Managing Financial Resources and Decision Assignment : Analysis

MANAGING FINANCIAL RESOURCES AND
DECISION

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
INVESTMENT APPRAISAL 1......................................................................................................1
1.1 & 2.1 Identifying different sources of finance and analysis of their cost.........................1
1.2 Implications of different sources of finance.....................................................................2
INVESTMENT APPRAISAL 2......................................................................................................3
2.2 & 2.3 Importance of financial planning and information needs of different decision
makers.....................................................................................................................................3
1.3 Appropriateness of source of finance...............................................................................4
2.4 Impact of finance on financial statements........................................................................6
4.1 & 4.2 Main financial statements and their appropriateness for different business
organizations...........................................................................................................................6
4.3 Calculation of ratios of Apple Ltd....................................................................................7
3.1 & 3.2 Analysis of budget and calculation of unit cost.....................................................9
3.3 Project evaluation techniques.........................................................................................10
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INDEX OF TABLES
Table 1: Comparison of economic performance of world leading economies................................4
Table 2: Ratio analysis of Apple Ltd...............................................................................................7
Table 3: Cash budget.......................................................................................................................9
Table 4: Calculation of per unit cost..............................................................................................10
Table 5: Calculation of ARR.........................................................................................................10
Table 6: Calculation of NPV.........................................................................................................11
Table 7: Calculation of payback period.........................................................................................12
Table 8: Calculation of IRR...........................................................................................................12
ILLUSTRATION INDEX
Illustration 1: China, USA and UK PMI.........................................................................................5
Illustration 2: China, USA and UK GDP.........................................................................................5

INTRODUCTION
This report is prepared to create a broad understanding about the source of finance among
readers. In relation to this, implications of different sources of finance are also described in
detail. In order to comprehend the suitability of source of finance, economic indicators are also
used and their data is interpreted. Apart from this, ratio analysis is also done and their results are
interpreted to understand the economic condition of Apple Ltd. At the end of report, project
evaluation techniques are applied and viability of project is determined on the behalf of results of
various techniques of project evaluation.
INVESTMENT APPRAISAL 1
1.1 & 2.1 Identifying different sources of finance and analysis of their cost
In today’s era, raising finance is a basic problem for every company. Along with this,
selection of specific source of finance is a complicated task. Mainly, all sources of finance falls
in two categories namely equity and debt. This source of finance and their sub categories are
described as below:
Equity:
1. IPO or FPO- Firm can raise the capital by issuing shares through IPO or FPO. It is a
common source of finance for large sized firms. However, this source of finance has
some merits and demerits. Therefore, firms must cautiously use this source of finance
(Du and Girma, 2012).
2. Private equity- In order to raise the capital through IPO, firms needs to fulfil all
eligibility criteria of listing stock market indices. Firm uses this source of finance when
their fundamentals are strong but they are not eligible to raise the capital. Under this
mode of finance, private equity firm provides capital to the firm by purchasing stock in
the organization that approaches PE firm for equity.
Debt:
1. Long term and short term debt- Under this mode of finance, firms take a loan for long
and short term from banks and NBFC'S. In return, firm has to give debt at fixed or
floating interest rate.
1