Unit 2 Managing Financial Resources_ HND in Business (GC01321)
Introduction
A limited organization named Clairton Antiques that has established by 4 partners earlier 5 years ago. This is an unincorporated organization that has increasing every day. The main goods of this organization are antique goods. This has been now functioning in London, but going to start a new store in Birmingham. The organization wants £500,000 assets to operate its company. It is opinion to increase these resources by receiving loans from the lender or other resources. The organization is thoughts to go away exchange of stock and go open to conduct this asset.
This assignment first explains different resources of business for both unincorporated and corporate organizations. Then, the implication of different financial resources is described. After that, the possible resources of economics for Clairton are explained. In the 2nd t+ask, two resources of economics for Clairton are described with their influence on dividends, tax and investment.
Additionally, the significance of economic planning is described with the budgeting reference, implications of breakdown to economic sufficiently, overtrading. Next, the data wanted for the economic making of decision are evaluated in terms of parterres, finance brokers and venture capitalists. The 3rd task describes the budget of cash for Clairton and recommends them to develop their economic conditions. This task also plans the cost of the unit for the non-production organization (Clairton) and evaluates the feasibility of two venture report applying different investment evaluation technologies. The 4th task of this assignment explains the major element of economic statements and contrasts the form of Clairton’s statement of finance with partnership and sole trader organizations. Lastly, this task evaluates the statement of finance of Clairton applying different financial proportions.
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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
As Elliott and Elliott (2014) notes, unincorporated organizations can different resources of economic to operate their markets. The major resources are retained profit, personal saving and sales of assets, working capital, and credit and loan observing from a lender, economic from relatives and family members, and employing more partners.
Personal saving: It is the basic resource of economics for unincorporated organizations. The manager saves cash from the organization or other resources and can apply and give to the organization to develop its activity. The unincorporated owners can also save and utilize in the organization and to start the new store or increase the markets (Elliott and Elliott, 2014).
Retained profit: According to Elliott and Elliott (2014, ) retained profit is a profit that comes from business operations sales and revenue, and profit. The company can reinvest this profit within the business. It can also be used for marketing and advertising purpose. In addition, this profit can be used for maximizing business like opening new branches in new places. Furthermore, this profit can be used for buying equipment for business.
Working capital: working capital is that capital that is used for everyday operation. It is mainly used for daily operations like paying employee wages or salaries, paying bills like electricity or gas bills. The main sources of this capital are net income, stakeholder investment, sales of business assets.
Sales of assets: the unincorporated organizations can have extra permanent capitals such as building and machinery. These resources can be traded by the owners as well as produce cash to increase the organization. However, in this term, the company owners must be evaluated extremely before trading the capitals, as it can influence on capabilities and capacity of the organization (Elliott and Elliott, 2014).
Loans, overdraft and credit-seeking: from the lenders or creditors, organizations can lend d loan, overdraft and cash. They can invest this money and become successful (Elliott and Elliott, 2014).
Funds from family members and relatives: According to Elliott and Elliott (2014), if any family members or relatives have any capital, they can be invited or motivated to invest in the business. In addition, if they have a high income, they can invest in the business from their income (Elliott and Elliott, 2014).
Additional partners: if a company has more than two partners, the extra partners are known as additional partners. Additional partners can also invest money in an organizational business.
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