Sources of Finance to Clariton Ltd for Expansion | Report

MFRD

Table of Contents
INTRODUCTION......................................................................................................................3
TASK 1......................................................................................................................................3
1.1 Identifying the sources of finance for incorporated and unincorporated business...........3
1.2 Assessing the impact of different impact source of finance............................................4
1.3 Evaluating the impact of suitable source of finance for business....................................6
TASK 2......................................................................................................................................6
2.1 Assessing the cost of different sources of finance...........................................................6
2.2 Defining the significance of financial planning...............................................................7
2.3 Identifying the information needs of different stakeholders............................................7
2.4 Analyzing the impact of different sources of finance......................................................8
TASK 3......................................................................................................................................8
3.1 Preparing cash budget and take suitable decision............................................................8
3.2 Calculating unit cost for making pricing decisions........................................................10
3.3 Assessing the viability of project by using investment appraisal techniques................11
TASK 4....................................................................................................................................13
4.1 Analyzing the key components of financial statements.................................................13
4.2 Comparing the financial statement formats of different type of business.....................15
4.3 Interpreting the financial statements of Clariton Ltd through ratio analysis.................16
CONCLUSION........................................................................................................................18
REFERENCES.........................................................................................................................19

INTRODUCTION
Decision making in relation to the management of financial resources are highly
crucial which is highly concerned with the achievement of organizational goals. In this,
manager pays a vital role in making contribution in the attainment of objectives by ensuring
effective management of financial resources. Moreover, manager primarily makes assessment
of monetary requirements and thereby frames strategies. Further, company is also required to
make selection of suitable proposal by evaluating each and every possible alternative. For this
project report, Clariton Ltd has been selected that offers highly antique products to the
customers. In UK demand for unique or innovative products are increased significantly.
Hence, present report will describe the sources of finance that are available to Clariton Ltd
for expansion. Besides this, it will also describe the manner in which financial plan helps in
making optimum use of financial resources. Further, it will also shed light on the manner in
which investment appraisal techniques help in making selection of suitable project. The
present report will also help in assessing the financial health and performance of Cariton Ltd.
TASK 1
1.1 Identifying the sources of finance for incorporated and unincorporated business
Incorporated business
 Venture capitalists: It is the main external sources of finance which offers financial
and advisory services to the customers. In the present times, venture capitalists firm
provides fund to emerging business units and thereby makes contribution in the
growth of firm who have potential (Venture capitalists, 2017). In this regard, by
taking fund from venture capitalists Clariton Ltd can execute its business plan more
effectually.
 Long-term loan: Bank is the major sources of finance which provide financial
assistance to the business unit at suitable interest rate. Hence, by taking loan from
financial institution on the basis of collateral security company can generate finance.
 European Union or government grant: Now, UK government provides high level of
monetary support to the business units which are highly growing. In this, by
generating fund from European Union Clariton Ltd can implement its business ideas
in the best possible way.

Unincorporated business
 Sales of assets: In the business unit, by selling unused assets such as land & building,
plant & machinery etc Clariton Ltd can enhance fund. Moreover, there are several
assets which are not used by firm in other productive activities (Frydman and
Camerer, 2016). In this way, through the means of selling of assets company can raise
finance.
 Short-term loan: By taking loan from co-operatives and other banking institution for
short term such as less than 1 year Clariton Ltd can raise finance and thereby would
become able to meet its monetary requirements.
 Profit margin: In the dynamic business environment, with the motive to meet
contingent situation company makes focus on retaining profit margin rather than
spending. Hence, by making use of such gross margin Clariton Ltd can execute its
business plan.
1.2 Assessing the impact of different impact source of finance
Sources Legal Financial Dilution of
control
Bankruptcy
Internal sources of finance
Sales of assets After selling,
business unit
does not have
right in relation
to making use of
assets. However,
after selling
such asset
Clariton can
take it on lease
according to the
requirements.
For attracting
large number of
investors or
potential buyers
business unit
places
advertisement
on newspaper,
social media etc.
Hence,
advertisement
and registry
expenses impose
cost in front of
the firm
No No