Business managing financial resources and decisions

In case of internal sources of funds: Management of The Ritz London is required to opportunity cost as they are free from economic obligations.

Business managing financial resources and decisions

The cost of the mortgage will be 3, pounds per month. Total interest will be pounds. Thus we can see that the monthly interest of long term loan is higher than the mortgage payment but we should consider that in case of mortgage payment we need to pay more amount of total interest along with the principle amount than the long term loan.

Thus mortgage payment method should be chosen as the interest payment will be less.

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Question P5 Financial planning can be defined as calculating about expected expenses and revenues for the coming financial year. Financial planning is necessary for a business organization to conduct the business activity in a smooth way.

Importance Financial planning is important because it states about the probable necessary income and expenditures which will help to earn profit for the business organization.

Financial planning includes budgeting method in which managers prepare a budget about upcoming income and expenses that the company has to taken care of.

It helps us to set up a sales target and goals for production process. Cash budget states about the future cash receipts and payments for a specific period.

It typically takes into account a period in the nearest future. The cash budget helps the business to decide when revenues will be sufficient to cover expenditures and when the organization will need to look for outside financing.

Sample on Managing Financial Resources & Decision Making

It is done monthly to look after the liquidity position of the company. Thus if cash budget has surplus amount of cash then it can be said that the company is well going by fulfilling the revenue target within the budgeted expenditures.

Question P6 Financial statements provide financial information to the investors and creditors regarding financial performance of the company. Analysis of financial statements helps the managers to make decisions by understanding the financial condition of the company Wild,pp.

For instance, the creditors and banks capital providers are generally interested in the safety and profitability of their investment. The balance sheet of the company gives them an idea about where their money was invested by providing detailed information about the assets of company.

Question P7 If the shareholders of this business choose to include debt capital to finance this project then it is very important for the business to have healthy financial statements.

Since debt capital is a fixed obligation that requires regular repayment of interest along with principal.


The business will have to pay regular interest on outstanding capital even if it incurs losses and has to liquidate assets. If the business is not able to earn more than its cost of capital then the net-worth of the investors will turn negative and business will be a failure. The most important impact of sources of finance on financial statements arises from sale of assets and loan.

The impact of loan on financial statements include reduction in net profit due to servicing of interest rate liability; higher provisions for doubtful debts; and increase in liabilities along with increase in assets where funds were employed. The sale of asset helps organizations to realize cash immediately.

This strategy is generally employed when the organization is unable to generate sufficient cash from core operations. Question P8 Sales budget- It is constructed to estimate the future sales and it can be broken into currency and units.

It is used to set a target for sales goals for the company. Production budget- It estimates the number of uni8ts of output which should be produced to meet the sales target. It also states about various costs that are involved in the manufacturing process. Material budget Material budget is constructed after calculating the production requirements after preparing the production budget.

Business managing financial resources and decisions

It includes cost and amount of raw materials that is needed to conduct the production. Labour budget It is used to calculate the labor hours which will be needed to produce the required amount of output.

Managing Financial Resources Decisions

Master budget The master budget is a one-year budget arranging record for the firm incorporating all different budgets. It matches with the financial year of the firm and may be broken down into quarters and, further, into months. On the off chance that the firm plans for the master budget to make continuous record, moving from year to year, then ordinarily a month is added to the end of the budget to encourage arranging.

This is also known as continuous budgeting. How budget analysis is useful to make appropriate decision Budget Analysis is very much helpful in making appropriate decisions.

Budget helps the organization to decide about the necessary cost and sales target to fulfill. With the help of a budget, management can take proper decisions about the performance of the employees in meeting the target. Managing Financial Resources & Decisions Assessment Tansy Addis STU 1a when considering setting up an organisation there are a number of factors that should be considered.

Assignment on Managing financial resources and decisions Introduction: JS and co is running in the UK since , which is a medium sized retailer formed by two partners James and Sainsbury. Assignment On Managing Financial Resources And Decision Finance Essay. Print mid and long term resources include briefly in this assignment.

There are share capitals, bond debenture, called up share capital, share premium, EPS dilution and diluted EPS. Factoring is a financial transaction whereby a business sells its accounts receivable.

Assignment Help Samples Finance Managing Financial Resources Introduction Present report focuses on illustrating the significance of making accurate decisions .

Financial planning is necessary for a business organization to conduct the business activity in a smooth way. Importance Financial planning is important because it states about the probable necessary income and expenditures which will help to earn profit for the business organization.

Introduction to Managing Financial Resources & Decisions: identifying the sources of finance available to a business and assessing the implications of the different sources of finance.

Introduction to the module, mode of assessment, awareness of the awarding body, assessment criteria and the mode of assessment.

Business Managing financial resources and decisions Essay Example for Free