...Managing Financial Resources and Decisions Mark Anthony R. Casanova Kiyoung Jung (Justin) Section A 2.2 Explain the importance of financial planning The importance of financial planning for the business is best seen when a company is faced with a situation concerning outstanding debts and rising cost. So to be able to be prepared for the situation in advance, the company should have prepared a proper financial plan beforehand. The success of a business is greatly determined by the financial plans they have laid out and how well it is followed to support their business plan. Wealth maximization is the main goal of a financial plan. Wealth maximization is simply explained as maximization of the shareholder. The strategy of wealth maximization usually includes creating financial investment decisions that bring into any risk which is bigger than expected benefits. The objective of wealth maximization is commonly accepted goal of a corporation. As stated by this objective, the manager should be the one who makes decisions that maximize the wealth of shareholders. In other words, this is also to make the shareholder’s investment profitable. Shareholders’ wealth will be maximized when a decision made by manager raises the NPV (net present value). The NPV means the difference between present value of the benefits and present value of the costs. A decision which has a positive net present value will create wealth for shareholders and a decision that has a negative net present...
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...fi·nanc·ing [fi-nan-sing, fahy-nan-] noun 1. the act of obtaining or furnishing money or capital for a purchase or enterprise. 2. the funds so obtained. Advertising The activity or profession of producing advertisements for commercial products or services. | | Marketing The action or business of promoting and selling products or services.Distributing 1. Give shares of (something); deal out. 2. Supply (goods) to stores and other businesses that sell to consumers.Selling 1. Give or hand over (something) in exchange for money: "they had sold the car". 2. Have a stock of (something) available for sale: "the store sells electrical goods".AccountingThe action or process of keeping financial accountsPurchasing 1. Acquire (something) by paying for it; buy. 2. Obtain with effort or suffering: "the victory was purchased by the death of Rhiwallon".Manufacturing 1. Make (something) on a large scale using machinery: "they manufacture paint"; "a manufacturing company". 2. (of a living thing) Produce (a substance) naturally.Planning 1. The process of making plans for something. 2. The control of urban development by a local government authority, from which a license must be obtained to build a new property or...Teaching Ideas or principles taught by an authority: "the teachings of the Koran".Charting 1. Make a map of (an area). 2. Plot (a course) on a chart: "taking a route he had not charted".Maintaining 1. Cause or enable (a condition or state...
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...Benefits For Gildan Let’s take a look at the benefit first. The competitive advantage of Gildan in the activewear industry is that the company is able to provide customer high-quality T-shirts and fleece garments with a very low price. After expanding to Honduras, where labor was cheap, the manufacturing cost of Gildan had a significant decrease. So the company was able to hire more workers to involve in manufacturing. In 2001, Gildan produced 168 million T-shirt. The inexpensive manufacturing cost and high productivity allowed Gildan to maintain their competitive advantage and set up very low selling price to their customer so that they can increase sales. The annual sale of Gildan in 1998 was $200 million. And 3 years later, in 2001, their sale rose to $500 million. Also the high quality and low cost garments enable Gildan to earn more market share. It surpassed its competitor, Fruit of the loom, to become the leader of the industry in 2001. For Honduras The globalization of Gildan also benefits Honduras. The foreign investment is helpful for Honduras GDP growth. The company also created a lot of job opportunities for local people. Starting in 2001, Gildan built massive textile facilities and employed more than 5,000 people as their sewers. In addition, Gildan transferred lots of skills and technology to Honduras. It provided training for workers. And all of these above are beneficial for Honduras development. For the Fund For The Solidarity Fund, the benefit of Gildan’s...
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...Phase 1 Individual Project The difference between managerial accountant and a financial accountant are vastly different. Investopedia defines managerial accounting as the process of identifying, measuring, analyzing, interpreting, and communicating information for the pursuit of an organization's goals. The information that a managerial account has is primarily targeted to assist managers inside the organization to make better decisions for the company ("Financial accounting," ). On the other hand the financial accounting is greatly different in that it is a method of recording, summarizing and reporting the numerous amounts of dealings from an industry; as a result it makes available a precise representation of the business fiscal situation and performance. The most important objective of financial accounting is the planning of financial statements - including the balance sheet, income statement and cash flow statement that condenses the firm's functioning presentation over a specific period, and financial position at a precise point in time. These statements - which are normally prepared quarterly and annually, and in accordance with Generally Accepted Accounting Principles (GAAP) - are aimed at external parties including investors, creditors, regulators and tax authorities ("Financial accounting," ). The key difference between financial and managerial accounting is that financial accounting is aimed at providing information to parties outside the organization, whereas...
