FINANCIAL APPRAISAL

Financial Appraisal



Financial Appraisal

Task 1

Case Scenario:

Regeneration Through Education Limited (RTE) is a charity whose charitable aims are to provide adult education courses and a discounted room letting facility for clubs in a deprived area of Portshampton. They have recently received a regeneration grant which has enabled them to fund the construction of a purpose built complex of rooms and conference facilities on an adjacent site. The charity has approached you for advice in some areas of concern (all queries need to be addressed).

Query 1 Advance payment to suppliers (guide 500 words, 25%):

1.RTE requires an investment of £100,000 in furniture and fittings for the new building. The supplier, Vital Office Furniture Limited, has demanded a 50% down payment from the charity before they will process the order. The balance will be payable within 10 days of receipt of the goods. The trustees of the charity are concerned that this is a large amount of money to hand over to a supplier that they have no track record with. Funds are particularly tight during the period of construction. You are required to evaluate how RTE may reduce their financial risk on this transaction.

Amongst the basic and most crucial components in the involvement of funds and resources necessary for development is the issue of financial risk that is prevalent in the area. One must understand that absolutely no business in today's world, no transaction or purchase is free from any form of risk that is being involved in the whereabouts of how far and wide can a person actually pave way for only profits and no losses (Hoopes, Madsen & Walker, 2003, pp. 889).

The biggest business giants and major corporate giants have undertaken major risks in order to stand in the position in which they are today. Popular names such as Tesco, General Motors, Rolls Royce, Microsoft, Nike, Maersk, etc. have come this far with their strong and proactive relationship with the presence of risk involved in their portfolio. It has not been that these people have not suffered major losses; they have been through all forms of casualties and problems, losing their broad customer base and even going down in their business. The verdict: these companies have carefully checked and balanced their investments and maintained constant scrutiny and investigations regarding the use of their invested funds and resources and the kind of work that is being delivered as the final product.

In the case scenario mentioned above, the first and most prime step that a person may take is to find and keep track of the vendors and suppliers that RTE is dealing with. With major investments involved and the kind of parties working towards the establishment and creation of a business, company heads and the people involved in the dissemination and management of funds and financial resources, should be clearly states in black and white and that a sense of transparency and clear communications must prevail between parties and the suppliers involved in the context of creating an effective and efficient ...