LFBM203 Assessment Part 2 - Managing Financial Resources

LFBM203 Assessment
Part 2

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
Scenario 1 Ratio analysis and Sources of Finance.................................................................3
Scenario 2 Costing and Cost volume profit (CVP) analysis..................................................5
Scenario 3 Cost of capital and Investment appraisal methods...............................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
The management of the financial resources provides assistance to an organisation in the
process of addressing the complicated issues or complexities of the financial planning as well as
controlling. This report is based on XYZ Plc which is a holding company and having three
scenarios that are based on three distinct departments like X-Square Financial Ltd, York
Manufacturing Ltd as well as Zebra Investment Ltd. The initial department deals in funding
innovate and young businesses within UK while second department of York Manufacturing Ltd
is engaged in producing washing machines (Abdullayev and Kattakichiyev, 2019). Last
department is involved in making plans to undertake three mutually exclusive projects. The first
scenario will discuss understanding of ratio analysis as well as sources of finance that facilitate
an organisation in improving its financial performance. Along with it, there will be costing as
well as cost profit volume analysis that assists organisation in managing entire cost of business
operations. Moreover, this report also covers investment appraisal methods as well as cost of
capital tool.
MAIN BODY
Scenario 1 Ratio analysis and Sources of Finance.
The tool of ratio analysis is considered as a quantitative approach for having an idea
regarding the liquidity, profitability and efficiency of given different departments through
evaluation of financial statements. Examples of financial statement include income statement,
balance sheet and so on. The stakeholders as well as the investors use ratio analysis for
examining financial health of business through making comparison of both past and future
performance. Through making comparison of the data, X Square's past performance can be
viewed and future performance can be analysed (den Heijer, 2021). The financial ratios can be
estimated in an easy manner because all the information required for calculating is given within
financial statements.
There are six categories of ratio analysis and they include:
 Liquidity Ratios: This facilitates in measuring potential of company to pay off its short-
term obligations as and when they are due.