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Source Of Finance in Sweet Menu Restaurant

   

Added on  2020-01-23

17 Pages5272 Words54 Views
MFRD

Table of ContentsINTRODUCTION ..........................................................................................................................1Task 1...............................................................................................................................................11.1 Different types of sources of finance....................................................................................11.2 Implication of sources of finance..........................................................................................21.3 Most appropriate sources of finance for Sweet Menu restaurant.........................................3Task 2...............................................................................................................................................42.1 Cost of different sources of finance......................................................................................42.2 Importance of financial planning to Sweet Menu restaurant...............................................52.3 Information needed by decision maker of Sweet Menu restaurant......................................62.4 Impact of sources of finance on financial statements...........................................................6Task 3 ..............................................................................................................................................73.1 Analyze of Blue Island restaurant cash budget.....................................................................73.2 Calculation of Unit cost and its relevant decisions related to pricing...................................83.3 Viability of the proposal by using investment techniques....................................................8Task 4...............................................................................................................................................94.1 Main financial statements....................................................................................................94.2 Financial statements need to be prepare by different types of organization......................104.3 Calculation of various ratios to find out the best company................................................11Conclusion.....................................................................................................................................13References......................................................................................................................................13

INTRODUCTION Finance is the branch of economics that is concerned with the allocation of resources ineach and every department and organization as well as with the management, acquisition andinvestment (Barnes and Pancost, 2010). Finance deals with all the matters that are related to themoney as well as market. In simply words, it could be said that finance includes the process ofproviding money for different projects. The following report is going to depict about the various sources of finance throughwhich an organization can raise its funds in order to meet its various needs. In addition to this,costs which need to be bearded by company through using various sources of finance are alsomentioned. In this report, some of the best sources of finance through which Sweet Menurestaurant can raise its finance in order to expand its business are also discussed. In this,importance of financial planning is also mentioned. Along with this, various types of informationneeded by the decision maker of company are also interpreted.In the following report, budget of Blue Island restaurant is analyzed in order to find outits current market position. In addition to this, two proposals are analyzed by using variousinvestment techniques in order to found out the best one. In this report, different types offinancial statements are also mentioned. At last, various ratios are calculated by taking intoconsideration the profit and loss account as well as balance sheet with an aim to compare thefinancial position of Sweet Menu restaurant and Blue Island restaurant. Task 11.1 Different types of sources of financeThere are different types of sources of finance through which company can raise itsfunds. Some sources through which company can raise the availability of finance are present inthe internal environment of it while some of them are present in the external environmental.Internal sources of financeSale of assetsThis is one of the best methods through which company can raise finance.By selling its old or obsolescent asset, company can raise the level of itsfunds. Simply, keeping the useless asset will increase the cost of company(Bhowmik and Saha, 2013). So, this method can be used by company inorder to meet its both the short term and long term requirements of funds.

Retained profitRetained profit is the part of profit which is kept by company as a reserve.By using this method, Sweet Menu restaurant will be able to raise its financein order to expand its business. Friends andfamiliesSweet Menu restaurant can also raise its finance by taking funds fromfriends or family members. Normally, company needs to pay less interest toits friends and family members.External sources of financeIssue of shares In order to meet its long term requirement of funds, company can raise itsfunds by issuing equity shares to the general public (Brigham and Daves,2012).Bank loanIt is the method through which company can borrow funds from the bank bypaying interest to them. This method can be used by company to meet itsshort-term and Long-term requirement of finance. Hire purchase This is the method through which company can use the asset or propertywithout purchasing it at that particular time.1.2 Implication of sources of financeSourcesLegal aspectsdilutionbankruptcySale of assetsAt the time of sellingassets, Sweet Menurestaurant is requiredto follow the legalprocedure (Brighamand Ehrhardt, 2013).Once, the legalprocedure for sellingassets is completedthen, at the particulartime, ownershipchanges.If situation ofbankruptcy arises, thencreditors can sell outthe assets of companyin order to recovertheir money.Retained profitNo legal procedure isneeds to be followedby company at thetime of using retainedprofit.Ownership does notchange. It remainswith the companyonly. If retained profit isavailable, then in thatcase, condition ofbankruptcy cannotarise.Friends and familyLegal procedureOwnership of theIn case of bankruptcy,2

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