logo

Report On PQR Ltd - Importance Of Finance, Cash Budget

   

Added on  2020-02-03

17 Pages4794 Words75 Views
MANAGING FINANCIALRESOURCES ANDDECISIONS

Table of ContentsINTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................3AC 1.1 Sources of finance..........................................................................................................3A.C. 1.2 Assessment of implications of financial sources..........................................................4AC 1.3 Evaluation of appropriate source of finance...................................................................5AC 2.1 Assessment of cost of sources of finance.......................................................................6AC 2.2 importance of financial planning....................................................................................7AC 2.3 Types of information needs for decision makers............................................................7AC.2.4 Impact of finance on financial statements......................................................................8AC 3.1 analysing cash budget and decision for business proposal.............................................8AC 3.2 unit cost calculations and pricing decisions...................................................................9AC 3.3 financial appraisal...........................................................................................................9TASK 2..........................................................................................................................................10A.C 4.1 Financial statements....................................................................................................10AC 4.2 Comparison of formats of financial statements............................................................12AC 4.3 Interpretation of financial ratios ..................................................................................12CONCLUSION..............................................................................................................................13REFERENCES..............................................................................................................................15

INTRODUCTIONIt is very important for a business to manage its financial resources and take suchdecisions that helps in the growth of business and helps it expand. The sustainability of businessis another important aspect. The financial decisions are very critical in nature and they are to betaken after thorough critical assessment of the sources of finance. It is the science of moneymanagement. Managing financial resources and taking relevant decisions is what an entrepreneurhas to do. In this report the company PQR LTD. Is a new venture and they want to raise capitalfrom the market. So this report includes all the aspects that the entrepreneur has to look beforeproposing a business proposal( Bierman, and midt 2012). They has to make a plan by keeping inmind the objective of profit maximisation. This report further includes the analysis of cashbudget and comparison of financial ratios with the importance of finance on financialstatements.TASK 1AC 1.1 Sources of financeAn entrepreneur wants to launch a business proposal for which he has £ 20000 forinvesting purpose as capital but he needs to borrow £ 280000 for making a bid of£300000. for this they have to raise funds from the capital market and theyare a newly set up company. It is true that business are more profitable ifthere is more risk involves(Brown Evans and Moser 2010). There arevarious sources of finance that they are considering for raising the capitalfor their proposal. These resources are available at various costs and theyhave to decide which will be beneficial for the. The sources available tothem could be external as well as internal .External sources available are : Debentures: these are the fund borrowed from the public andcontains a written acknowledgement. It comprises of terms andconditions regarding its interest payment and repayment of debt.Capitalmarket: the another way to raise capital from the market isby issuing its shares in the market or by issuing right shares to theexisting shareholders at a comparatively low prices than the market

price. They can raise it by either preference shares or by equityshares.Bank borrowings: the company can avail the option of borrowingfrom banks directly. They have to go under certain formalities and canget the loan required.Bank overdraft: It allows the company to withdraw funds even if thebalance of their account is zero. It will lead to higher rate of interest.Franchising: It helps the business to so the operations by lendingtheir name to other party and they run the business(Ezzamel Robsonand Stapleton 2012). It costs them less.Internal sources Retained Earnings: these are the earnings of the owners of thebusiness and these are not spend and are invested back in thebusiness for further investment purposes.A.C. 1.2 Assessment of implications of financial sources.The financial sources are available to the business but they all have various benefits andcertain limitations attached to them. The implications has a great impact on the working of thebusiness as they need to be selected very carefully. If the financial sources are not taken withproper evaluation they can hinder the operations of business. Here in this case scenario theentrepreneur wants to raise funds of £ 280000. the company has to critically evaluate the prosand cons of every source. As if he gets the fund from debentures or from bank borrowings he hasto go for various legal proceedings and fixed repayment period. Etc. there are some implicationsattached to it and these may be in the form of legal(Gervais Heaton and Odean 2011),financial, dilution of control and bankruptcy.SourcesLegalFinancialBankruptcyDilution ofcontrolShares The voting rightsare not availablewith them.The repayment isnot the concernedissue but they areobligatory to giveIn case ofbankruptcy thepreferenceshareholders areControl is notdiluted

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
Financial Resources Management Assignment
|20
|5280
|22

Managing Financial Resources and Decisions- PDF
|15
|4544
|100

Different Financial Sources- Report
|18
|4678
|50

Government Plan for Textile Business | Report
|16
|5132
|33

Financial Decision of ABC Ltd | Assignment
|14
|4368
|129

Managing Financial Resources - Sainsbury Assignment
|15
|4215
|23