Sources of Finance for the Business- Research Report

Added on -2020-02-14

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Managing FinancialResources and Decisions
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................11.1...........................................................................................................................................11.2...........................................................................................................................................21.3...........................................................................................................................................3TASK 2............................................................................................................................................42.1...........................................................................................................................................42.2...........................................................................................................................................42.3...........................................................................................................................................52.4...........................................................................................................................................6TASK 3............................................................................................................................................63.1...........................................................................................................................................63.2...........................................................................................................................................83.3...........................................................................................................................................9TASK 4..........................................................................................................................................114.1.........................................................................................................................................114.2.........................................................................................................................................124.3.........................................................................................................................................13CONCLUSION .............................................................................................................................14Index of TablesTable 1: Operating budget...............................................................................................................7Table 2: Calculation of unit cost.....................................................................................................8Table 3: Calculation of NPV..........................................................................................................10Table 4: Calculation of NPV..........................................................................................................10Table 5: Calculation of IRR...........................................................................................................11Table 6: Calculation of ratios of TESCO.......................................................................................13
INTRODUCTIONFinance is the major source or elements of an organization that aids in carrying out variousactivities of a business organization. It is the backbone of every enterprise on which the businessfunction effectively. The present research report is designed to provide readers with a deepunderstanding of varied sources of finance and their availability for the business. The aim of thisstudy is to create an insight on how and where to access distinct sources of finance and theability to utilize financial information for decision making. Furthermore, the report presentsadvantages and disadvantages of various sources such as retained earnings, share capital, bankloan and hire purchase and their suitability as well (Ojha, Gianiodis and Manuj, 2013). Likewise,various ratios of Tesco limited has also been highlighted in this report that becomes the basis formaking various decisions by several users of it. Moreover, a budget has also been prepared andthe calculation of unit cost to provide readers and insight on the usefulness of it and howdecisions are taken based these data's. TASK 11.1Funds are required for various purposes and an entrepreneur needs funds to start-up anew venture and carry on the operations of the same. In order to purchase various equipments,leasing land, buying stocks, an owner opts for several sources of finance through which it canavail money. In the present research report, the best sources of funds for the entrepreneur havebeen highlighted below:Long term sources: An entrepreneur may require high amount of funds to invest inpurchasing equipments, land and machinery. They can refund the amount of money in the either5, 10, 20 or more years according to the terms and conditions of the respective source. Some ofthem have been enlisted below:Share Capital: This is a method used to raise funds by selling the companies share to theexternal members. The shareholders invest their money the respective company and forthis purpose they receive dividends at the end of the financial period (Nga and Yield,2013). Retained earnings: This is the amount of funds that is earned by an organization in theprevious financial year. For instance, the entrepreneur has invested £100000 in purchase1

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