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Managing Financial Resources Assignment : R.L. Maynard

   

Added on  2020-01-07

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MANAGING FINANCIALRESOURCES

TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................11.1Identify the sources of finance...............................................................................................11.2 Implications of the different sources.....................................................................................21.3 Evaluate the appropriate sources of finance..........................................................................32.1 Analyse the cost of different source of finance for a business..............................................32.2 Explain the importance of financial planning.......................................................................42.3 Explain the effects of suggested finance on financial statements.........................................43.1 Analyse budgets and make appropriate decisions.................................................................43.2 Explain the calculation of unit cost and make pricing decisions..........................................63.3 Investment appraisal techniques...........................................................................................6TASK 2............................................................................................................................................84.1 Discuss the main financial statements...................................................................................84.2 Compare appropriate formats of financial formats of financial statements for differenttypes of business.......................................................................................................................114.3 Interpret financial statements using an appropriate ratios...................................................12CONCLUSION .............................................................................................................................14REFERENCES..............................................................................................................................15

INTRODUCTIONFinancial resources are the most important assets for a company that assist theorganisation to expand their business and run their day to day business operations. There aresources available are internal and external sources such as bank loan, venture capital, equityfinance, home loan, sales of an assets etc. It create a cost to a firm, provide tax benefits and itshas a financial, legal implication as well as dilution of control. In the present research projectthere is a mainly discussion on various source of funds and their implications. Thus, it also studyon the internal and external sources in which there is a benefits and disadvantages. In regard tothis, there is an also discussion on the implication to the company. TASK 11.1Identify the sources of financeThere are various type of source of finance that are used by the R.L. Maynard. These areas describe as follows- Internal sources- It is that type of sources through which company generating the income fromthe internal sources. These are mentioned below- Sales of an asset- The firm can generate the income or finance by sale of an assets suchas machinery, furniture and any kind of fixed assets etc.Retained earning- It that type of internal sources through which company can able togenerate income is a retained earning. It is a part of net profit that are remained afterdistributing the dividends to the shareholder. Thus, it can be used by the organisation forthe purpose of reinvesting into the business to generate a revenue. External sources- Bank loan- It is a secured loan that are borrowed by the company from the financial andbanking institution. It is used by the company for the purpose of generating the long-termfinance from external sources. It can be taken by the company at the rate of interest onbank loan. Venture capital- The Company can generate the finance from external sources fromborrow the equity capital participants. It supports consultancy services and also financialassistance to those who are in need. 1.2 Implications of the different sourcesInternal sources1

Sales of an assetsLegal implications- There is no legal implication of sales of an assets as it is a property ofa company that are sales to another party. For this reason, there is no need of legalformalities of sell of an assets to other person for the purpose of generating income.Financial implication –The company can able to raise short-term funds and theorganisation needs to minimize prices of stock for the purpose of clear off the inventory. Dilution of control- The sale of an assets does not have an implication of dilution ofcontrol as it does not involve any external parties. Retained earningsLegal implications- There is no legal implication of retained earning as these sources areused by the company from internally. Financial implication- There is no financial implication of a company as it is a part of acompany. Dilution of control- There is no dilution of control. External sourcesBank loanLegal implications- There is a legal implication of bank loan that requires a legalformalities and documentation process that are needed to fulfil the terms and agreementsof bank loan. Financial implication- There is a financial implication in which they have to repay at afixed rate of interest on bank loan. Dilution of control- The dilution of control is low for the bank loan. Venture capital Legal implications- There is a needed of the legal formalities of venture capital when oneparty is borrow equity capitalist from the venture capitalist. Financial implication- The financial implication of a venture capital is that they have topay dividend to the shareholder that incur cost of finance. Dilution of control- There is a dilution of control of this external sources is higher. 2

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