Optimum Utilization of Assets for Sales Generation in XYZ Ltd.
Added on 2019-12-03
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Table of ContentsINTRODUCTION ..........................................................................................................................1TASK 1 ...........................................................................................................................................11.1 Sources of finance available to large and small as well as for the new start up and thosewho wishes to expand.................................................................................................................11.2 Implications of the each source of finance in terms of legal aspects, cost and suitability....21.3 Three case study examples....................................................................................................3Task 2...............................................................................................................................................42.1 Cost of different sources of finance......................................................................................42.2 Importance of financial planning..........................................................................................42.3 information need by the decision maker...............................................................................52.4 Explain the impact of finance on the financial statements....................................................5Task 3 ..............................................................................................................................................63.1 Finding and recommendation for the budgets analyzed.......................................................63.2 Calculation of different types of unit cost. ...........................................................................63.3 Use of investment appraisal techniques in the decision making aspects of ABCEngineering ltd............................................................................................................................8TASK 4..........................................................................................................................................104.1 Concept of prime entry as well as purpose and use of trial balance and final accounts.....104.2 Difference between the financial statements of the different types of business organization...................................................................................................................................................104.3 Calculation of different ration in order to find out the companies positions......................11Conclusion.....................................................................................................................................12REFERENCES..............................................................................................................................13APPENDIX....................................................................................................................................15
INTRODUCTION Financial resources are the crucial element of the business upon which the success of anorganization is highly depends. Financial resources refer to the fund which is available to thebusiness for performing the business functions and activities more effectively and efficiently. Inthis, finance plays a vital role in making optimum utilization of the financial resources throughthe sound strategies and policies. The present report will discuss the sources of finance availableto for new business start ups as well as those who wish to expand. It also depicts the cost andimplications of the different sources of finance. Besides this, it develops understanding about theconcept of contribution and break even analysis. This report will examine the capital budgetingtools which help organization in making suitable investment decisions. Further, the presentreport helps XYZ in assessing their financial health and performance through the ratio analysis. TASK 1 1.1 Funding sources which are available to large or small and for the new start up or those whowishes to expandThere are different sources of finance which are available to large and small as well as forthe new start up and those who wishes to expand their business operations are given below:Big and small sized business organization:Large sized business enterprise can fulfill itsfinancial need by issuing equity shares to the investors. Whereas by approaching bank for thefinancial assistance small sized organization become able to fulfill their financial requirements(Post and Byron, 2015). These are the cost effective ways which helps organization in meetingtheir financial needs.Advantages: Tax deduction is one of the biggest advantages which attract small sized organization tomeet their financial needs through bank loan. In equity shares, company can save floating cost by offering shares to the existingshareholders. Disadvantages:In bank loan, organization requires make payment of high interest amount which closelyaffects the profitability aspect of the organization.1
Issuing of equity share increase the interruption of shareholders in the decision makingaspects. It imposes problem in front of the organization. New business start up: Business entity is able to start up their new venture by taking intoconsideration personalized fund. Besides this, by approaching friends and family members onecan meet their financial needs. Both these sources prove to be more fruitful for the individual.Advantages: If individual undertakes the fund which are gathered by him there is noobligation in relation to the periodical interest amount.Disadvantages:Increase in the intervention of shareholders in the decision makingprocess in one of the main drawback when company make issue of equity capital (Zhou,2015). Moreover, shareholders possess equity share and thereby have the right to takeparticipation in the decision making aspects. Expansion of the business: Retained profit is the best source which enables company to expandtheir business operations and functions. It is the part of the profit which every company kept itwith itself to fulfill their monetary requirements to meet contingent situation. 1.2 Implications of the each source of finance in terms of legal aspects, cost and suitabilityAll the above mentioned sources of finance place different impact on enterprise in thefollowing manner:Funding sourcesLawful aspects Monetary implicationsSuitabilityIssue of equity sharesIf organization raisestheir finance throughequity shares then theygive right to theshareholders to takeparticipation in thedecision makingaspect of anorganization. Company also has toincur floating whilethey issue equityshares which imposefinancial cost in frontof the corporation. It is the most suitablesource through whichlargesizedorganization can meettheir needs. Moreover,company does nothave need to makeexpenses on issuing ofattractive prospects toattract their existingshareholders.Bank loanBank has the right tocease the securityFor the financialassistance bankIt is the most effectivesource because it2
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