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...“The relationship between working capital management and profitability of listed companies in the Athens Stock Exchange” Dr Ioannis Lazaridis Professor University of Macedonia* Department of Accounting & Finance MSc Dimitrios Tryfonidis PhD Candidate University of Macedonia* Department of Accounting & Finance *156 N. Egnatia Str. 54006 Thessaloniki Greece Tel.: 0030 2310 891697 Fax: 0030 2310 891650 E-mail: lazarid@uom.gr Abstract In this paper we investigate the relationship of corporate profitability and working capital management. We used a sample of 131 companies listed in the Athens Stock Exchange (ASE) for the period of 2001-2004. The purpose of this paper is to establish a relationship that is statistical significant between profitability, the cash conversion cycle and its components for listed firms in the ASE. The results of our research showed that there is statistical significance between profitability, measured through gross operating profit, and the cash conversion cycle. Moreover managers can create profits for their companies by handling correctly the cash conversion cycle and keeping each different component (accounts receivables, accounts payables, inventory) to an optimum level. Introduction Capital structure and working capital management are two areas widely revisited by academia in order to postulate firms’ profitability. Working capital management have been approached in numerous ways. Other researchers studied the impact of...
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...Determinants of short-term debt financing Richard H. Fosberg William Paterson University ABSTRACT In this study, it is shown that both theories put forward to explain the amount of shortterm debt financing that a firm employs have validity. The matching principle correctly predicts that the amount of short-term debt financing that a firm uses is directly related to the quantity of the firm’s current assets. Additionally, other factors that have been shown to affect the levels of long-term debt financing that a firm employs are also shown to affect the amount of short-term debt financing that a firm uses. Specifically, the amount of firm short-term debt financing is shown to be inversely related to the amount of the firm’s non-debt tax shields, growth opportunities, product uniqueness and firm size. Additionally, short-term debt financing was found to be directly related to the quantity of tangible assets the firm owns. Keywords: Debt, Capital Structure, Matching Principle, Collateral, Financing Determinants of short-term, Page 1 111008 – Research in Business and Economics Journal INTRODUCTION The matching principle of finance is the standard theory used to explain the amount of short-term debt financing and other current liabilities that a firm has on its balance sheet. Briefly, the theory states that firms should finance their short-term assets with short-term liabilities (Guin (2011)). This implies that the amount of short-term debt financing that a firm uses depends on the...
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...PROJECT REPORT ON SMEs PROJECT FINANCING BY BANKS SUBMITTED TO: PROF. MAYANK PATEL AND PROF. RAVIRAJ GOHIL SUBMITTED BY: MRINKAL GARG 1011113076 2011-13 2012 ACKNOWLEDGEMENT This is to acknowledge all those without whom this project would not have been a reality. Firstly I would to convey my heartfelt thank to my Professors, Prof. Mayank Patel and Prof. Raviraj Gohil, who always help me by giving valuable suggestions and guidance for completion of this project. I am also very thankful to my father Mr. Vimal Garg who provide me a unique platform to fulfillment of this project and provide practical exposure to earn knowledge in the field of sanctioning procedure of bank loans and learn the problems faced by customers and bankers during the financing a project that could be done in a bank. I also want to extend my sincere thanks to “Agarwal & Co.” who’s immense support and dedicated their time toward it to sharing their knowledge in the field of finance and learn the day-to-day activities that are carried out in the CA firm. I would like to thanks to, Prof. BALA BHASKARAN (Director of Shanti Business School, Ahmadabad) who provides me this golden opportunity by giving this project. Table of Contents ACKNOWLEDGEMENT 2 EXECUTIVE SUMMARY: 4 Objective: 4 Brief Description of Project: 4 INTRODUCTION 6 Introduction of Project Financing 6 Introduction of Banking 8 SIGNIFICANCE OF THE STUDY 14 PROJECT OUTLINE FOR PROJECT FINANCE 15 ...
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...Debt Financing Ayivi Koutodjo Business 530 Abiola Fapetu Liberty University Debt financing decision is not a process of couple hours of meeting. It required thorough scrutiny and an effective brainstorming. Managers are, most of time, facing huge challenges in meeting the company’s cash flow target. The task on hand is to find solutions of the possible organization’s incoming shortage of cash, more precisely how to raise and maintain cash in the company six months from now until the next two years, when the company will lunch his lucrative product. Many possibilities will be analyzed and the best one will be presented to the board of directors. Debt financing is an on-going process that company uses to achieve their objectives. It is one of the chief financial officer (CFO) duties. The CFO has multitude of choices to choose from when I comes down to raise cash. He could decide to retain earnings, to sell bonds, to sell stocks, or to obtain a loan. The CFO has to choose the one that add value to the shareholders wealth. To be successful in this task the CFO must consider the current economy condition and the current organization’s standing and objectives. Furthermore, the CFO must remain trustworthy and must not...
