Sample on Managing Financial Resources and Decisions

1. https://www.GlobalAssignmentHelp.com/ MANAGING FINANCIAL RESOURCES AND DECISIONS By Toll Free No.+ 44 203 3555 345 Mail Us: help@globalassignmenthelp.com Need College assignment Help? Global Assignment help provides best assignment help for all subjects.

2. Table of Contents INTRODUCTION .......................................................................................................................... 1 TASK 1 ........................................................................................................................................... 1 https://www.GlobalAssignmentHelp.com/ 1.1 Sources of finance available to Hardwood Ltd ..................................................................... 1 1.2 Implications of sources of finance ........................................................................................ 2 1.3 Appropriate source of finance ............................................................................................... 3 TASK 2 ........................................................................................................................................... 4 2.1 Cost of different sources of finance ...................................................................................... 4 2.2 Importance of financial planning .......................................................................................... 4 2.3 Information need of decision makers .................................................................................... 5 2.4 Impact of finance on financial statements ............................................................................ 5 TASK 3 ........................................................................................................................................... 6 3.1 Analyzing cash budget .......................................................................................................... 6 3.2 Calculation of unit cost ......................................................................................................... 6 3.3 Investment appraisal technique ............................................................................................. 7 TASK 4 ........................................................................................................................................... 9 4.1 Main financial statements of company ................................................................................. 9 4.2 Appropriate format of financial statement .......................................................................... 11 4.3 Ratio analysis ...................................................................................................................... 11 CONCLUSION ............................................................................................................................. 14 REFERENCES ............................................................................................................................. 15 Toll Free No.+ 44 203 3555 345 Mail Us: help@globalassignmenthelp.com Need College assignment Help? Global Assignment help provides best assignment help for all subjects.

3. INTRODUCTION Managing financial resources plays important role in the business as without proper management of funds it is not possible for management to accomplish desired objectives. Further, finance is one of the key resource without which no business can survive in the market and is associated with growth along with overall performance of company in the market. https://www.GlobalAssignmentHelp.com/ Moreover, at the time of taking expansion decision different sources of finance are considered by company through which it becomes easy to carry out overall operations in effective manner (Malina and Selto, 2006). Apart from this to assess financial viability of the project investment appraisal techniques are used which involves net present value, internal rate of return etc. Through all these methods it is possible to allocate funds in right project. Considering the present scenario Hardwood Ltd is a medium sized private company which produces furniture for retail sector along with private homes for last 6 years. At present business is planning to expand its operations for which management of financial resources is must. Various tasks have been covered in the study which involves sources of finance and its implication, information need for decision makers etc. TASK 1 Different sources of finance are available to Hardwood Ltd which company can consider for expanding its operations. Such sources are for short, long and medium term. 1.1 Appropriate source of finance In case of Hardwood Ltd most appropriate sources of finance for company are retained earnings and issue of shares in the market. Through both these source company can purchase plant and machinery and in turn all the operations can be carried out in effective manner. Hardwood Ltd operates on larger basis due to which its savings can be easily utilized for conducting operations. Further, shares can be issued in the market where company can obtain capital through its investors and it is beneficial for the entire business (Vos and et.al., 2007). Main benefit of adopting retained earnings as a source is that large amount of fund can be obtained internally and funds can be easily obtained for expansion purpose. But on the other hand in case funds are obtained by issuing shares in the market then company has to pay Toll Free No. +44 203 3555 345 Mail Us: help@globalassignmenthelp.com Need College assignment Help? Global Assignment help provides best assignment help for all subjects.

4. dividend to its shareholders which increase expenditure level. Therefore, the two sources recommended are appropriate for the company with the objective to expand overall operations. This is a Sample Report On Managing Financial https://www.GlobalAssignmentHelp.com/ Resources and Decisions For Complete Assignment Kindly Visit us at: help@globalassignmenthelp.com TASK 2 2.1 Cost of different sources of finance Considering different sources of finance for satisfying overall needs of the business has cost associated with it which Hardwood Ltd has to consider necessarily. In case when company considers issuing shares as source of finance then cost associated with payment of dividend has to bear and this increases overall expenditure level of the business. Further, when bank loan is considered as one of the source of finance then it leads to rise in interest cost which is unfavorable for business as company has to pay interest for the amount obtained (Wilmott, 2013). Therefore, this cost also has adverse impact on the business and for operating efficiently business has to identify which source is cheap so that long term benefits can be obtained easily by business. Apart from this when retained earnings is considered as an source of finance then it leads to rise in overall cost of loss linked with investment in any other project which is regarded Toll Free No. +44 203 3555 345 Mail Us: help@globalassignmenthelp.com Need College assignment Help? Global Assignment help provides best assignment help for all subjects.

