Financial Analysis and Performance Evaluation of Taste Plc
Added on 2019-12-03
18 Pages5275 Words186 Views
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Table of ContentsINTRODUCTION...........................................................................................................................12.0 Identifying the source of finance available to business.........................................................12.1 Types of business...................................................................................................................12.2 Sources of finance available to business...............................................................................12.3 Compare and contrast right issue of shares and loan notes...................................................22.3.1 Right issue..........................................................................................................................22.3.2 Loan stock...........................................................................................................................32.3.3 Implications of right issues and loan stock.........................................................................32.4 Sources of finance for buildings and NCA............................................................................32.5 Working capital.....................................................................................................................42.5.1 Define.................................................................................................................................42.5.2 Why it is important.............................................................................................................42.5.3 Sources available for working capital.................................................................................43 Financial statements..................................................................................................................43.1 Statement of profit and loss...................................................................................................53.2 Statement of financial position..............................................................................................53.3 Statement of cash flow...........................................................................................................53.4 Impact on these financial statements.....................................................................................53.4.1 WACC for three options.....................................................................................................53.4.2 Gearing for three options....................................................................................................73.4.3 How these finance impacted on financial statements.........................................................73.5 Earning per share...................................................................................................................73.5.1 what information does this provides...................................................................................73.5.2 calculation of Earning per share.........................................................................................73.5.3 Explanation of answer........................................................................................................84 Investment appraisal.................................................................................................................84.1 Why it is important to appraise potential investment............................................................84.2 What are the risks to future cash flow...................................................................................84.3 Different type of techniques..................................................................................................84.3.1 Payback period....................................................................................................................84.3.2 Calculating payback period................................................................................................84.3.3 Net present value................................................................................................................9
4.3.4 Calculation of net present value.........................................................................................94.4 Recommendation to board of directors................................................................................104.5 Unit cost...............................................................................................................................104.5.1 Concept of unit cost..........................................................................................................105.0 Cash flow vs profit...............................................................................................................115.1 Main trends and messages contained within cash flow.......................................................115.2 Importance of financial planning.........................................................................................115.3 Explain why company may be profitable but run into problem with liquidity...................125.4 Users of financial statements...............................................................................................125.4.1 Who are they.....................................................................................................................125.4.2 What information do they need........................................................................................126 Interpretation of financial statements.....................................................................................136.1 Ratio analysis.......................................................................................................................136.1.1 Profitability ratios.............................................................................................................136.1.2 Liquidity ratio...................................................................................................................136.2 Overall opinion on current performance of firm.................................................................147.0 Main differences in the financial statements.......................................................................14CONCLUSION..............................................................................................................................14REFERENCES..............................................................................................................................15
INTRODUCTION Managing financial resources within the enterprise plays significant role as finance isregarded as one of the major resource without which no organization can survive in the market.Apart from this, inadequacy of finance has adverse impact on business and it acts as hurdleespecially at the time of accomplishing desired aims and objectives of company. Further, varioustechniques are present through which business enterprise manage its financial resources such asby indulging into proper plans etc (Arffa, 2001). Moreover, identification of appropriate sourceof finance is also crucial for business and by selecting specific source it is possible for businessenterprise to carry out its overall operations in effective manner. Apart from this, to take decisionin relation with investment in any new project investment appraisal techniques are effectivewhich are net present value, internal rate of return etc. By using different methods it is possibleto allocate funds in right project and is fruitful for business. Present study being carried out isbased on management of financial resources where different scenarios have been provided.Various tasks have been covered in the report which involves selection of appropriate source offinance, benefits of net present value method, concept of unit cost etc. 2.0 Identifying the source of finance available to business 2.1 Types of businessDifferent types of businesses are present which requires finance in order to carry outoverall operations in the market. Such businesses involve public, private, partnership etc.Financial requirement of every business differs from each other and it depends on the nature andsize of business operations are being carried out. Moreover, it depends on management the typeof source being adopted for satisfying financial need and it directly assist in accomplishment ofdesired aims along with objectives. 2.2 Sources of finance available to business Different sources of finance are present which can be adopted by Taste plc foraccomplishing its overall aims along with objectives. Such sources are described below: Sources Feature Advantage Disadvantage Bank overdraft (Shortterm)This source of financecan be undertaken byfirm where moreamount can beMain benefit of usingthis source is that bynature it is flexible andlarge amount can beHigh rate of interest ischarged by bank and itincreases expenditurelevel of company1
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