Unit 2 Managing Financial Resources _HND in Business (GC01322)
Introduction
This paper conducts a report on financial resources for an organization called Clairton Antiques. This is an incorporated organization. The main goods of this organization are traditional goods. It is nowadays working in London, however in Birmingham, searching onward to establish a new office. To start its firm, the industry desires £500,000 money. It is considering raising this asset by getting advances from creditors or any other income. The organization is also considering going public or stock exchange to accomplish this stock. This assignment firstly describes different resources of economics for unincorporated as well as corporate organizations. After that, the submission of diverse possessions of economics is designated. Then, the feasible possessions of funds for Clariton are clarified. Secondly, two possessions of funds for Clariton are designated with their power on the tariff, dividends or share. Furthermore, the consequence of monetary development is termed with the situation of financial planning, inferences of catastrophe to economics adequately, over dealing.
Task 1
1.1 Identify the sources of finance available to: a) unincorporated business; and b) incorporated business.
Sources of finance for an unincorporated business
According to (Elliott and Elliott, 2014), the main financial sources of an unincorporated business are retained benefit, personal saving, and sales of resources, operating capital, getting additional associates loan and credit looking for from investor, funding from relatives or family.
Personal saving: It is an essential resource of economics. From unincorporated organizations or other resources, the possessor saves cash. He can invest or apply in the unincorporated organizations to develop an act. As Elliott and Elliott (2014) notes, the possessors of unincorporated can use or save in the organization.
Retained profit: the profit which is taken from the business operations are called retained earnings. The business owners take the decision to take out this money from the business and to invest in another part of the business operation (Elliott and Elliott, 2014).
Working capital: this the capital which comes from the business’s day-to-day operations. This capital is used to conduct the business daily works. For example, this source of finance a business can use for paying employee salaries and electricity bills.
Sales of assets: a business can decide to sell its asset. The asset selling can be of selling business properties, buildings, and others. It can be used to invest in business operations. However, the business should think about it deeply before selling the assets. This is because the selling of assets may impact business performance (Elliott and Elliott, 2014).
Loans, overdraft and credit-seeking: a business can look for long or short-term loans or credit cards, or overdrafts from the lenders like banks. These sources of finance can be contracted based on interest and payment conditions. These sources of finance can be used for business extension, business maximizations, and business operations.
Funds from family members and relatives: when the business needs any funds, the owner of the business can look for funds from the relatives and family members. In this case, the owner of the business can do a contract following the terms and conditions of the funds uses and profit or interest payment.
Additional partners: the owners of businesses can also look for business partners if they face difficulties in sourcing their finances. In this case, the business owner conducts a deal with the partners (Elliott and Elliott, 2014).
Sources of finance for incorporated business
Retained profit: the profit which is taken from the business operations are called retained earnings. The business owners take the decision to take out this money from the business and to invest in another part of the business operation (Elliott and Elliott, 2014).
Working capital: this the capital which comes from the business’s day-to-day operations. This capital is used to conduct the business daily works. For example, this source of finance a business can use for paying employee salaries and electricity bills.
Sales of assets: a business can decide to sell its asset. The asset selling can be of selling business properties, buildings, and others. It can be used to invest in business operations. However, the business should think about it deeply before selling the assets. This is because the selling of assets may impact business performance (Elliott and Elliott, 2014).
Loans, overdraft and credit-seeking: a business can look for long or short-term loans or credit cards, or overdrafts from the lenders like banks. These sources of finance can be contracted based on interest and payment conditions. These sources of finance can be used for business extension, business maximizations, and business operations.
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