...Abstract Before selecting the proper financing sources Knowing the costs of financing is a prerequisite. This assignment is regarding the financing issues of business. it is very necessary to have proper knowledge over the financing terms and methods to obtain requisite financing for the organization. One has to know the costs of financing as a prerequisite before selecting the proper financing sources. In this assignment, several advantages and disadvantages are discussed for different financing methods, cost of finance, financial planning and information and many other issues that help to gain a proper knowledge about the financing in organization. Different books and journals have been used to prepare the assignment. Contents Introduction 3 Requirement 1 3 Task 1.1 : Business needs finance and available sources of finance to a business 3 Equity financing 4 Debt Financing 4 Lease Financing 4 Task 1.2 : Accessing and comparing the implication of the different sources of finance 4 Implication of equity financing 4 Implication of debt financing 4 Implication of lease financing 5 Task 1.3: evaluation of the appropriate sources of finance for the above mention businesses. 5 M1: Critically evaluate each available sources of finance to that particular firm. Evaluation should include the pros and cons, and legal aspects of each source. (Merit M1). 5 Case study 1: An engineering firm 5 Equity financing for this firm 5 Debt financing 5 Lease financing...
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...THE LONDON COLLEGE UCK HND IN BUSINESS HNBS 102 MANAGING FINANCIAL RESOURCES AND DECISION TASK 1) General information about the company: - the full name of the company: the restaurant "Millennium"; - the legal form of the company: general partnership;( being in a partnership the company has more chance to be successful not only cause more capital is injecting to the business but also expertise or specialised skills and knowledge can be used to run the business smoothly. Important is that any kind of liabilities are divided between the partners.) - activities: industry: restaurants, retail and utilities; - company location: London Representation of entrepreneurs: Main characteristics: - the primary goal of the company is to operate and on the nature of the service, and to strive to satisfy any culinary needs and expectations on the part of clients (mainly residents of the city of London); - getting a significant position in the local catering market; - the entry of the company on the domestic market, and also in the future to strengthen their position nationally. Capital expenditures is creating future benefits for a business . Existing when a business invest money in to fixed assets or to add the value of an existing with a useful life extending. The long-term financing provides businesses with a more stable debt management than a short-term loan. Unlike particular short-term loans such as credit from...
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...One of foundation of financial planning analysis and decision making is the financial information. It’s needed to forecast the financial statements to relate and also assessitsbusiness’sgrossingcapability. Financial decision making investment and financing decision making is also required. The financial information of an enterprise is contained in the financial statements. Its usage of financial statement analysis in investment decision has been addressed by a series of authors. According to Gautam, U. S. (2005) The Financial Statement commonlydescribedby means of financial information which is related to the information to financial position of severalfirm in a case form. According to J.AOhison (1999) was defined as a written report that...
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... MANAGING FINANCIAL RESOURSES AND DECISIONS MAKING UNIT NUMBER: UNIT 2 QFC LEVEL: LEVEL 5 ASSESSMENT TASK 1 Eight (8) sources of finance available to a business and for each source; assess its implications (financial, legal, dilution of control and bankruptcy). Sources of finances can be divided into two namely, internal and external finance. Internal finance refers to the funds or financial resources that are within easy reach of business owner i.e. owner has control over resources. BBC (2013) Examples of Internal finance include personal finance and retained earnings/profit. Personal/Owner’s Finance comprises of financial resources such as personal savings, current or fixed assets used by the owner to raise funds for a business project. Most of the resources are either in cash or inconvertible to cash, with the exception of fixed assets such as equipment that can be difficult to convert for usage immediately. Houston Chronicle (2013) The advantage of using personal finance is that the business owner does not need to worry about paying interest rates or meeting deadlines for repayment. Also, as stated above the owner benefits from having autonomy to make decisions on how to run the business i.e. having full control of the business and its resources with no interest rate needed. Using personal finance can jeopardise the financial standing of...
