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Managing Financial Resource Decisions

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Added on  2019-12-03

Managing Financial Resource Decisions

   Added on 2019-12-03

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Managing FinancialResource Decisions1 | P a g e
Managing Financial Resource Decisions_1
Table of ContentsINTRODCUTION......................................................................................................................1TASK 1......................................................................................................................................1AC 1.1 Types of finance sources...........................................................................................1AC 1.2 Implications of different finance sources..................................................................1AC 1.3 Case study examples for the businesses....................................................................2TASK 2......................................................................................................................................2AC 2.1 Cost of finance sources for raising the funds............................................................2AC 2.2 Importance of financial planning..............................................................................3AC 2.3 Financial decision making........................................................................................3AC 2.4 Financial statements..................................................................................................4TASK 3......................................................................................................................................4AC 3.1 Analysis of sales budget and cash flow forecast.......................................................4AC 3.3 Application of different investment appraisal techniques.........................................5AC 3.2 Calculation of breakeven point, contribution and profitability.................................7TASK 4....................................................................................................................................10AC 4.1 Books of prime entry and financial statements of different organizations.............10AC 4.2 Financial statements of different types of organization..........................................11AC 4.3 Analysis of financial statements.............................................................................11CONCLUSION.................................................................................................................................................12REFERENCES.........................................................................................................................132 | P a g e
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Index of TablesTable 1: Calculation of payback period (In £)...........................................................................5Table 2: Calculation of Accounting rate of return (In £)...........................................................6Table 3: Calculation of net present value (In £).........................................................................6Table 4: Calculation of internal rate of return (In £)..................................................................6Table 5: Calculation of contribution per unit and profit (In £)..................................................7Table 6: Profit and Breakeven point by changing the selling price (In £).................................8Table 7: Profit and Breakeven point by changing the fixed cost (In £).....................................8Table 8: Profit and Breakeven point by changing the material price (In £)...............................9Table 9: Profit and Breakeven point by changing the labour price (In £)..................................9Table 10: Calculation of profits (In £)......................................................................................10Table 11: Ratio analysis ..........................................................................................................113 | P a g e
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INTRODCUTIONEvery business organization establishes with the purpose of survival for a long timeperiod. Therefore, it becomes necessary for the organization to have adequate amount offinance availability so as to run its operations in an effective manner. Finance is termed as thelifeblood of the business for all the organizations whether new or old and large or small scaleorganizations. This report helps in identifying a variety of finance sources that are availableto different type of organizations. Moreover, it describes the way that how organizations cantake effective business decisions through proper financial planning. TASK 1AC 1.1 Types of finance sourcesFinance sources influence the business operating activities to a great extent. The typesof finance sources that is available to the organizations that are described below:New and old: New business start ups can use its personal savings and loans fromothers such as friend and family members. Moreover, they take loans from banks to a limitedextent. However, old business organizations can use internal and external sources. They canuse its retained earnings, banks loans and share capital.Large and small: share capital and debt capital are considered as major finance sourceavailable to large business organizations. Moreover, it can use venture capital and profitsfrom other businesses to expand its business operations (Davies and Crawford, 2011).However, small business organizations can use overdrafts facilities, retained earnings andshort term and medium term bank loans. Moreover, it can sale its disposable assets and cashcan be squeezed through its operations. AC 1.2 Implications of different finance sourcesEvery business organization use a combination of available finance sources at leastcost. Therefore, they consider its advantage, disadvantage and legal aspects.Bank loans: It is a major source of finance the advantage is that available for differenttime period at chargeable interest rates? The disadvantage is that in case of failure to pay thebank loans the security kept against the loan can be disposed off. Moreover, banks charge ahigher rate of interest on loans for new business start ups. Many legal requirements have tobe fulfilled by the enterprises. 4 | P a g e
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