[PDF] Managing Financial Resources Assignment

Managing Financial Resources

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK.1............................................................................................................................................3
1.1 Identification of source of finance:.......................................................................................3
1.2 Implications of the different source of finance.....................................................................4
1.3 Evaluation of different financial source................................................................................4
2.1 Cost of different source of finance........................................................................................5
2.2 Importance of financial planning..........................................................................................5
2.3 Information required for making decisions...........................................................................6
2.4 Impact of finance on financial statements.............................................................................6
3.1 Cash budget...........................................................................................................................6
3.2 Calculation of unit cost.........................................................................................................7
3.3 Assess viability of project.....................................................................................................8
TASK 2..........................................................................................................................................10
4.1 Financial statements............................................................................................................10
4.2 Comparison on appropriate format of financial statement in different businesses.............11
4.3 Interpretation of financial statements using appropriate ratios by using internal and
external ratios............................................................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
There is a need of enough capital for running any business. This is much required for
every kind of business from small running to large scale businesses. But the capital which is
needed by the firm, is to optimum implemented for effective running. But, there is strong
management of finance (Arthur, Cheng and Czernkowski, 2010). For management of finance is
not an easy as it requires vast knowledge for the handling of finance and makes decisions
accordingly. Strategically, financial management process starts from the raising funds to the
implementation into the most utilizing things in the business. The acquisitions of finance, cost of
funds, risk factors of raising finance, return on investment and so many things which are needs to
decides after deep analysis of financial factors, and then makes decisions (Managing Your
Resources, 2017). The decisions to be made after analysing the financial statements or other
relevant statements which are much required for decisions.
TASK.1
1.1 Identification of source of finance:
In order to start a new business company need to raise capital which is required at the initial
stages. It depends on the advantages and disadvantages of the different sources that which is best
suitable . Creations is a beauty saloon whose main aim will be providing the customers with the
best services of excellent quality.
Mission of business- To develop the physical appearance of the customers.
It is very important to keep the interior of the saloon very attractive and comfortable so that
costumer feel comfortable while taking the services. Selecting the best location is very important
as it will have major impact on sales.
The entrepreneur available balance is £20,000 and he is thinking to launch a project which
needs £300,000. To meet the rest demand, company needs to raise capital, the capital is
raised via equity or debts, it is depending on the nature of the cost. The entrepreneur
now need to know the cost of capital of both ways; equity or debt. Normally,
entrepreneur can raise finance via various ways through which the the ambitious
projects could be implemented. Here, There are different sources of finance which the
entrepreneur could exercise. Which includes:
Internal sources:

Equity share: It is a type of share and it is also known as owner of the company and the
dividend should be provided to them in the cash but in last after providing the
dividend to preference shares. Those person who are having the equity share having a
right to take any type of decision for betterment of the business entity. The equity
dividend rate is not ascertain (Bennouna, Meredith and Marchant, 2010).
Debenture: This is normally a kind of debts which shows the indebtedness to the
company. Under this, company would able to get the finance for their ambitious
purpose and meet out the requirements as per their necessities. It is not connected with
any banks. In this, those persons who are having the debentures of the firm they can
take the interest at a fixed rate when the company earning maximum profit.
Retained earning: It is a process of reinvestment and it refers to the percentage of
net earnings and not paid as a dividends. It help the employees of the business entity to
do reinvestment in the core business (Bodie, 2013).
External sources:
Bank loan: Banks and financial institutions issue loans to the the enterprise under this the
business plan is highly competent. Therefore, the owner of restaurant business could raise funds.
1.2 Implications of the different source of finance
There are different sources of finance which are stated above and Balti Placehave
to use these sources of finance so that they can not face any obstacles in managing the
different operational activities of the company.
Equity shares: Equity shares are also known as ordinary shares and the person
who having the company's equity shares they are the owner of the firm and they can
make any type of decision for the favour of the business entity. For the owners of the
equity share, they have to dividend but not have any fixed rate when company is
generated more revenue.
Debentures: It is a long term source of finance for Balti Placeand in this the
company have to pay the interest to the debenture holders on the fixed rate and it can
pay on the instalments (Bradbury, 2011).