5. as opportunity cost. So, these are some of the major costs associated with different sources of finance which Hardwood Ltd has to consider while selecting any source. 2.2 Importance of financial planning Financial planning is must for Hardwood Ltd as business is presently planning to expand https://www.GlobalAssignmentHelp.com/ its operations and for the same planning is must. Further, the significant aspect of financial planning takes into consideration development of budgets, financial forecasting, making fruitful decisions and identifying the appropriate source of finance. Through, financial planning it is possible for business to utilize all the resources in efficient manner and in turn acts as development tool for the business (Davies and Crawford, 2011). In short, planning allows business to gain competitive advantage and in turn unfavorable situations such as inadequacy of finance can be tackled easily by business. Through financial planning company can know how much funds are required in carrying out key operations of the business and through this fund can be allocated accordingly. Apart from this, due to rise in level of competition along with other type of challenges in the market it is required for business to indulge into practices of financial planning so that it can be utilized in appropriate manner keeping in view overall aims and objectives of the business (Financial Planning - Definition, Objectives and Importance., 2016). 2.3 Information need of decision makers Individuals who are associated with Hardwood Ltd require different type of information so that decisions can be taken which varies from one another. Shareholders of the company are interested in knowing profitability along with liquidity position of the company through which they can take investment decision and it can be known whether to buy shares of the company or not. Further, employees of the company are interested in gaining information through which they can know their personal growth level. Suppliers of Hardwood Ltd are interested in knowing liquidity position of the firm as through this they can know the payment capacity of company as goods are supplied on credit (Dell'Ariccia, Detragiache and Rajan, 2008). Apart from this, financial institutions are interested in knowing the profitability position of the firm as through this it can be known the time period in which company can repay the amount. Management of Hardwood Ltd is interested in knowing profitability position of firm as through investment decision can be taken easily which is associated with growth of organization. Therefore, in this Toll Free No. +44 203 3555 345 Mail Us: help@globalassignmenthelp.com Need College assignment Help? Global Assignment help provides best assignment help for all subjects.

6. way the information need of decision makers varies from each other and they are interested in obtaining different type of information to satisfy their personal needs. 2.4 Impact of finance on financial statements Finance has direct impact on the financial statements being prepared by enterprise. Further, it directly depends on the business the range of sources adopted for satisfying its https://www.GlobalAssignmentHelp.com/ financial needs. Generally statements such as balance sheet, profit and loss account, cash flow statement etc are prepared by business for knowing its overall performance in the market. In case if business uses retained earnings as a source to satisfy its financial needs then it increases the value of equity in the balance sheet and enhances the gearing ratio. Further, in case if debenture is undertaken by firm then interest paid is shown as an expense in profit and loss account and is also considered in cash flow statement as an outflow in operating activities (Elliott and Meyer, 2007). Cash received from issuing debentures is represented in cash from financing activities. Apart from this, if bank overdraft is considered as source then interest paid is charged as an expense in income statement and is also considered as an outflow in operating activity. Venture capital as a source has impact on cash flow statement where cash proceed of the share issue is regarded as an inflow which is considered under financing activity in cash flow statement. This is a Sample Report On Managing Financial Resources and Decisions For Complete Assignment Kindly Visit us at: help@globalassignmenthelp.com Toll Free No. +44 203 3555 345 Mail Us: help@globalassignmenthelp.com Need College assignment Help? Global Assignment help provides best assignment help for all subjects.

