Sources of Financing and Cash Flow Management for Victory PLC

Victory PLC

Table of Contents.
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Part A...............................................................................................................................................3
Difference between Cash Flow and Profit :.................................................................................4
Working Capital ..........................................................................................................................4
Ways to improve the Cash Flow of Victory PLC........................................................................5
Part B...............................................................................................................................................6
Cash Budget of Bemus Ltd..........................................................................................................6
Analysis and Recommendation. ..................................................................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
The report will discuss various sources of financing and which is the most appropriate
source of finance for the Victory Plc company. It will address the difference between the cash
flow and profit of the company. Secondly, the report present the meaning of Working capital
which helps in determining the liquidity of the firm and what are the changes of working capital
that will affect the cash flow of company. Furthermore, there are recommendations that the
Victory PLC should take to improve the company's cash flow. Lastly, the report will represent a
cash budget of Bemus Ltd from month of March 2022 to June 2022 to ascertain the expected
cash expenses and receipts. It will also discuss the ways which firm can use to overcome the
liquidity of the company.
MAIN BODY.
Part A
Victory PLC has various sources of financing to operate the activities of business such as
loans, debentures, issue of shares, debentures, right issue, business advances, funding through
business assets, crowdfunding, etc.
Debentures is a debt instrument which can be short term or long term that many
companies used to borrow funds at a predetermined rate of interest. There is no collateral
security backed by the debentures, and they are issued for a term of 10 to 15 years. The
debenture holders who purchase the debentures receive interest on regular basis irrespective of
profit or loss in the company (Sen, and Mehta, 2018). On the maturity date, the debentures are
redeemed at par or premium and the company have to pay lump sum amount to the investors.
Debentures are riskier as delay in payment of interest or the debenture amount result in decrease
in credit worthiness of the company and the company need to pay the interest out of capital or
reserves In case of loss.
Right issue of shares means to offer the shares to the existing shareholders to buy the
additional shares of the company at a discounted price instead o f buying at a higher rate from
the secondary market. Right issue helps in reduction of underwriting commission costs of the
company (Mazumdar, 2019). It helps in company to expand its operations without taking debt
from banks or financial institutions and avoid interest payments at a fixed rate. Right issue
protects the shares of the investors from dilution during issues of new shares in the market. The
existing shareholders have na opportunity to increase the stake of the min the company.