Managing Financial Resources and Decisions | Study

Added on -2020-02-17

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Managing FinancialResources and Decisions1
TABLE OF CONTENTSINTRODUCTION ..........................................................................................................................3TASK 1............................................................................................................................................31.1 Identification of the financial sources available ...................................................................31.2 Assessment of implications in using different sources..........................................................41.3 Evaluation of most suitable financial sources for Clariton Antiques Ltd..............................4TASK 2............................................................................................................................................52.1 Analyzing the costs of sources of finance..............................................................................52.2 Importance of financial planning for Clariton Antiques Ltd.................................................62.3 Assessing the information which is required for decision making........................................72.4 Impact of sources on the financial statements.......................................................................7TASK 3............................................................................................................................................83.1 Preparing an analysis of the cash budget for Clariton Antiques............................................83.2 Manner in which unit costs can be calculated for making pricing decisions.......................103.3 Viability of the project using investment appraisal tool......................................................11TASK 4..........................................................................................................................................144.1 Key components of financial statements.............................................................................144.2 Format used by Clariton Antiques Ltd.................................................................................154.3 Interpretation of the recent financial statements using suitable ratios.................................15CONCLUSION .............................................................................................................................17REFERENCES..............................................................................................................................182
INTRODUCTION Financial resources is considered as the money that is present to the firm for spending inform of cash, liquid securities as well as credit lines. Before commencing any business anentrepreneur is required to secure adequate amount of financial resources for the sake ofoperating in an effective manner and attain greater success. Financial management is regardedas suitable management of funds (Ball, Jayaraman and Shivakumar, 2012). This is comprised ofplanning, directing, controlling as well as monitoring of the financial resources of the firm. In thepresent study managing financial resources has been discussed in context of Clariton AntiquesLtd. The report includes suitable financial sources. Further it covers the importance of financialplanning for organization. TASK 11.1 Identification of the financial sources available There is presence of various sources of finance that exists for the firm. This act as an aid inaccomplishing the need foe the purpose of carrying out organizational performance. Financialsources for unincorporated and incorporated organization is different to a greater extent. This hasbeen demonstrated in manner as under:a) Unincorporated business It is considered as the kind of business which is not able to make issue of shares andenhance funds through public for the purpose of achieving business targets. Under this firm canuse various financial resources which involves retained profit, bank loan and sale of old assets.Further the business can make utilization of owner capital so as to increase the return andachieve expectations of several parties to a greater extent (Funke, 2007). Clariton can use abovesources in order to expand. Further short term sources can be used by the management in ordercontribute towards firm's success. The sources which can be attained with less efforts includesassets and bank loan. b) Incorporated business It is regarded as the type of business that attain funds through various sources like issue ofshares, retained profit, bank loan and leasing. With this firm business can attain funds in order tocarry out organizational operations in an effective way. Moreover issue of share is being done in3
order to raise long term finance with which business is able to fulfill the expectations of severalparties to a greater extent. Beside this retained profit is considered as the source which can bearranged in less time period (Maynard, 2013). Through this Clariton Antique can expand in yearsto come. The incorporate firm possess scope for growth and development. In accordance withsuch they can effectively access long term sources. 1.2 Assessment of implications in using different sourcesThere is existence of several sources that can be availed by the firm in an effective way.As per the case Clariton is required £0.5 million in order to attain building within Birmingham.In this regard various sources are demonstrated in manner enumerated below:Loan from bank: With respect to case, Clariton Antique Ltd is developing plans for the sake ofproject expansion. In this regard loan can be taken and it is considered as appropriate financialsource. In this relation firm can make payment of interest against the borrowed amount. Insituation of default legal actions can be taken by the banks against the cited business. Issues of shares: The present scenario demonstrates that Clariton limited is considered as limitedfirm and thus it can make issue of shares. Such is suitable in reducing the risk associated withloss. Under this firm needs to pay divided to shareholders (Bhandari and Iyer, 2013). In case itdoes make payment on time then legal actions can be taken by the public. Retained profit: This is referred to as source of finance which can be arranged within lesserduration of time. With the use of such the firm can lose control of money that they possess inorder to meet the contingencies for long run. Attainment of such does not require the business torepay the amount after fixed time period. Thus retained profit is regarded suitable as it assist inattaining building in Birmingham. Leasing: This is regarded as suitable source of finance as under this company can gain machinethat can assist in production of the antique items. Such play significant role in making reductionof the burden of firm in relation to start up of activities with respect to production. For gettingmachine rent has to be paid (Nobes, 2014). In case of delay in making payment of rent legalactions can be taken against the cited business. This affects the credit rating of organization inthe market. 4

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