(solved) Assignment Managing Financial resources and decisions

MFRD

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Identifying the sources of finance which are available to a business...............................1
1.2 Assessing the implications of the different sources of finance........................................2
1.3 Evaluating the most appropriate sources of finance for the organization........................4
TASK 2............................................................................................................................................5
2.1 Analyzing the cost of different sources of finance...........................................................5
2.2 Stating the importance of financial planning for Sweet Menu Restaurant.......................5
2.3 Assessment of the information needs of different decision makers.................................6
2.4 Stating the impact of sources of finance upon financial statements of an organization...7
TASK 3............................................................................................................................................8
3.1 Analysis of budget and decisions based upon it...............................................................8
3.2 Calculation of unit cost and making suitable pricing decisions.......................................8
3.3 Assessing the viability of two projects by undertaking investment appraisal techniques9
TASK 4..........................................................................................................................................12
4.1 Discussing the main financial statements.......................................................................12
4.2 Comparing the formats of financial statements of different types of business..............13
4.3 Interpreting the financial statements of Sweet Menu and Blue Island restaurant by using
ratio analysis.........................................................................................................................14
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
Financial resources may be defined as money which is available in business organization
for spending in the most profitable investments. It refers to input for the production process and
thereby helps in fulfilling the organizational goals and objectives (Managing Financial
Resources and Decisions, 2013). In this, finance manager of an organization plays a vital role in
making optimum utilization of resources to the large extent by framing sound strategies and
policies. This project report is based upon Sweet Menu Restaurant Ltd which is the most
reputable restaurant and situated in Gants Hill in East London. The restaurant is planning to open
its new branches in Central London and Croydon. This report will discuss the sources which are
available to restaurant along with their implications. It also depicts the importance of financial
planning for restaurant in relation to their expansion project. Besides this, it also develops
understanding about the investment appraisal techniques which help in making suitable
investment decisions.
TASK 1
1.1 Identifying the sources of finance which are available to a business
There are several internal and external sources of finance that are available for Sweet
Menu Restaurant. It includes retained earnings, issuance of shares and debenture, bank loan,
leasing as well as friends and family members. By undertaking such sources of finance, company
is able to meet their financial needs and expand their business operations as well as functions.
Sources of finance which are available for Sweet Menu Restaurant are enumerated below:
Sources of finance Features
Internal sources of finance
Friends and family members By approaching friends and family members,
Sweet Menu Restaurant can meet its financial
needs or requirements. For this, company
requires to give shareholding to their loved one
in an organization.
Retained earnings Each and every organization keeps the fixed
percentage of profit with itself for
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contingencies which will arise in near future
(Dada, Azim and Ullah, 2014). It is the cost
effective source of finance which helps
organization in meeting financial needs for the
expansion project.
External sources of finance
Issuance of shares and debentures It is another important source of finance which
helps company in meeting their financial
needs. Company can easily raise finance by
issuing equity shares and debenture to their
existing and potential investors. Through this,
company is able to open new restaurants in
Central London and Croydon without facing
financial crisis.
Bank loan Company can meet its financial requirement by
approaching bank for loan on the basis of
financial security. It provides tax benefit to the
organization and thereby, they can increase the
profitability aspects (Copeland and Dolgoff,
2011).
Leasing Leasing is the best external source of finance
which provides opportunity to make the use of
asset for the productive purposes without
making huge investment on it. Leasing acts as
safeguard for company in relation to the
obsoletation of technology.
1.2 Assessing the implications of the different sources of finance
Different source of finance places different impact upon Sweet Menu Restaurant in the
following manner:
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