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Managing Financial Resources PDF

   

Added on  2020-10-22

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Managing FinancialResources
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TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1Task 1...............................................................................................................................................11.1 Merits and demerits of listing in stock exchange..................................................................11.2 Discussing the steps for listing Milner Chemicals Plc in London Stock Exchange.............21.3 Methods to raise capital in London stock exchange.............................................................4Task 2...............................................................................................................................................52.1 A Cost of ordinary share capital ...........................................................................................5B) Cost of preference Share Capital............................................................................................5C) Cost of debenture Capital after tax.........................................................................................5D) Weighted average cost of Capital..........................................................................................52.2 Significance of financial planning........................................................................................62.3 Information required of directors, junior managers and senior managers............................72.4 Impact of finance on Financial statement.............................................................................7Task 3...............................................................................................................................................83.1................................................................................................................................................83.2................................................................................................................................................83.3................................................................................................................................................8Task 4.............................................................................................................................................104.1 Discussing the main financial statements prepared by business organisations yearly........104.2 Various formats of income statement of manufacturing company, trading organizationsand clubs...................................................................................................................................114.3 Computation of ratios..........................................................................................................11CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................13
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INTRODUCTIONManaging financial is very important aspect of each and every organization. The presentreport is giving brief about the sources of finance which are available to business. Theimplications of finance as resource within the business has been elaborated by analyzing costs ofvarious sources. Further it has been briefed about financial decisions according to financialinformation.Task 11.1 Merits and demerits of listing in stock exchangeThe benefits while listing in stock exchange can be in various forms like it providesaccess to capital which will help Milner Chemical Plc for raising finance for development evenat the time of admission and via raising more capital (Rahman, And et.al., 2017). It will createrise in profile i.e. it will create demand for shares and it will improve the liquidity of Milnercompany as many investors prefer to invest in business which is listed on the main exchange astheyare more comfortable, opportunities and for the issue of security. While listing on market, itfacilitates acquisitions or increases the ability of Milner Chemicals Plc for acquisitions withlisted shares as currency. Market valuation for the business has been created and all theopportunities are enabled to raise fund and for expansion. Valuation has been objected as it helpsin creating independent value of business of Milner Company. The base of shareholder has beenbroadened as it has created a market for the share of company. In the same series, shares havebeen used as the employee incentive for giving motivation for long term i.e. improves employeecommitment. It improves investor, supplier and customer's confidence and the position inmarketplace. It provides pure access to a currency acquisition and transparency related to the valuationof busienss. The companies which listed uses shares instead of cash for acquisitions. This is aperfect measure for applying buy and build strategy when cash ha snot been properly optimisedin other areas. The value of the business has been determined objectively by market not likeprivate company as requirement of assessing the relative value of the two business which aredifferent to each other. Employee commitment has been encouraged by giving them rewardswhich represents clear value. The employees of listed company are gaining more advantage ifthey have been allotted shares or options by which they can easily observe their worth. Thepublic profile has been heightened and it improves the capability for attracting high calibre1
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members of board. To get more talent with respect to business, the liquidity of the companywhich is listed gives the best incentive plan.These issues should be considered by Milner Plc while listing on stock exchange likemarket fluctuations, compliance and cost related to listing (Rubin and Patel, 2017). The marketgot fluctuated by many external factors which consist of social, economic and political change asall these will be affecting the share price of company in positive manner and even negativemanner. If the organisation is listed publicly, there is requirement of complying with the code ofUnited Kingdom with respect to Corporate Governance. The companies which are public aredirectly linked to the property of public as they are purely expected for complying the rules ofthe market which are populated by them. The services of nominated advisor have been used bythe companies on AIM and firm which are listed on London Stock Exchange, acts as the mainregulator of business and its listing should be managed with ongoing compliance. The shareswhich are issued not only diluted but they also lack liquidity. Fundraising and activity ofacquisition is undermined because of less demand of the shares. Lack of demand will generallyconvert into less share price and its application of shares as currency of acquisition will lose itsappeal. The amount of significant costs and time related to flotation and its ongoing listing mustnot be underestimated. The beginning of flotation process consumes so much time and itsadministration of announcements which are regular and constant. There are many other activitieswhich should be managed so in short it is very time consuming and labour intensive which doesnot match the business.1.2 Discussing the steps for listing Milner Chemicals Plc in London Stock ExchangeThe major steps for listing Milner Plc on the London Stock Exchange:Advisors should be appointed and those advisors must have the relevant public experience andproper recommendations should be undertaken for appointing new ones. Every advisor hassignificant role in the process of admission as:Corporate advisorBrokerReporting accountantLawyer2
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