Managing Financial Resources and Decision (Doc)

Managing Financial Resources
and Decision

Table of Contents
Introduction......................................................................................................................................1
Task 1...............................................................................................................................................1
1.1 Different sources of finance for Sweet Menu Restaurant......................................................1
1.2 Implications of Sources.........................................................................................................2
1.3 Appropriate source of finance...............................................................................................2
Task 2...............................................................................................................................................3
2.1 Costs associated with different means of funding.................................................................3
2.2 Importance of Financial Planning..........................................................................................3
2.3 Information needs of different decision makers that are associated with Sweet Menu
Restaurant....................................................................................................................................4
2.4 Impact of finance on the statements......................................................................................5
Task 3...............................................................................................................................................5
3.1 Analyse budget......................................................................................................................5
3.2 Unit costs calculation.............................................................................................................6
3.3 Investment Appraisal Techniques..........................................................................................7
Task 4...............................................................................................................................................9
4.1 Discuss the main financial statements...................................................................................9
4.2 Different between major financial statements.....................................................................10
4.3 Ratio Analysis......................................................................................................................11
Conclusion.....................................................................................................................................12
References........................................................................................................................................1

INTRODUCTION
In the current corporate scenario, every business requires adequate amount of funds or
money to carry out operations appropriately. However, increasing competition has also enforced
the companies to enhance their level of operations to attain future sustainability. Thus, financial
resources are the integral part of business enterprise and it is the duty of senior authority to
ensure that they make optimum utilisation of available resources and generate desired results and
outcomes (Cunningham, 2006). In this context, current report focuses on economic analysis of
Sweet Menu Restaurant Ltd which is one the its own kind of restaurant in Gants Hills in East
London. With recent success top level management of restaurant are planning to open two new
branches in popular places of London with the aim of attracting large number of customers
through hygiene and delicious intercontinental offerings. In this regard, various sources of funds
has been analysed to raise the amount between £300000 and £500000. Further, implications
associated with the different sources has been focused on and importance of financial planning
for the betterment of business operations. Thereafter, different stakeholder of cited restaurant has
been identified and their importance in decision making. Along with this, investment appraisal
techniques have been used to evaluate the feasibility and reliability of the proposals for the future
expansion and lastly, with the help of ratio analysis performance of cited firm is compared with
its competitor (Blue Island Restaurant).
TASK 1
1.1 Different sources of finance for Sweet Menu Restaurant
As per the present provided case, Sweet Menu Restaurant is planning to enhance its
business functioning by opening two new branches in popular places of London. In order to do
so, huge amount between £300000 to £500000 is required by the management and for which
they can make use of following sources of finance:
 Bank Loan: At present in UK there are several financial institutions which provide
corporate loan to the firms so that they can enhance their business operations and attain
long term sustainability (Narayananand Nanda, 2004). Considering the debt financing it
is one of the most feasible options available to the management of Sweet Menu
Restaurant. The main benefit of this source is that it is available on the basis of mere
formalities as well as repayment of loan is based on monthly instalment which is feasible
for the SME like Sweet Menu Restaurant to repay.
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 Hire purchase and leasing: These are the sources categorized under short and medium
term financing. With the use of this, restaurant can easily acquire machinery of their
choice and enhance the technological aspect so that customers of restaurant get new
experience (Thomas, 2008). However, the main advantage of these sources is that they
are available at feasible monthly instalments.
 Venture Capitalist: Owners of the cited restaurant has the duty to influence venture
capitalist so that investment can be raised. One of the major benefits of this source is that,
capitalist have lesser interest in the functioning of business as compared to shareholders
(Curry, 2013). But it is essential to provide accurate and reliable information to these
people so that they can make smart decision regarding future investments.
 Retained earnings: It is another major internal source that top level management of Sweet
Menu can use in order to raise funds for the future expansion. However, advantage of this
source is that it is already kept reserved for the future contingency and does not raise any
debt. Along with this, firm does not raise any liability of repaying it.
 Sale of fixed assets: Considering the short term financial needs, sales of fixed assets is
appropriate source of finance. It is the duty of senior authority of Sweet Menu Restaurant
to focus on those assets which are of no use or less use in the functioning of business
should be sold to raise the money for buying new technology or machinery for the new
restaurants. But contradicting to this, once the asset is being sold management cannot
make use of it again.
 Third party investment: In order to raise funds from the market it is important for the
senior authority of Sweet Menu Restaurant to influence investors for investing the
money. The advantage of this source is that third party investors have very little interest
in the functioning of firm but despite of this, management has to provide them accurate
and reliable information about the functioning so that they can assess risks and
uncertainties and accordingly make smart and effective decisions.
 Government grants: It is considered as the legal system in which government of UK
provide monetary rewards to those entrepreneurs who are starting a business or
expanding the operations. But in order raise the funds from grants wide range of past and
current information of Sweet Menu Restaurant has to be provided to the government
authority so that they can analyse and accordingly make the decisions.
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