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Importance of sources of finance for Sweet Menu Restaurant

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Added on  2019-12-04

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1 1.2 Implication of sources of finance2 1.3 Appropriate sources of finance for Sweet Menu Restaurant 3 TASK 24 2.1 Cost of different sources of finance 4 2.2 Importance of financial planning for Sweet Menu restaurant4 2.3 Information needed by decision maker of Sweet Menu Restaurant5 2.4 Impact of sources of finance identified on financial statements 5 TASK 36 3.1 Analyze of the cash budget in order to take appropriate decisions 6 3.2 Calculation of unit cost and relevant pricing decisions6 3.3 Viability of two projects using various investment

Importance of sources of finance for Sweet Menu Restaurant

   Added on 2019-12-04

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Importance of sources of finance for Sweet Menu Restaurant_1
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................11.1 Sources of finance available to a business.......................................................................11.2 Implication of sources of finance.....................................................................................21.3 Appropriate sources of finance for Sweet Menu Restaurant............................................3TASK 2............................................................................................................................................42.1 Cost of different sources of finance..................................................................................42.2 Importance of financial planning for Sweet Menu restaurant..........................................42.3 Information needed by decision maker of Sweet Menu Restaurant.................................52.4 Impact of sources of finance identified on financial statements......................................5TASK 3............................................................................................................................................63.1 Analyze of the cash budget in order to take appropriate decisions..................................63.2 Calculation of unit cost and relevant pricing decisions....................................................63.3 Viability of two projects using various investment methods...........................................6TASK 4............................................................................................................................................74.1 Main elements of financial statements.............................................................................74.2 Different statements used by different organization........................................................74.3 Calculation of various ratios.............................................................................................8CONCLUSION................................................................................................................................9REFERENCES..............................................................................................................................10APPENDIX....................................................................................................................................12
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INTRODUCTION Financial management refers to the management of funds in an effective and efficientmanner in order to accomplish the objectives of the organizations. It is a function that is directlyassociated with the top management. In other words it could be said that finance is the sciencethat manage all the activities related to banking, investment made by the company in order toachieve the desired objective. Therefore, the following report depict about the various sources offinance available with the company to raise its capital. In this cost of various sources of financeavailable with the company is also gadfly. In this report impact of various sources of finance onfinancial statements are discussed. In this report four month budget of the company is going tobe analyzed to find out the actual position of the company. At last, various ratios are calculatedand compared in order to find out the position of the both the companies.TASK 11.1 Sources of finance available to a business.There are various types of internal and external sources of finance of available with thecompany which in turn will aid the company to meet its various requirement of finance.Internal sources of financeFriends and family: - It is one of the internal sources of finance of available with thecompany in order to raise its finance. Company can borrow money from its friends or anyfamily members. It is one of the easiest methods to raise finance. Sale of fixed assets: - Company can also raise its finance by selling out the obsolescentassets. By selling unwanted assets company will be able to meet its both short term andlong term requirement of funds depending upon the size of the assets (Beaver, McNicholsand Rhie, 2005.External sources of financeIssue of shares and debenture: - In order to meet the long term requirement of financecompany can issue shares and debentures to the general public. By issuing shares anddebenture company can raise large amount of capital within a short period of time. Hire purchase: - in this method company can raise its finance by hiring the assets orproperty. In this method company can use the use the asset without purchasing it. Thismethod can be used by the company in order to meet its long term requirement of1
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finance. In this method company can use the assets or property by simple paying regularinstallments.Bank loan: - it is a method of raising funds for a short and long time period. In thismethod company borrows the funds from the bank by paying a high rate of interest. Atthe time of taking Loan Company also need to submit same collateral securities in orderto avail the loan.Credit card: - It is method of raising funds for short period of time. It is a card issued bythe bank. By using this card company can withdraw up to a certain amount of moneyfrom its bank account and can pay back to bank after. Overdraft: - It is a method of withdrawing the money from the bank account at the timewhen available balance goes below zero. By using this method company can be able tomeet its short term requirement of funds.Government grants: - It is a method in which government pays subsidy to a recipient forbusiness or personal purpose. Government grants are not required to pay back to thegovernment. Leasing: - it is a method of using the assets or property for some period of time withoutpurchasing it. This method is used for meeting long term requirement of the finance. Inthis method company pays some amount of money to the lessor annually as a rent forusing the property. 1.2 Implication of sources of financeSourcesLegal implicationFinanceimplicationInsolvencyimplicationIssue of dilutionBank loanCompany need tofollow a legalprocedure inorder to avail theloan. At the sametime companyalso need tosubmit theCompany will beable to meet itshuge amount ofcash one at thetime. But at thesame timecompany alsoneed to pay highBank can recoverits money back byselling thecollateral securityof the company inthe case ofbankruptcy.Ownership of theamountwithdraws by thebank changes.Company has fullright to use thefund raiser in anymanner. 2
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