Managing Financial Resources

8 August 2016

Unit 2: managing financial resources and decisions outcome 1: understand the sources of finance available to a business outcome 2. 4: explain the impact of finance on the financial statements outcome 3: make decision based on financial information outcome 4: analyze and evaluate the financial performance of a business scenario you have graduated from hnd with flying colors and have been successful at finding a job as a financial consultant with high finance consultancy ltd. Your job is to advise clients on diverse projects as and when they are handled by your firm. Please study each task and give your expert opinion

Task 1 you have to advise rabeebok plc, a public limited company that manufactures sporting goods. The management of the organization is in the process of evaluating expansion plans. For this, you need to write a report on the following: 1. 1 p1- identify and discuss all the different sources of finance available to the company (max: 1200 words) 1. 2 p2 -assess the implications of the different sources (max 1000 words) 1. 3 p3 – evaluate appropriate sources of finance for rabeebok. Plc who needs to decide where to get specific funds for their particular expansion needs.

Managing Financial Resources Essay Example

These expansion plans will require capital for the following: a) additional land b) additional equipment c) a fleet of 10 staff transport vehicles d) day to day operations m1- while completing 1. 3 p3, demonstrate that effective judgments have been made. Justify why you think particular sources are suitable for each need m2-while completing 1. 1 p1, use at least two sources other than the textbook to complete your discussion on the sources of funds available to organizations. Include these references in the body of the discussion (i. E. In the assignment itself) as well as in the bibliography.

This criterion is meant to encourage you to utilize a range of sources of information. D1-critically evaluate why at least two sources of funds are not suitable for each option in the scenario described in 1. 3 p3. This criterion is meant to encourage you to use critical reflection to generate and justify valid conclusions. Guidelines to achieve 1. 1 p1, 1. 2 p2 and 1. 3 p3: for 1. 1 p1, you must identify all the sources of funds that are available to a public limited company. These should include all internal and external sources which are available to all small, medium and large companies.

For 1. 2 p2,you must discuss the advantages of using each different source of fund. For example, for hire purchase, you can mention that an advantage of using this source of funds is that there is no up front lump sum payment whereas one of the disadvantages is that the organization does not own the asset unless all the installments have been paid off. For 1. 3 p3,suggest appropriate sources of finance for these needs. You should consider the purpose for which the funds are required and which sources of funds will be most appropriate. Task 2 allisson and company is a wholesale business.

Their budgeted income for the first six months of 2014 is as follows: jan 14 feb 14 mar 14 apr 14 may 14 jun14 sales 52 55 55 60 55 53 c. G. S 30 31 31 35 31 32 salaries 10 10 10 10 10 10 electricity 5 5 4 3 3 3 depreciation 3 3 3 3 3 3 other overheads 2 2 2 2 2 2 total expenses 50 51 50 53 49 50 net profit 2 4 5 7 6 3 all amounts shown are in ? 000 allisson and co. Gives all its customers one month credit. Sales revenue in dec 2013 is expected to be ? 60,000 inventory purchases are made on one month’s credit. December 2013 purchases are estimated to be ? 30,000. Salaries and other overheads are paid in the month concerned.

Electricity is paid quarterly in march and june. The business plans to buy and pay for a new van in march. The cost of this van is ? 15000 the business plans to buy some equipment in april for ? 38000. The business expects to have a beginning balance of ? 12000 in cash in january 2014. 3. 1 p8 – a) discuss the types of budgets that allisson and co will need to help in making financial decisions. B) based on the information provided to you, prepare a cash budget for allisson and co. For the first six months of 2014 and discuss any problems the company may face in these six months.

C) make recommendations on how to improve cash balances over the six month period and make a new improved budget for this period d3 – demonstrate that a high level of creative thinking has been employed to solve allison and co’s cash budget problems. Task 3 3. 2 p9- do the required calculations and use this information to make pricing decisions. Information will be provided in class. This task will be completed as a time constrained class activity. Task 4 assess the viability of a project using investment appraisal techniques. Al haider contractors llc is investigating the possibility of investing in two new projects.

Data have been extracted from the report relating to the projects. Both projects involve purchasing new equipment. The data will be provided to you in class at the time of the class activity as per the format below: project 1 (? ) project 2 (? ) cost expected annual net profit/(loss) year 1 year 2 year 3 the company has an estimated cost of capital of 10% and uses the straight line method of depreciation for all fixed assets when calculating net profits. The business has sufficient funds for all capital expenditure requirements. 3. 3 p10. Calculate for each project: a. Payback period b. Net present value c.

Approximate internal rate of return compare the two projects and discuss which is more viable for the organization. Task 5 make a presentation with two other colleagues on the following: 2. 4 p7 – explain the impact of finance on the financial statements. 4. 1 p11 – explain the purposes of the main financial statements . 4. 2 p12 – describe the differences between the formats of financial statements for different types of businesses. M3 – while making the presentation for 2. 4 p7, 3. 3 p10 and 4. 1 p11, ensure that technical language is accurately used. This will be assessed on an individual basis during the presentation

D2 – while making the above presentation, take responsibility for managing and organizing activities of others. You will need to provide evidence of this in the form of action plans, minutes of meetings and if possible, discuss a conflict situation you have handled. Task 6 4. 3 p13 – interpret financial statements using appropriate ratios and comparisons both internal and external. For this task, you will be evaluating the financial performance of two organizations using appropriate ratios and comparisons. The financial statements of the two organizations will be provided to you during a class activity.

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