Finance For Managers



Table of Content

FINANCE FOR MANAGERS1

QUESTION 011

Objectives of Financial Reporting2

A) Sources of Finance2

B) Merits & De-Merits of Sources of Finance2

Retained Earnings2

Share Issuance3

Disadvantages to company: Equity shares have the following disadvantages to the company:4

Trade Credit6

Lease Financing7

C) Other Sources7

QUESTION 28

A) Costs of Sources of Finance8

B) Importance of Financial Planning8

C) Information Needs of Financial Decision Makers10

QUESTION 312

Purpose of Financial Statements16

Formats of Financial Statements16

Ratio Analysis18

Books of Prime Entry & Components of Final Accounts18

REFERENCES20

BIBLIOGRAPHY21

Finance For Managers

QUESTION 01

Every enterprise aims to maintain its market dominant position as well as to maximize its profitability through a series of activities, so as to remain competitive within framework of the market mechanism and to advance functions. It is necessary for managers to be familiar with the overall performance of the enterprise, in an effort to develop an effective strategic plan for companies' prosperity and progress. Thus it is essential to identify the capabilities of a company in economic terms, so as to enable first line management to determine the business's objectives and targets, concerning its operations. (Scott, Martin, Petty , Keown, 2003, 32 )

In an effort to examine an enterprise in financial terms, so as to provide managers with sufficient information, referring to its economic evolution, certain financial statements have evolved, such as Balance Sheet, Trial Balance, Profit and Loss Account, Ratios and so on. (Ross, Westerfield, Jaffe, 2003, 10)

A company's published report and accounts will contain a confusing set out of figures. Whilst these figures will all be based on historical facts and can be taken as accurate, a question arises; what do these figures mean? An answer to these question will require an analysis of the figures contained within published report and accounts, using a series of Financial Ratios.

In this assessment, we will analyze and critically evaluate the most common financial ratios by incorporating examples relevant to enterprise Limited. This assessment will be focusing mainly on the enterprise; we will also compare the results to those of Enterprise Group Limited. These financial ratios have been applied according to most recent figures that appear on the Athens-Fame electronic library. (Peters, Schaffer, 2005, 4)

Objectives of Financial Reporting

Goal of giving helpful information to economic declaration users in order that correct conclusions can be made is finished through the reporting. Data offered should be comprehensive in order that a good comprehending of the entity's undertakings is possible. Financial information should help in the evaluation of the allowances, timing, and uncertainties of money flows. Also, economic describing should furnish information about the firm's financial assets, assertions against those assets, owners' equity, and alterations in assets and claims. Financial describing should supply information about economic presentation throughout a time span and management's release of its stewardship blame to owners. It should likewise be helpful to the managers and controllers themselves in making conclusions representing the owners. (Stickney, Weil, Schipper, 2009)

A) Sources of Finance

The sources of finance available to Coraonation Public Limited Co. are following:

Retained Earnings

Share Issuance

Trade Credit

Lease Financing

B) Merits & De-Merits of Sources of Finance

Retained Earnings

The merits of retained earning as a ...