MANAGING FINANCIAL

Managing Financial Resources and Decisions

Managing Financial Resources and Decision- Boatline Ltd

Introduction

This paper focus on the sources of finance available to a business in order to expand or bring new product in the market, understanding the implications of finance as a resource within a business with the financial decisions based on financial information and hence evaluating the financial performance of a business. In short, this paper will focus on the feasibility and viability of the project whether to be undertaken or not.

Task One)

1.1 Sources of Finance

There are varieties of sources that are available for a company which has been divided into internal and external Sources of Finance. For Boatline Ltd there are following Sources of Finance: As we know that Sources of financing is divided into internal (equity) and external (debt and debt capital).

Internal sources of fund

These source of funds are self-generating sources of credit, are obtained in spontaneously.

In the equity taken into account:

Share capital (formed as a result of the contribution the company's founders at its creation)

Additional capital (formed as the result of the revaluation of fixed assets of the organization)

Capital reserve (formed by contributions from profit organization for the next unforeseen needs)

This will benefit in terms of following

Financing through equity has several advantages:

Due to replenishment of the profits of the enterprise increases its financial sustainability;

Formation and use of own funds is stable;

Minimizes the cost of external financing (debt service to creditors);

Simplifies the process of decision making for enterprise development, as sources to cover the additional costs are known in advance.

External Sources of Finance

External funding provides for the use of state funds, financial-credit institutions, non-financial companies and citizens. In addition, it involves the use of cash resources of the founders of the enterprise. Such mobilization of necessary financial resources is often preferred because it provides the financial independence of the enterprise and facilitates the further conditions for obtaining bank loans.

Issue of shares 

An effective way to rise funds and increases the capitalization of the company. However, the issue of shares accompanied by a redistribution of the share capital and may lead to loss of control over the enterprise. 

Spilt stock

Increase in the number of shares owned by each stock certificate represents.

Initial Public Offering - IPO

In general, the initial public offering of the shares through public subscription (Initial Public Offering - IPO) is a procedure for their implementation on an organized market to raise capital from a broad range of investors.

Loans and borrowings 

One of the main sources of funding, suggesting involvement of both secured and unsecured bank loans for short-and long-term basis. In the difficult economic situation, banks are reducing lending business, including the sharply worsening conditions of loans. 

Bond issues 

An alternative to bank lending. Typically, the cost of the bond issue for the company lower than the rate on bank loans, but the company has to bear the additional costs of production procedure itself. In addition, in case of worsening of financial condition and debt-servicing difficulties, to negotiate with a lender is easier than with many ...