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...Chapter 01 Financial Statements and Business Decisions True / False Questions 1. Accounting is a system that collects and processes financial information about an organization and reports that information to decision makers. True False 2. Assets on the balance sheet are recorded at market value or replacement cost. True False 3. In accounting and reporting for a business entity, the accounting and reporting for the business must be kept separate from other economic affairs of its owners. True False 4. The accounting period in which service revenue is recognized (i.e., revenue for services rendered) is generally the period in which the cash is collected. True False 5. Total assets are $70,000, total liabilities, $40,000 and contributed capital is $20,000; therefore, retained earnings are $15,000. True False 6. The payment of a cash dividend to stockholders increases stockholders' equity. True False 7. The accounting model for the balance sheet is: Assets + Liabilities = Stockholders' Equity. True False 8. A decision maker who wants to understand a company's financial statements must carefully read the notes to the financial statements because the notes provide useful supplemental information. True False 9. The financial statement that shows an entity's economic resources and its liabilities is the statement of cash flows. True False 10. Companies prepare...
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...RMIT FINAL EXAMINATION FACULTY OF BUSINESS SCHOOL OF ECONOMICS AND FINANCE BAFI-1100 FINANCIAL DECISION MAKING FIRST SEMESTER 2004 DATE: TIME: INSTRUCTIONS: 1. This is a CLOSED BOOK EXAMINATION 2. The examination represents 60% of the assessment in this subject. 3. All answers are to be made on the examination paper. 4. All questions should be attempted; there is no choice between questions 5. The use of a calculator is permitted, however laptop computers are not permitted to be brought into the examination room. 6. Students are advised to show all workings for questions involving calculations. Question 1. (a) Consider an investment that has cash flows of $500 at the end of the first year and $400 at the end of each of the next 4 years. If your opportunity cost is 10% per annum, how much is this investment worth to you? $1,607.11 (b) If you deposit $1,000 at the end of each year in a savings account earning 4% compounded annually, how much will you have in 10 years? Difficulty$12,006 (c) Delta Bolton needs to borrow $100,000 to finance a new business. She has been quoted an annual instalment loan carrying a 16% rate of interest, and a seven-year maturity. (i) How much will the annual instalments be? (ii) Of the 2nd instalment what will be the principal and interest components? (iii) How much will the outstanding debt be after the 2nd payment? (i) $24,761.27 ...
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...Introduction Making financial decisions involves balancing risks and profitability. Financial management is the operative way for a firm to organize and control financial resources of a firm in order to exploit profitability and ensure liquidity for a company. The three types of financial management decisions are capital budgeting, capital structure, and working capital management. It is important that the decisions being made in regards to financial management be concise, educated, and understandable. This paper addresses the three types of financial management decisions which guide companies in the direction for success, and will point out a few possible ethical problems company’s may face in their quest for that success. Part 1: Capital Budgeting Capital budgeting is the process of planning and managing a firm's long-term investments. “Evaluating the size, timing, and risk of future cash flows is the essence of capital budgeting” (Ross, Westerfield, Jordan, 2007, p. 5). The size, timing, and risk of future cash flows are the most important things to consider with capital budgeting. Formal methods that are used in capital budgeting include profitability index, valuation of future cash flows, and net present value. Profitability index is the present value of an investment’s future cash flows divided by its initial cost, also known as benefit-cost ratio. The index measures the value of each dollar invested in the company and is rationed from the present...
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...Recommendation 1. First, building strong relationships with government officials during peacetime will help establish a shared understanding of the need to work together effectively in a crisis. Second, crisis exercises can be used to practise a multi-actor response, agree the structures and processes required to coordinate activity, and develop stakeholder engagement skills. Whilst not necessarily overriding the political imperatives that can make a crisis response dysfunctional, these actions can help mitigate their impact. These events, however, were criticised – for their content rather than their form – by a number of stakeholders. Some critiqued the performance of the spokespeople. Others found fault in the absence of ‘new news’ being offered. These criticisms do not undermine the argument in favour of communicating early, quickly and regularly with stakeholders. But they do pose questions about precisely how an organisation should engage with them when the operational reality is unchanging or when the information available is limited. The use of third parties to manage expectations about the operational challenges being faced is one option. Another is to paint a picture of what is happening and what your organisation is doing so that key stakeholders can fully grasp the scale of the crisis and understand the endeavours of those on the frontline. This will not compensate for the lack of new information but can demonstrate that the organisation is trying to resolve the...
