Strategic Financial Management: Sources of Finance, Ratio Analysis, Investment Decisions, and Global Environment Strategies

STRATEGIC FINANCIAL
MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
PART 1............................................................................................................................................3
1. Sources of finance available to Syngenta and associated risks...............................................3
2. Using ratios to analyse the performance of Syngenta.............................................................4
Recommendations on how new investment will improve the current financial performance of
Syngenta......................................................................................................................................6
3. Analysis of potential investment decisions and strategies......................................................6
4. Global environment decisions and strategies affecting Syngenta...........................................8
PART B..........................................................................................................................................10
TASK 1..........................................................................................................................................10
Nature and type of costs Syngenta and its impact on the company's financial position...........10
Appropriate costing techniques.................................................................................................11
Role of accounting to support decision making........................................................................11
Risk involve in financial decision making................................................................................13
Budgetary techniques................................................................................................................14
Investment evaluation techniques.............................................................................................14
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Financial management is defined as managing the financial resources associated with the
business venture and also to channelise the use of the respective financial resources in process to
maximise the business objectives. This report will talk about the different sources of finance
which company could use to mange its financial requirement in business. Performance of the
business will be discussed with the use of ratio analysis technique. Potential investment decision
will be discussed in respect to the organisation. Global environment and its impact over the
company will also discuss in this project. Furthermore, this report will discuss nature and type of
cost company is utilising in the business. Various costing technique will also be a part of
discussion. All different budgetary technique will be discussed under this project. Investment
evaluation technique will also be a part of discussion in this report.
MAIN BODY
PART 1
1. Sources of finance available to Syngenta and associated risks
Sources of finance for a concern are many but majorly company chooses to use debt, equity,
retained earnings, debentures and term loans for financing its expansion and growth purpose.
Syngenta has a need of long term sources to finance its Grangemouth expansion project. The
need of funds for the investment is identified as £150 million. The various sources of finance that
Syngenta could have used and their associated risks are explained as follows:
Retained earnings: This source of finance is available with the business internally which has
been generated through earning profit from year to year by selling their products and services.
The source is considered as a primary source of funding investment proposals (Tretyak and et.al.,
2020). There are no costs to the company for utilizing this source for financing their investments.
It gets created out of the profit remains after distributing dividends to the shareholders. Risk
involved in using retained earnings as a source of finance is that it deprived the existing
shareholders of the company from enjoying the benefits resulting from the actual earnings which
creates dissatisfaction among them and accordingly, the market value of the company's share
gets adversely affected.
Debt capital: Debt financing can be availed through external sources which can be for both short
term and long term. Generally, banks, financial institutions and individual who subscribes for the

company's debentures to provide debt capital (Mazouni, 2018). Debt capital can be availed at any
stage of the business through issuing debt securities such as debentures, promissory notes and
corporate bonds. Companies issuing debt instruments are called as borrowers as they are getting
funds in the form of cash for accomplishing their respective objectives. By using this source for
funding, companies need to pay back the principal amount along with the interest amount paid
regularly. In this way, there is cost to the company in choosing this source of finance in terms of
fixed rate of interest that is needed to be paid regularly (Kumar, 2017). Risk involved in sourcing
funds through debt securities is that company is under obligation to make payments of interest
and principal on time failing which leads to the bankruptcy and operation seizure for the
company. Therefore, a financial risk is present in this source of finance.
Equity capital: With the issue of equity shares and preference shares huge amount of funds can
be obtained and in return ownership stake has been provided to those subscribing for shares.
There is no requirement of making regular payments to the shareholders in the form of interest as
they got dividend payments when the company desires or make profits (Levchaev and Khezazna,
2020). Also, the principal amount of capital obtained is not necessary to be repaid in the
condition where the company's assets are not sufficient for making payments and thus they are
paid in last. The bad side of this source of finance is that whatever profit has been earned by the
company needs to be shared with the shareholders of the company. Risk involved in equity
financing is that there is an ownership loss when businesses use too much equity capital. The
control of the company also goes into the hands of shareholder and the investor owning huge
stake in the company can influence its operations.
2. Using ratios to analyse the performance of Syngenta
Ratio analysis helps in analysing company's performance by using difference parameters such as
sales, profit, assets, etc. (Gogol and Kolotok, 2019). Here various ratios such as profitability and
liquidity ratios will be calculated for Syngenta to determine its financial performance and various
recommendations will be made on how with the help of new investment company will be able to
improve its current financial performance.
Ratios formula 2019 2020
Gross profit margin Gross profit / Sales *
100
6199 / 13582 × 100
= 45.64%
6174 / 14287 × 100
= 43.21%