Unit 2 Managing Financial Resources and Decisions (GC01315)
Table of Contents
Introduction.
Task 1.
1.1 Identify the sources of finance available to a) unincorporated business, and b) incorporated business.
1.2 Assess the implications of the different sources of finance identified.
1.3 Evaluate appropriate sources of finance for Clariton.
Task 2.
2.1 Analyze the costs of the two sources of finance under consideration with reference to a) dividends; b) interest; and c) tax.
2.2 Explain the importance of financial planning for Clairton Antiques Ltd with reference to:
2.3 Give an assessment of the information that will be needed to make a decision on financing.
2.4 Explain the impact on the financial statements if Clarition Antiques Ltd choose to go with
Task 3.
3.1 Cash budget for Clairton Antiques and advice on decisions that can be taken to improve their financial position. 1
3.2 Unit cost calculation for the non-production company (Clariton )
3.3 Viability of the projects using investment appraisal techniques.
4.1 Discuss the key components of financial statements.
4.2 Compare the format used by Clariton Antiques Ltd to presenting their finical statement with that of a sole trader or a partnership or both.
4.3 Interpret the recent financial statement of Clairton Antiques Ltd using appropriate ratios and making a comparison with the previous years.
Profitability ratio.
Conclusion.
Reference.
Introduction
This paper conducts a financial analysis of a company. The company name is Clarition Antiques Limited. This is an unincorporated company. This company is now operating in only London now. However, this is thinking to open a new branch in Birmingham. Therefore, Clairton needs extra money, the amount of £500,000. The Clarion is now thinking to raise this amount from banks or other sources. In addition, this is thinking to sell its share in the stoke exchange attracting the general public. Firstly, the sources of finances for incorporated and unincorporated businesses are discussed in this paper. Then, the implication of several sources of finance is discussed. Next, the appropriate sources of finance for Clairton are discussed. Secondly, two sources of finance considered of Clairton are discussed with their influence on tax, dividends and interest payment.
Then, the financial planning and its importance are discussed with the reference of budgeting, overtrading, and frailer to the management of finance properly. Next, the information for the financial decision-makers is discussed regarding finance brokers, venture capitalists, and business partners. Thirdly, the cash budget of Clairton is evaluated to suggest the business. Then, the cost-per-unit is calculated for the non-production company, Clariton. Next, two investment projects are evaluated to assess their viability and suggest the business accept the best one. Fourthly, several contents of the financial statements are discussed and then compare to the format of the balance sheet and income statement for several companies. Finally, the financial position of Clairton is evaluated by calculating and assessing financial ratios.
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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 tutor2u (2016), a number of sources can be considered for the unincorporated business to finance. Firstly, personal savings can be a great source of finance for unincorporated businesses. The owner of the unincorporated business can save money and can invest from their own pocket to the business. The second source can be retained earnings. The owner of the unincorporated business can save money from business profits and reinvest within the business. The unincorporated business can use this source of finance for business operation, marketing and advertisement purposes. The other source can be working capital. This is the short-term money. It is very essential for the unincorporated business to do the operation for paying rent and bills, employee wages or salaries, invoice payment and stationary. Then, the sales of business assets can be a source of finance.
The unincorporated business can decide to sell the surplus fixed assets such as buildings and machinery. This source may support the business to open the new brand and maximize the business but should be careful to sell the assets. Because it would impact on the business performance. Then, loans, overdrafts, and credit cards can be great sources of finance for the unincorporated business. These sources can be classified as long-term (such as 5-6 years) and short-term (such as 1-2 years). These sources support the business in maximizing business and conduct its current operations. The additional partners or finance from family members and relatives can be other sources of finances. These sources can be effective to run the current business or extend the business. In this case, the owners of unincorporated businesses should do policies and terms and conditions for the investments……
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