Sources of Finance in Green Supplies Ltd : Report
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Added on 2020-01-07
Sources of Finance in Green Supplies Ltd : Report
Added on 2020-01-07
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Table of ContentsINTRODUCTION ..........................................................................................................................1TASK 1............................................................................................................................................1a. Identifying different internal and external sources of finance which are available to GreenSupplies ltd. ................................................................................................................................1b. Assessing the implications of different sources of finance.....................................................2c. Evaluating the sources which are most suitable to Green Supplies Ltd..................................3d. Analyzing the cost of the above identified source of finance.................................................3TASK 2............................................................................................................................................4a. Stating the importance of financial planning to Green supplies ltd........................................4b. Assessing the information need of different decision maker..................................................4c. Stating the impact of loan and equity investment upon the income statement and balancesheet of an organization..............................................................................................................5TASK 3............................................................................................................................................6a. Preparing cash budget for four months ..................................................................................6b. Stating the calculation of unit cost and pricing decision based upon it..................................7c. Assessing the viability of project by using investment appraisal techniques..........................8TASK 4............................................................................................................................................9a. Discussing the main financial statements of the firm .............................................................9b. Comparing the formats of financial statements of different type of business organization..11c. Interpreting financial statements by using ratio analysis .....................................................11CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................13
INTRODUCTION Finance refers to the money which is available to organization for spending in thebusiness activities and functions. It is that crucial element of the business which facilitateseffective implementation of the policies and strategies within the suitable time frame (Al-Bakri,Matar and Nour, 2014). Finance manager of an organization plays a vital role in framingcompetent financial strategies which ensures optimum utilization of monetary resources to thelarge extent. This project report is based upon Green supplies Ltd who offers fitness product totheir customers through online means. The present report will discuss the sources of financewhich the company can use to meet its financial need or requirement. Besides this, it will alsodevelop understanding about the concept of unit cost and profit margin. Further, this report willalso shed light on the investment appraisal techniques which helps corporation in assessing theviability of project. In addition to this, report will also examine financial health and performanceof Green supplies by taking i9nto consideration ratio analysis.TASK 1TASK 1a. Identifying different internal and external sources of finance which are available to GreenSupplies ltd. On the basis of cited case scenario Green Supplies ltd. wishes to expand its businessoperations and activity in market. In this condition, various types of internal and external sourcesof finance which are available to firm are enumerated below: Internal sources of finance: It refers to the sources which are accessible within thebusiness organization. Internal sources of finance which company can use to meet their financialneed are as follows:Retained profit: This is most effective source of finance which helps corporation inexpanding the business operations in an effective manner. Moreover, each and everyorganization retains part of profit with itself to meet the contingent situation which willarise in near future (Batta, Ganguly and Rosett, 2014). By accessing such fund Greensupplies ltd. is able to increases its business activity in market.1
Sale of non-profitable assets: Company can raise fund by selling the non-profitable assetswhich are does not use in productive purposes. Thus, by selling the assets firm can meettheir financial needs for expansion plan.External sources of finance: It includes the sources which are present outside anorganization. Green supplies ltd. can raise money by accessing the below mentioned sources offinance:Bank loan: Green Supplies Ltd. can fulfill its financial requirements by approaching bankfor loan on the basis of collateral security. Therefore, by offering security to financialinstitution company can get financial assistance and there be able expand its business.Issuance of equity shares: Organization can also generate fund by issuing equity shares tothe general public at large (Baum and Crosby, 2014. It is the most effective and cheapersource of finance through which Green Supplies ltd.Factoring: By selling the receivables to third party green supplies is able to get moneybefore the due date. It is also the best source which offers opportunity to Green suppliesto receive money whenever it wants and thereby execute their business strategies andpolicies.b. Assessing the implications of different sources of financeInternal and external sources have different implications in terms of legal, financial andbankruptcy which affect decision making aspect of Green supplies ltd. Implication of differentsources of finance are enumerated below:Sources of financeLegal implicationsFinancialimplicationsDilution of control orBankruptcyInternal sources of financeRetained profitAs per the rule andregulations eachorganization require tokept the fixedpercentage of profitwith itself to meet thefuture contingentsituation or liability.By using retainedprofit Green suppliedLtd. can meet itscurrent financial needsbut in future it will notable to face futurecontingent situation(Brown and Petersen,When company issuesequity share thenshareholders alsoinfluence thepercentage of profitwith they needs tokeep with it.2
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