7. TASK 3 3.1 Analyzing cash budget Interpretation: Cost can be divided into different types which are material, labor, direct, indirect, https://www.GlobalAssignmentHelp.com/ fixed, variable etc. After analyzing the cash budget of the business all the major elements have been classified such as purchase, labor, fixed expense etc (Ge and McVay, 2005). Purchase of enterprise has increased ever month, labor charges are fixed. Further, firm has purchased machinery of 700000 which has enhanced overall cost and has lead to rise in expenditure level. Further, due to purchase of machine its overall closing balance has become negative and it has started to fall. Moreover, overall sales of the enterprise are stable and business enterprise has made capital investment of some specific amount. It is regarded as the cost incurred by the company with the motive to produce, store and sell one unit of commodity. It takes into consideration all the fixed cost along with variable one. Per unit cost of product is £131. Further, per unit cost of furniture has been calculated by considering all the fixed cost along with variable one. On the basis of per unit cost pricing decisions are made by enterprise and it is favorable for business in every possible manner. Further, it supports enterprise in knowing cost of producing one unit of commodity along with the major expenses. Therefore, in this way the concept of per unit cost is favorable for business and supports in earning higher profits to the business. On the basis of unit cost business enterprise takes pricing decision and prices of commodities are decided accordingly. Further, in case when business consider per unit cost while taking pricing decision then it is cost plus pricing. On the other hand, different pricing strategies are present which business can consider such as skimming, penetration etc. When skimming strategy is undertaken then business sets high price for its commodities and in case of penetration pricing low prices are set by business. Interpretation: On the basis of payback period method Machine A must be purchased as its entire amount can be recovered in time period of 2.5 years which is less as compared with Machine B. Toll Free No. +44 203 3555 345 Mail Us: help@globalassignmenthelp.com Need College assignment Help? Global Assignment help provides best assignment help for all subjects.

8. Interpretation: After applying accounting rate of return technique it has been found that investment in Machine B is more feasible for company as its return is high and through this company can easily obtain large number of benefits (Methods of project evaluation, 2015). TASK 4 4.1 Main financial statements of company https://www.GlobalAssignmentHelp.com/ Main financial statements prepared by hardwood Ltd are Balance sheet and income statement as through these statements it is possible for management to know their profitability along with liquidity position. Main purpose of balance sheet is to provide users idea regarding the financial position of business (Rigby, 2011). It has two sides named asset and liability which highlights different items. Assets are owned by business and liabilities are the debt of firm. Further, income statement highlights the key activities of business which are acting as income for business and expenses. Cash flow statement considers three activities which are operating, investing and financing. Further, it supports in providing information regarding the range of activities which are leading to inflow and outflow of cash. Balance sheet Toll Free No. +44 203 3555 345 Mail Us: help@globalassignmenthelp.com Need College assignment Help? Global Assignment help provides best assignment help for all subjects.

9. Income statement https://www.GlobalAssignmentHelp.com/ Cash flow statement Toll Free No. +44 203 3555 345 Mail Us: help@globalassignmenthelp.com Need College assignment Help? Global Assignment help provides best assignment help for all subjects.

10. https://www.GlobalAssignmentHelp.com/ Ratio Analysis Return on capital employed: On analyzing the ROCE of Hardwood Ltd., in 2013 it was 13.85% and in 2014 it was increased and has given the return of 18.95%. On comparing this ratio with the industry averages, it was assessed that Hardwood has very low return as 35% was industry average. It shows that company has generated very less return from the amount of capital employed in its business. Operating profit: In 2013, the operating profit of hardwood was12.81% which is lower as per the industry average that is 13.6% But due to increase in sales of company in 2014, operating margin of business was 14.6% which is much better than performance of previous year and as well as of industry rate (Mohsin, 2013). Gross profit: Gross profit ratio shows the relationship between gross profit and sales of company and in 2014 this ratio of Hardwood has increased from 45.82% to 49.42%. Gross profit margin of company was also better when it measured with average gross profit margin of industry which was 40%, so it resulted that business has generated good amount of sales revenue in 2014 as well as in 2013. Toll Free No. +44 203 3555 345 Mail Us: help@globalassignmenthelp.com Need College assignment Help? Global Assignment help provides best assignment help for all subjects.

