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Role of Managers in the Business Organisation

   

Added on  2020-02-03

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Table of ContentsINTRODUCTION ..........................................................................................................................4TASK 1 ...........................................................................................................................................41.1 Assessing the sources of finance which are available to the business organization .......41.2 Identifying the implications of each financial source to the business .............................51.3 Evaluating the suitability of selected sources of finance .................................................6TASK 2 ...........................................................................................................................................7a. Calculating the cost of ordinary share capital ....................................................................7b. Calculating the cost of preference share capital ................................................................7c. Finding the cost of debentures ...........................................................................................8d. Computing weighted average cost of capital .....................................................................82.2 Presenting the importance of financial planning ............................................................92.3 Assessing the information needs of Directors, Senior and Junior managers ................102.4 Analyzing the impact of financial sources of annual statements...................................10TASK 3..........................................................................................................................................113.1.........................................................................................................................................11i) Preparing Production Budget in units and in monetary terms..........................................11ii) Producing the Budgeted Profit and Loss Account for the following year. ....................12iii) Calculating the level of sales required to produce the required level of profits.............133.2.........................................................................................................................................13i. Calculating the fixed overhead absorption rate per direct labor hour...............................13

ii) Computing the fixed overhead cost per unit for each product .......................................14iii) Calculate the budgeted production cost per unit for each product.................................14iv) Calculating unit cost by using mark-up method ..........................................................143.3.........................................................................................................................................15TASK 4..........................................................................................................................................174.1 Stating the information which is provided by the financial statements of businessorganization .........................................................................................................................174.2 Comparing the financial statement format of different types of business organization 184.3 Analyzing the financial performance of Wordsworth Plc through the means of ratioanalysis ................................................................................................................................18CONCLUSION .............................................................................................................................19REFERENCES .............................................................................................................................21

INTRODUCTION In the business organization, manager plays a vital role in making effectualadministration of financial resources. Moreover, finance is one of the essential elements whichare needed by the firm to implement plan. Thus, for the attainment of organizational goalseffective allocation and usage of funds are highly required. This aspect shows that in the absenceof having enough resources highly competent or sound plan of the business organization has noworth. By considering this, it can be stated that effective financial management is key of successwhich in turn helps company in meeting the objectives. The present report is based on differentcase situations which will provide deeper insight about varied financial sources and theirimplications. Further, report will highlight the importance of financial planning and othermonetary tools and techniques. It will also depict the extent to which financial position andperformance of Wordsworth Plc was good during the period of 2015 and 2016. TASK 1 1.1 Assessing the sources of finance which are available to the business organization Finance is the effective process and finance management plays a vital role to achieve thegrand success in the business as well. There are several sources of finance such as equity, debt,debentures, retained earnings and team loans, working capital loans, letter of credit, euro issue,venture funding or more. These sources are mainly depend on the time period and the ownersand stakeholders and shareholders and control and the other sources of generation and thesefactors has the great impact on the growth of the organization as well(Tang, Tao and Bekedam,2012). Sources of finance are the most major explored area for all the entrepreneurs to start andset up new business and manage the finance as well. It is very toughest part of all efforts andbusiness and it is very major part to manage the finance for finance manager. Choosing the rightsource and making the right strategy is more challenging for finance manger and has theeffective impact on the growth of the organization as well. On the basis of time period sourcesare mainly classified in terms of long term, short term and for ownership it is more divided in theform of owned capital and borrowed capital as well. Mainly the internal and external sources are

the two sources of capital and all these sources of capital more applicable for different types ofrequirements . Long term finance sources can be any in the form likeshare capital or equity sharepreference capital or preference sharebonds and debenturesterm loans venture funding international financing like Europe issue, Foreign currency loans, ADR, GDR etc.Short term finance sources includes finances like trade credit, creditors, payable, factoringservices, bill discounting etc.In the ownership financing resources it is majorly based on the sharing the cost and control overthe capital as well. Own capital is sources from mainly like equity capital, preference capital,retrained earnings and convertible debentures or more. Borrowed capital includes the followingsources like financial institutions, commercial banks or more(Coleman, 2007).1.2 Identifying the implications of each financial source to the business There are various types of implication which affect the financial sources in the form ofbalance sheet management, cash flow management, or more and affect the growth of thebusiness as well. A entrepreneur start a small business and start up so there is very effective roleof finance management in the form of cash management, account management and company'sprofit and gain and quality or production management as well(Benedict and Elliott, 2008). Asmall business require a effective finance management for their business and has the impact onthe growth of the organization. Sources of the internal finance for the Wordsworth Plc which aregiven below:Personal savings : Mainly Wordsworth Plc only depend on the saving sources as afinance sources. Personal savings of the organization and saving of each individual whobelongs to the management of that organization, is directly affect the growth of theorganization and development as well. Retained profit: This is very important for any organization and retained the profit in anyof the way like reinvest the cash in the particular business as well. It could includes thenew technology, marketing and advertising process, and software system as well.External finance sources

Loans: Loan is very important factor that affect the organization growth and thedevelopment process as well. It includes the fixed and variable interest secured againstthe asset being invested in and because of that legal shared interest in the investment. Ifthe business is fail so the loan process is very effective to reset the business at verystarting point and set the business in current market trend .Factoring: This process is include total outsourcing of the company and arrangementwith an external organization as well. There are also some of fees involves to manage theworkforce and accounts and it includes credit management, administration charges,interest and current protection charges(Cox and Fardon, 2003).1.3 Evaluating the suitability of selected sources of finance In the evaluation of the selected sources of the finance this is mainly includes thefinancial performance and financial position as well. This process is majorly includes theeffectiveness of finance management and processing. Suitability of financing method includesthe following:Financial performance and position: Performance and position are very important forany of the organization and also company needs to be taken out into the accounts as well.Recent performance and position of the organization may has the great impact in thecompetitive world. It is well suited for the finance management to achieve the successand target goals of the particular organization.Financial performance: By evaluating the selected source of finance it mainly includesthe key areas like growth in form of turn over, net profit of the company, growth ofoperating profit and growth and profit after and before the tax services applied.Suitability of financing alternatives1.Availability: The availability in the finance management is very important tool to achievethe success in the organization. A small and medium size company always focusing onthe funding and raising the equity end. If the organization require more equity in theirfirm so that they must be able to suggest the potential sources like venture capitalist andalso able to aware the drawbacks of that type of sources.2.Maturity: Matching is very important and effective tool for any small and bigorganization. Hence, short term business includes the short term finance management andlong term business need long term finance management accordingly.

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