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...FINANCING PROPOSALS Methods for financing business operations are contingent on what the majority shareholders want and in what direction they want to steer the company. With that being stated, a series of financing options have been prepared for The Board’s consideration. ISSUANCE OF BONDS OVER STOCK What factors would cause our corporate management to obtain cash by issuing bonds, instead of selling stock? The primary consideration involves the issue of ownership. Are the shareholders ready to dilute ownership of the company through the sale of equity, or do they want to maintain 100% control? Assuming the shareholders want to maintain control, the issuance of bonds is advantageous in that 100% ownership is maintained. The capital received is fairly immediate, with few, if any, encumbrances as to how it is allocated. In addition, the interest paid out to the bondholders is tax deductable, and the repayment schedule can be set up and incorporated into the annual budget. Lastly, the terms of the bonds issued; short, midterm, or long term is up to the shareholders; offering another layer of financial control. ISSUANCE OF STOCK OVER BONDS Situations where it would be wise for management to issue additional common stock, rather than bonds to meet long-term capital needs are again, dependent on the direction of the company, and the intentions of the shareholders. Assuming shareholders want to expand and are ready to welcome additional partners...
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...FOREWORD I am Sarah Afifah binti Abd Hamid was requested by Puan Rohani Abdul Ghani to conduct a study issue that related to finance sector. I choose “Bank Islam offers superbike financing “as for my individual assignment and presentation. Generally, I have to study and find out why Bank Islam choose to offer superbike financing and what is the reasons due to that. This main finding was that the assumption of increasing profit in sales is increased in this market segment by Bank Islam. Image 1: Example picture of superbike financing by Al-Rajhi Bank 1.0 INTRODUCTION Bank Islam, established in 1983, is Malaysia’s maiden Shariah-based institution. Since its inception, it has emerged as the symbol of Islamic banking in Malaysia and its vision to be “A Global Leader in Islamic Banking” illustrates the Bank’s status as the flag bearer of the country’s financial services industry (“the industry”). Bank Islam has been growing from strength to strength as evidenced by its financial performance and paid-up capital, which, in turn, was instrumental in making the growth of its assets. Throughout the year, Bank Islam has been embarking on a number of expansion programmes with its involvement in, among others, notable transaction in Sukuk and Corporate Mandates. Living up to its pioneering spirit, the Bank has continued to provide innovative and enhanced products and services which have resulted in a growing number of customers seeing Islamic banking as a true alternative to conventional...
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...625 1.1 Sources of Financing There are basically two types of financing; debt and equity financing. Equity financing means trading a share of ownership ofbusiness for a financial investment in the organization or company. Investment in the equity results in sharing of company’s profit and loss. Equity financing represents permanent investment in an organization and cannot be paid back at later stage. Equity financing is done by the investment throughpersonal savings, life insurance policies, home equity loans, friends and relatives, venture capital, angel investor, government grants, equity offerings, initial public offerings and warrants. Debt financing includes obtaining trusts from lenders with the stipulation of reimbursing the borrowed funds with addition ofinterest at a specified future time. For the leasers (those providing monetary requirementsto the business), the prize for giving the debt financing is the earning from interest on the amount lent to the borrowers. Debts financing are secured and unsecured. Secured form of debt financing includes collateral i.e. value of asset to satisfy the loan at time of default. Unsecured form of debt financing does not have any back up from asset or collateral. Some of the ways through which debt financing can be done are friends and relative, banks and other commercial lenders, commercial financing companies, government programs and bonds. 1.2 Implication of Sources of Financing Each type of money related source has a set...
