 0.90
= $24300
Ordering cost: Annual demand*per unit ordering cost/EOQ
(27000*0.90/167)
= $145.50
Holding cost: Holding Cost per unit*EOQ/2
(1.75*167/2)
= $146
Hence,
Annual cost: $24300+$145.50+$146
= $24591.5
(c) Evaluation of decision to use EOQ model.
In reference to Touchdown Sports Inc, administrators use the EOQ model to define the
optimal order size that significantly reduces total expense or satisfy consumer demand.
EOQ may be about 167 that minimises costs or allows Touchdown Sports Inc. to
increase the profit margin. The Organization’s decision to choose this design is that it
needs to decrease stock or retention costs and determines how much company requires
retaining stock or re-ordering the other volume. This system can also suggest buying a
larger amount with fewer orders to take better advantage of reduced bulk sales and lower
ordering cost. Likewise, they may refer to more and more orders for fewer items to
minimise the operating costs, if they are high and the order volumes are typically low
(Mokhtari and Asadkhani, 2019).
(d) Suggestion to Touchdown plc.
The key aim of inventory control has been proposed to the senior leadership team of
Touchdown Sports Inc. to reduce the total cost of stock and, with the aid of the EOQ
model, executives are able to decrease it by minimising order or retaining expenses that