Managing Financial Resources - Sainsbury Assignment

Managing Financial
Resources
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TABLE OF CONTENTS
INTRODUCTION ..........................................................................................................................3
TASK 1............................................................................................................................................3
1.1 Sources of finance available to business................................................................................3
1.2 Implications of different sources of finance..........................................................................4
1.3 Various sources of finance appropriate for business project.................................................4
2.1 Costs of each sources of finance identified............................................................................5
2.2 Importance of financial planning...........................................................................................5
2.3 Identification of information needs of external and internal decision makers.......................6
2.4 Impact of finance on financial statements.............................................................................7
TASK 2............................................................................................................................................7
3.1 Analysis of budgets and making appropriate decisions.........................................................7
3.2 Calculating unit costs and making pricing decisions.............................................................8
3.3 Assessing the viability of project...........................................................................................8
TASK 3............................................................................................................................................9
4.1 Main financial statements......................................................................................................9
4.2 Comparing appropriate formats of financial statements for different types of business.....10
4.3 Interpreting financial statements using appropriate ratios...................................................10
CONCLUSION .............................................................................................................................11
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Index of Tables
Table 1: Cash Budget for six months...............................................................................................8
Table 2: Ratio analysis of Sainsbury ............................................................................................11
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INTRODUCTION
The concept of financial management is defined as the planning, directing, controlling
and organizing of activities with respect to finance. This includes procurement as well as
utilization of funds of organization. The role of financial management can be greatly viewed in
the achievement of business goals as it ensures effective and efficient management of money
(Managing Financial Resources and Decisions, 2013). In the present report, management of
financial resources has been discussed with respect to Sainsbury. The study entails to gain
insight to the sources of finance that is available to business along with the cost attached to them.
Further, it also includes the information that is required by different decision makers.
TASK 1
1.1 Sources of finance available to business
There are various financial sources which are available to business such as Sainsbury.
These are as follows:
Internal sources:
Such types of financial sources are raised by the business from inside. With the assistance
of internal sources, the organization can meet its working capital requirements.
 Sale of asset: By selling the assets that are non performing for the organization can raise
finance (Drake and Fabozzi, 2012). This assists it in meeting day to day requirements of
funds in an effective manner.
 Retained earnings: The amount of profit that is kept as the reserve by firm in order to
meet the uncertainties can be used by Sainsbury for satisfying its financial needs. It acts
as the suitable sources that are available with the business.
External sources:
Such financial sources are raised from outside the organization. They are effective in
meeting the long term financial requirements of business.
 Bank loan: Under this, company can borrow funds from financial institutions with an aim
to meet the long term business needs. For this, it is required to keep certain assets as
security with the bank.
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