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...Cover Page Programme: BTEC Higher National Diploma (HND) in Business Unit Title and Number: Managing Financial Resources and Decisions (Unit 2) QFC Level: 4 Credit Value: 15 Credits Module Tutor: Yannick Fansi Student’s Name: Adeyinka Adedoyin Email: princessadeyinkaadedoyin@yahoo.com Student’s ID: 21834 Task 1: 1.1 Identify the Alternative Sources of finance that could be available to the business. (1.1, 1.2) Introduction In writing this assignment report, I will attempt to look into the different sources of finance that business can access or that available for starting a new business and I will also find out the implications of sources of finance and how it impacts on the business. It is often difficult to start a business without enough capital or cash, as all businesses require some form of finance throughout the life span of the business and for the operational cost of the day to day running of the business. Therefore without finance or raising enough capital the business can never materialised. It can therefore be argued that Finance is the life wire of a business as it plays a major role in starting a business. Finance can be used for various business projects including purchase of machinery, starting up a restaurant or for expanding existing business. When considering starting a business before raising the finance certain factors such as the size of the business, location of the business, the type of business and the target...
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...HCS/405 Health Care Financial Accounting Many hospitals in the United States are faced with many financial burdens. Hospitals have the challenge of making adjustments according to the economy, patient need, and quality of care. With the downfall of the economy, accounting issues, funding options, capital growth, and capital insufficiency, many hospitals are faced with making and planning financial decision in order to succeed. The Elijah Heart Center analysis simulation shows how to direct finance so that the Elijah Heart Center will have the ability to make good use of the organization funds. Creating a good financial decision for Elijah Heart Center involves analyzing the financial problems that Elijah Heart Center faces while deciding on which course of action should be taken. They must be able to identify and analyze any potential financial problems in order to make financial decisions in take another course of action. In this paper I will show how analysis simulation can help Elijah Heart Center make good use of funds to the best of the organizations ability. The Elijah Heart Center is a Cardiac Care Hospital that is dealing with a significant amount of loss in their accounting issues. The finance Department has reported that the revenue is increasing at a rapid rate with the rising rate of new patients, but the profits are falling. A financial consultant was hired to analyze the financial indicator and make recommendation and options on how to changes...
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...Health&Beauty Spa Services Business Plan 2014 Baby and Me Health-Beauty Spa services London Phone: 02033248641 Mobile:07849282187 e-mail:infobaby_me@yahoo.com 1 Table of Contents 1.Executive Summary 2.Sources of Finance 2.1 Sources of finance 2.2 Importance of Sources of finance 2.3 Capital required for business 2.4 Advantages and disadvantages of finance 2.5 Start-up 2.6 Cash flow 2.7 Sales Forecast 6 7 8 9 9 12 13 3. Return Investment 3.1 Investment Appraisal 3.2 Importance of Investment Appraisal 3.3 Advantages and Disadvantages 3.4 Calculation of Return on Investment 14 14 15 16 4.Financial Planning 4.1 Successful business 4.2 Importance of financial planning 4.3 Price 4.4 Fixed cost and Variable cost 4.5 Break even analysis 17 18 19 20 20 5.Financial Documents 5.1 Importance of financial documents 5.2 Profit and Loss account 5.3 Balance sheet 5.4 Profit and loss 5.4 Ratios 5.5 Conclusion Reference List 2 21 22 24 24 25 25 1. Executive Summary Baby and Me is a start-up business, planned to begin commerce In June 2014 as a sole trader enterprise owned by Oktavianti. The business leads up to be the first mother-to-be spa or salon in Bedford Square, London City. With services and products offered in an exclusive combination, I believe that the market share will grow quickly. Baby and Me supplies clients with a relaxing and recovering environment where all of their soul and body necessities...
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... | Factors Influencing on Financial Decision A Case of a company operating in Bangladesh Company Name: GPH ispat ltd. Submitted To Mr. Saleh Mohammed Mashehdul Islam Asst. Professor, SOB, AUST. Submitted By Roll # 12-52-02-012 Mahmud Hassan Principle of Finance (MBA 603) Section # B Ahsanullah University of Science and Technology Date of Submission : 3rd Jan, 2013 Chapter-1 Company Information GPH Ispat Limited is one of the leading integrated steel manufacturing companies in Bangladesh engaged in manufacturing of M. S. Billet & M. S. Rod. The Company was incorporated in Bangladesh on 17 May 2006 as a Private company limited by shares under the Companies Act 1994. The principal activities of the Company are manufacturing and trading of iron products and steel materials of all kinds or other metallic or allied materials and marketing thereof. The commercial production of the factory commenced on 21 August 2008. The company subsequently converted into a Public limited Company. Nature of Business The Company is engaged in the manufacturing process of producing M.S. Billet from Steel Scrap & M.S. Rod from M.S. Billet and sales/export of the products and other business related thereto. Financial Structure | Particulars | Capital ...