11. Operating asset turnover ratio: Operating asset turnover ratio of industry is 1.5 times and in both the year that is in 2013 and 2014, Hardwood has low turnover that is 1.1 and 1.29. It indicates that assets of business have not achieved higher sales. This is a Sample Report On Managing Financial https://www.GlobalAssignmentHelp.com/ Resources and Decisions For Complete Assignment Kindly Visit us at: help@globalassignmenthelp.com Current ratio: It indicates about liquidity position of the company and in 2013 current ratio of business was 1.19 times and in 2014the current assets of Hardwood has decreased and due to which ratio declines to 1.64. Liquidity of the business is improved but when it measured with the industry average that is 2 times, it shows that obligation of company to meet its current liabilities is less. Quick asset ratio: In 2013, quick assets of Hardwood was 1.10 times and in 2014 it is 0.69 times. Reason behind decrease in quick asset ratio was due to decrease in quick assets of the Hardwood. On the other side when it compares with the industry average, the performance of business as also poor. Stock days: In 2013 the stock days of Hardwood was 114 days and in 2014 it was 108 days, which indicates that efficiency of the company was improved but when it is compared with industry rates which is 75 days, it shows that performance of company is poor. Debtor days: Ratio of debtor days of Harwood in 2013 was 31 days and in 2014 it was 41 days, this ratio indicated about the time taken to convert the amount of debtors into cash. On comparing this ratio with the industry average, Harwood has taken 41 days to convert its debtors in cash whereas in industry it was only 30 days. Toll Free No. +44 203 3555 345 Mail Us: help@globalassignmenthelp.com Need College assignment Help? Global Assignment help provides best assignment help for all subjects.

12. Gearing ratio: Gearing ratio depicts about the proportion of debt and equity of Hardwood and on examining this ratio the performance of company was same that is 1.0 in 2013 and 2014 and also similar when its compare with the results of industry average. CONCLUSION From the entire study being carried out it has been found that it is necessary for https://www.GlobalAssignmentHelp.com/ Hardwood Ltd to indulge into proper practices of financial planning. Further, most appropriate sources of finance are retained earnings and bank loan. Moreover, applicability of investment appraisal technique has shown that it is feasible for company to purchase Machine B as it can support business in raising profitability level and can assist in accomplishment of long term goals along with objectives. Further, different financial statements are prepared by company such as cash flow, income and balance sheet with the help of which it is possible to know overall profitability and liquidity position. This is a Sample Report On Managing Financial Resources and Decisions For Complete Assignment Kindly Visit us at: help@globalassignmenthelp.com Toll Free No. +44 203 3555 345 Mail Us: help@globalassignmenthelp.com Need College assignment Help? Global Assignment help provides best assignment help for all subjects.

13. REFERENCES Books and Journals Davies, T. and Crawford, I., 2011. Business accounting and finance. Pearson. Dell'Ariccia, G., Detragiache, E. and Rajan, R., 2008. The real effect of banking crises. Journal of Financial Intermediation. 17(1). pp.89-112. Elliott, W.J. and Meyer, P.M., 2007. Incident diabetes in clinical trials of antihypertensive drugs: a network meta-analysis. The Lancet. 369(9557). pp.201-207. Ge, W. and McVay, S., 2005. The disclosure of material weaknesses in internal control after the Sarbanes-Oxley Act. Accounting Horizons. 19(3). pp.137-158. Malina, M. A. and Selto, F. H., 2006. Communicating and controlling strategy: An empirical study of the effectiveness of the balanced scorecard. Journal of Management Accounting Research. 13(5), pp.45-80. Mohsin, A. I. M., 2013.Financing through cash-waqf: a revitalization to finance different needs. International Journal of Islamic and Middle Eastern Finance and Management. 6(4). pp.304 – 321. Mumford, D. M. Schultz, A. R. and Osburn, K. H., 2001. Planning in organizations: Performance as a multi-level phenomenon. Emerald group publishing. 12(2). pp.5–64. Murphy, K. J., 2001. Performance Standards in Incentive Contracts. Journal of Accounting and Economics, (30), pp. 244-275. Parmenter, D., 2010. Key performance indicators (KPI): developing, implementing, and using winning KPIs. John Wiley & Sons. Pew Tan, H., Plowman, D. and Hancock, P., 2007. Intellectual capital and financial returns of companies. Journal of Intellectual capital. 8(1). pp.76-95. Rigby, G., 2011. Types and Sources of Finance for Start-up and Growing Businesses: An Instant Guide. Harriman House Limited. Vos, E. and et.al., 2007. The happy story of small business financing. Journal of Banking & https://www.GlobalAssignmentHelp.com/ This is a Sample Report On Managing Financial Resources and Decisions For Complete Assignment Kindly Visit us at: help@globalassignmenthelp.com Toll Free No. +44 203 3555 345 Mail Us: help@globalassignmenthelp.com Need College assignment Help? Global Assignment help provides best assignment help for all subjects.