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ManAGING FINANCIAL RESOURCES AND DECISIONS [pic] IN

   

Added on  2020-02-03

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MANAGING FINANCIALRESOURCES ANDDECISIONS
ManAGING FINANCIAL RESOURCES AND DECISIONS [pic] IN_1
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INTRODUCTIONFinancial resources are integral part of every business entity among all kinds of theresources required. Along with availability of various financial resources there are it is necessaryto utilize in appropriate and profitable way for taking efficient business decisions. The currentanalysis and report describes about the different kinds of financing sources which helpful forbusiness expansion in the other market and country. Further, the suitable source of finance forexpansing business is also evaluated in the present study. It shows about the costing of finance,significance of planning of the financials as well as its impact on the company's financialperformance and statements both. In the third part, information related to budgets and method fordetermining cost and pricing level of every produced unit is provided with the example. From thelast part of the report, the reader able to understand about the financial statements such as keycomponents, formats and way of making interpretation of it.TASK 11.1 Identification of available source of finance for businessWhen a business organisation going and taking decisions for expanding business then itrequires huge amount of capital. Because without the fund appropriate and adequate fund themanagement not able to produce more products and then provide in new market. For raisingmoney there are some sources provide fund which are explained as below:Equity shares: In such kind of the financing source the company issue equity type ofshares and stock in the market which are purchased by local community or any externalparty. In this, if the company is not listed in the stock market then cannot raise fund fromthe market and raise fund (The 12 Best Sources of Business Financing, 2010).Debentures: It is one type of written documents and paper which called as debenturesand bond is to issued by the firm and purchased by any external party. Furthermore,amount of the purchase and buy debentures is to be used for business expansion.Bank loan: Another external financing source which can be used by the company forraising capital is bank loan where the firm reach up to the commercial banks. After thatthe company has to show all its financial statements and then bank provide finance whichis used for business expansion.1
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1.2 Evaluating implications of such financing sourcesFinancing sourcesLegal implicationsFinancial implicationsDilution ofcontrol on firmEquity sharesIn this the company needs tolisting in the stock marketand then able to issue sharesand raise fund. Apart fromthis, it is also necessary tofulfil all the legaldocumentations (Chan andet.al., 2012).In this the business entityhas to pay amount to theshareholders in form ofdividend from the netprofit generated. Becauseof this conditionprofitability ratio andbusiness performancereduces.Control over thebusiness dilutedwithshareholders.DebenturesIn the management has tofulfilallthosedocumentations which arerequired at the time oftaking and issuingdebentures.While raising fund fromthe debt then from theprofit the firm has to payinterest to the regulatorybody and coupon rateboth.Control dilutedvery low.Bank loanIn the bank loan the firmneeds to show all thefinancial condition alongwith the liquidity position.The interest amount is tobe given by firm to thecommercial bank whichreduces the net profit atthe fiscal year ending(Fernandez, Le Roy andGnyawali, 2014).No dilution ofcontrol but incase of defaulterbank has right tocease firm.1.3 Evaluating suitable financing source for a business projectWhen the public listed business entity expanding the firm then for enhancing capital thereare bank loan and equity shares both are very appropriate source. Evaluation of such both thesource of the finance is given as below:2
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