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...SME Financing in the United Arab Emirates www.khalifafund.ae SME Financing in the United Arab Emirates Executive Summary 1. Introduction & Context 1.1 Background to the Study 1.2 Objectives of this Work 1.3 Consultations 1.4 Limitations 2.1 Definition of ‘SME’ 2.1.1 EU Definition of SME 2.1.2 World Bank Definition of SME 2.1.3 Criteria Used by Banks to Define SMEs 2.1.4 UAE Definitions of SME 2.2 Current overview of SME prevalence in Abu Dhabi/UAE 3.1 Scale of SME Finance in the UAE 3.2 Supply of Finance by Type 3.3 Sources of Finance 3.4 Stakeholder Mapping 3.5 SME Access to Finance Process 3.6 KPIs / metrics and baseline data 4.1 Key Findings – Supply Side 4.2 Key Findings – Demand Side 5.1 International Research Findings on Key Obstacles to Improving SME Access to Finance 5.2 Critical Success Factors to Improving Access to Finance for SMEs 6.1 Leading Practice SME Ecosystems: Singapore and the United Kingdom 6.2 Key Lessons Learned for the UAE 6.3 Detailed Review of Leading Practice and Regional Comparator Ecosystems 6.3.1 Singapore 6.3.2 United Kingdom 6.3.3 Jordan 6.3.4 Qatar 7.1 The core issues 7.2 n overview of the opportunities for KF and other (public and private) entities to A support SME access to finance in Abu Dhabi / UAE 7.2.1 Legal and Regulatory Transparency 7.2.2 Access to information 7.2.3 Capacity Building 7.2.4 Diversify SME Financing Mechanisms 7.3 Criteria 4 5 5 6 6 6 7 7 7 8 8 8 9...
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...Financial Definition of Project Financing Meaning of Project Financing ✓ This is a form of asset-based financing in which a firm finances a discrete set of assets on a stand-alone basis. ✓ A mode of financing the project where the repayment is based on the cash flows after the completion of the project and the fixed assets involved in the project are kept as collateral. ✓ It is a way to raise nonrecourse financing for a specific project characterized by the following: (1) The project is a separate legal entity and relies heavily on debt financing (2) The debt is contractually linked to the cash flow generated by the project. Five Basic Steps to Finance Step 1: Identify the Project If a project is being started from scratch with no leads, while there are resources it can query to help identify potential projects. Step 2: Determine the Feasibility of the Project When a promising project has been identified, the next and most important step is to determine the feasibility of launching the venture. This step involves drafting a carefully detailed plan of action which reflects the venture partners' understanding of: • the markets in which the products will be sold, including industry trends, tariffs and other barriers to entry; • domestic and international competition in the chosen industry; • the costs of human resources, technology, and other components of the venture; • the expected revenue that the project can generate...
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...FINANCING OPTIONS FOR SMALL AND MEDIUM SCALE ENTERPRISES IN NIGERIA BY SAS ARUWA BY SAS ARUWA Department of Economics and Management Sciences, Nigerian Defence Academy, Kaduna Abstract Government has identified the need for the development of Small and Medium Scale Enterprises (SME). One of such sectoral strategies is the introduction and pursuit of policies such as concessionary financing to encourage and strengthen the growth of SMEs in Nigeria. In this paper, a random sample of 10 formal/ informal finance sources and 20 SMEs in 6 selected Small and Medium industries in Kaduna and Abuja have been studied. We found that financing options for SMEs are numerous but access to these funds has been difficult inspite of several government initiatives. We also found that the Small and Medium Industries Equity Investments Scheme (SMIEIS) fund lacks standard guideline for fund disbursement, the unregulated informal finance institutions finance the SMEs much more than the formal sources and the informal sources make up more than half of the SMEs’ mix of funds. It is recommended that the informal source of financing is a potentially important source of micro financing. Savings in them should be further encouraged through regulation, government intervention by way of active participation of community and development banks in local business associations. SMEs should consider all financing options that maximize the value of the business enterprise. 1.1 INTRODUCTION The significant...
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...Project Financing Asset-Based Financial Engineering Second Edition JOHN D. FINNERTY, Ph.D. John Wiley & Sons, Inc. Project Financing Founded in 1807, John Wiley & Sons is the oldest independent publishing company in the United States. With offices in North America, Europe, Australia, and Asia, Wiley is globally committed to developing and marketing print and electronic products and services for our customers’ professional and personal knowledge and understanding. The Wiley Finance series contains books written specifically for finance and investment professionals as well as sophisticated individual investors and their financial advisors. Book topics range from portfolio management to e-commerce, risk management, financial engineering, valuation, and financial instrument analysis, as well as much more. For a list of available titles, visit our Web site at www.WileyFinance.com. Project Financing Asset-Based Financial Engineering Second Edition JOHN D. FINNERTY, Ph.D. John Wiley & Sons, Inc. Copyright C 2007 by John D. Finnerty. All rights reserved Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada. Wiley Bicentennial Logo: Richard J. Pacifico No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States...
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