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...STUDENT NAME: tishanni corpus Clarke Task. 1:1.1 AC identify the sources of finance available to the business. 1. Government grants A grant of monetary help with the type of cash by the government to a qualified grantee with no desire that the trusts will be paid back (staff, 2015) 2. Leasing Is a system that permits people to claim and make utilisation of specific resources for medium to long haul financing periods consequently for beforehand set between time instalments (Ahali.com, 2015) 3. Friends and Relative They may offer advances without security or consent to a more drawn out reimbursement period (Business gateway, 2015) 4. Government program Chosen, state, and neighbourhood governments have programs expected to help the financing of new interests likewise, little associations. The assistance is much of the time in the kind of an organization certification of the repayment of a development from a customary advance master Anon, (2015). [Online] available at: 5. Life insurance Is a way of ensuring your family or your friendship ones in the event that you pass away (you tube, 2012). 6. Personal savings The primary spot business visionaries ought to search for start-up cash is in their own pockets. It is the slightest costly wellspring of stores accessible (13 sources of finance, 2015). 7. Bank loans A development made by a bank to be repaid with eagerness...
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...(SOX). SOX aims to reduce corporate governance concern and ultimately seek to increase the credibility of the financial reporting. Agoglia, Doupnik, and Tsakumis (2011) looked at two aspects related to the strength of the financial reporting: the influence of standard precision and the role of audit committee. This article had and referred to with particularly focus on the circumstance in US with regards to their rules-based approach of accounting. The more precision based accounting standards in US is suppose to dampen the executives' ability to manipulate financial results as well as increase comparability across all firms. However, all the accounting scandals brought to the attention of the public has began to question whether the rules-based standards are serving their purpose better than the other option: principle-based. Originally, the view was principle-based accounting standards offers more room for flexibility and interpretation in the view of the executives and therefore more prone to manipulation because it allows for differences in judgment. This also implies of reduced comparability across firms because of the variations permitted. However, research from the article suggests otherwise. Results from the experiment showed that under the precise standard, or the rules-based standards, preparers are more likely to make aggressive financial reporting decisions (Agoglia et al. 2011, p.10). Thus, on the opposite side, principle-based standards result in less aggressive...
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...Report To - Michel Chang From - Consultant of the Michel Chang Date - 15th May, 2013 Subject -Financial analysis of the investment proposals by investment appraisal tools and giving suggestions and recommendations. I am going report the suggestion of acceptable investment with NPV method to you as a consultant of Michel Chang. For Beer Chang, 0 (15000) × 1 = (15000) PVIFA (r=10%) n 1-10 3000 × 6.145 = 18435 10 1500 × 0.386 = 579 NPV = 4014 For EduCare, 0 (10,000) × 1 = (10000) 1 (500) × 0.909 = (454.5) 2 1500 ×0.826 = 1239 3 2500 × 0.751 = 1877.5 4 3500 × 0.683 = 2390.5 5 4500 × 0.621 = 2794.5 6 5500 × 0.564 = 3102 7 6000 × 0.513 = 3078 8 5400 × 0.467 = 2521.8 9 4400 × 0.424 = 1865.6 10 2000 × 0.386 = 772 9186.4 Due to NPV method, the final results show that both investments show positive answer and are possible. Comment and Suggestion I can tell Both Beer Chang Project and EduCare are acceptable based on these calculations with NPV method. But we cannot do both of them at the same time. We have to choose the most possible project. According to this calculation, EduCare can make more profit more than Beer Chang can get. This is the fact, why we have to choose EduCare Service. 1. Investment Appraisal Methods There are four types of Investment Appraisal methods. They are- 1. NPV (Net Present...
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