Managing Financial Resources & Decisions : Assignment
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Added on 2020-10-05
Managing Financial Resources & Decisions : Assignment
Added on 2020-10-05
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Managing FinancialResources & Decisions
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................11.1 Identify the sources of finance available to:..........................................................................11.2 Assess the implications for using: .........................................................................................31.3 Evaluate the most appropriate sources of finance for Clariton Antiques Ltd........................4TASK 2............................................................................................................................................52.1 Analysis of cost of sources....................................................................................................52.2 Importance of financial planning...........................................................................................62.3 Assessment of information for takeover decision .................................................................62.4 Impact of choosing finance broker and venture capitalist.....................................................7TASK 3............................................................................................................................................83.1 Preparation of cash budget.....................................................................................................83.2 Pricing decision......................................................................................................................93.3 Viability of the projects using investment appraisal techniques.........................................10TASK 4..........................................................................................................................................114.1 Key components of financial statements.............................................................................114.2 Comparison of format used by Clariton Antiques Ltd. And sole traders............................12Clariton Antiques Ltd................................................................................................................12CONCLUSION..............................................................................................................................13REFERENCES..............................................................................................................................15
INTRODUCTIONFinance is the study that figures out how individuals and businesses make use of money.Financial resource includes cash, liquid securities and credit lines available to businessorganisations. A good financial management is key to achieve organisational goals andobjectives. Clariton Antique is founded by four partners four years back that deals in antiqueitems. It has four two branches in London and working for toward expansion of business.Managing finances helps Clariton Antique to make various business decisions and to avoidcompromise in business decisions due to shortage in funds. Financial planning helps in decisionmaking as it provides basis to budget and also various business opportunities are grabbed withavailability of funds. This project report consists of details regarding sources of availability offunds and its implications and analysis of income statement. Importance of cash budget andviability of investment decision (Drechsler and Natter, 2012). Together with this detailsregarding financial statements and its interpretation is included in this report. TASK 11.1 Identify the sources of finance available to:For every business, finance is required to purchase assets, labours, materials and regularcost. Finance is known as money management which considers some activities such asborrowing, saving, investing, forecasting and budgeting. For the development of business, theyrequired some sources that provide cash. Sources of finance is the finance provision for businessto cover their needed working capital for short periods and fixed assets and investments forlonger period. Clariton Antiques Ltd also required some finance for their resources(Massingham, 2014). Some sources of finance are debentures, equity, term loans, letter of creditsand so on. Sources of finance for unincorporated business and incorporated business arementioned below:a. Unincorporated business: Unincorporated business usually refers to business related to sole proprietorship andpartnership firms due to which it is the responsibility of owners of these business to procurefunds for their business. Some sources of finance available in this businesses are personalinvestments, business incubators, governments grant and subsidies, bank loans and venture1
capital. Clariton Antiques Ltd. which is an unincorporated business their sources of finance areas follows:Personal investments:Personal investment is referring to financial investment by an individual, instead offinancial institutions or enterprises. For every starting business, initially the owners have toinvest whether by giving cash or collateral the assets. This shows to bankers as well as investorsthat the owner has commitments for longer periods in projects and also ready to bear risk. At thetime of start-up owners of Clariton Antiques Ltd. Invest their own cash and capital and agree totake risks. So, initially their finance source is personal investments (Maskell, Baggaley andGrasso, 2016). Venture capital:Venture capital is a kind of private equity, which mostly financing that investors whogenerally start their organisations and small enterprises that are trusted to have potential ofgrowth for longer periods. These are capitals that usually comes from financial institutions,investment banks and investors. This is not compulsory for all entrepreneurs. From this capitalistexpected good returns of their investments which are generated when enterprise start selling theirshare to public. Clariton Antiques Ltd. Have this source of finance as it has high growthpotentials that refers to focus to innovations at the time they required finance in large amounts toget constituted into existing markets.b. Incorporated business:An incorporated business is referring to separate entity through owner of business andhave naturals rights. As Clariton Antiques Ltd. Plan to go for public company so they can usesome financial sources available in this business which are mentioned below:Equity capital:Equity capital is a source of funds that is paid in enterprises by investors in exchange forpreferred and common inventory. This is the most essential source of finance as in this capital iscreated by enterprises internally. Clariton Antiques Ltd. can use this source of finance to assurethe growth for their business without cutting their absolute majority stake. Working capital loans:Working capital loan is a loan which can be lend to finance the day to day businessoperations. This loans are not needed to purchase asset and investments for longer periods. It is2
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