Report On Clariton Company - Sources Of Finance

Added on -2020-02-17

| 20 pages| 4263 words| 30 views

Trusted by 2+ million users,
1000+ happy students everyday

Showing pages 1 to 4 of 20 pages

Managing FinancialResources and Decisions
Table of ContentsIntroduction......................................................................................................................................3Task 1...............................................................................................................................................31.1 ................................................................................................................................................31.2.................................................................................................................................................41.3.................................................................................................................................................5Task 2...............................................................................................................................................62.1 ................................................................................................................................................62.2 ................................................................................................................................................62.3 ................................................................................................................................................72.4.................................................................................................................................................8Task 3...............................................................................................................................................83.1.................................................................................................................................................83.2.................................................................................................................................................93.3...............................................................................................................................................10Task 4.............................................................................................................................................144.1 Components of financial statements....................................................................................154.2...............................................................................................................................................164.3...............................................................................................................................................16Conclusion.....................................................................................................................................19References......................................................................................................................................19
IntroductionEvery organization need to manage the for carrying out its business function inappropriate manner. If company unable to manage all its finance then it can suffer from loss andunable to expand business. The present report it based on Clariton company which wasestablished by four brother. Now it want to expand its business in new geographical area. In thepresent study different sources of finance available for business are discussed. Apart from this,importance of financial planning also explained in detail.Task 11.1 According to the given scenario, Clariton Antiques Ltd was established by the four partners andit was started as an incorporated business. Further, the organization has developed goodreputation in the market by selling Antiques items. Now, it is looking forward for expandingbusiness in Birmingham by opening the new branch. For this purpose, it needs to raise fund fromdifferent sources so that it can expand its business without facing any problem regarding finance.There are two type of business in which different sources of finance available are discussedbelow: A.) Unincorporated business: Unincorporated businesses are not required to follow any laws andlegislation which are made by the government(Akhtar and Kröner-Herwig, 2015). Owner holdsthe responsibility of overall ownership and liability and there is no interference of government.There are different sources available to the unincorporated business for raising fund which is asfollows:Sale of fixed assets in this company sale its assets in market which are not longer in use.Along with this, it is an internal stock which not creates any burden on firm of paying anyinterest. It is a medium term sources of finance for Clariton antique limited. Retained profit: Retained profit is the owner’s own money which it can use anytime andanywhere. It is one of the best sources of finance because company do not pay the opportunitycost or interest to others. It is a medium and long term sources of finances which ClaritonCompany not need to repayed. Along with this, if business use it profit then it is not necessarythat it enough profit earned from new business.
Owner investment: Owner investment is the long term money which will be in the formof start up capital. This can be used up at the time of expanding the business. Along with this, itcan be in form of additional capital which owner can use for expanding a business. B.) Incorporated business: Incorporated businesses are those companies which cannot be startbefore completing any legal formalities. There are different types of rules and regulation whichthe company needs to follow which are made by regulatory bodies. There are some sources offinance which are available for incorporated business and that are as follows; Venture capital; There are many organizations which uses the external sources offinance. Venture capital provides finance to the organization for expanding its business. Alongwith this, it charges financing cost in term of stake from business. This may increase burden ofexpenses on the organization which will overall impact the profit of business. Hire purchase: It is also an external source of finance for the organization. In this, firmhire some property or assets from the external party on rents. In this, the business raise fund ininstalments and after paying the instalments amount, he becomes the owner of the property andassets. Bank loan: Firm can raise fund from bank by fulfilling some legal formalities. Along withthis, it also needs to pay loan amount to bank with the interest every monthKo, and Lee, 2015.)..Along with this, company can take loan for longer or shorter period of time from bank. 1.2There are different sources of finance which have different implication on Clariton antiquelimitedInternal and externalsourcesFinancial implicationLegal implicationDilution of controlRetained profitIt is the company’sown profit, so firm donot face any type offinancial implicationFor using own money,company do not needto fulfil any legalformality it can use itsown money anytimewithout anyonepermissionThere is dilution ofcontrol ownerBank loanIf company raise fundFor raising fund fromThere is no dilution of

Found this document preview useful?

You are reading a preview
Upload your documents to download
or
Become a Desklib member to get accesss

Premium

$45

Q&A Library Access

Chat support

12

Document Unlocks

4

Answer Unlocks

Students who viewed this