MANAGING FINANCE

Managing Finance



Abstract

Finance has been life blood of businesses as companies need fund either for expansion, investment, purchasing or for daily business transactions. Finance is the only strength through which company can survive in the competitive market. Nevertheless, at the same time managing finance is also important. For companies it is important to evaluate their sources of finance, appraise financial information accurately for making appropriate decisions with respect of investment, pricing as well as budgeting decision. Hence, the focus of this paper would be on managing finance i.e. Managing Financial Resources and Decisions which will assist in evaluating financial performance of the company.



ABSTRACTII

INTRODUCTION1

DISCUSSION1

Task 1: Yardley Wood Store1

a. Prepare a cash budget for the first six months of the trading. Show all your workings.1

b. What is the amount of finance needed in the first six months of the operation?2

c. What other factors should be considered in cash budget?2

Task 2: Pricing Decision Using Relevant Information3

a. Calculate the Unit Cost and Pricing per Unit for 100 units3

b. Briefly explain how company make Pricing Decision using Relevant Information4

Task 3: Investment Techniques5

a. You are required to calculate the followings:5

i. Payback Period (years)5

ii. Net Present Value6

b. Briefly explain which plan would you recommend and why?7

Task 4: Financial Statement Analysis8

a. Main Financial Statements 8

b. List and assess the information needs of different users of financial statements8

c. Calculate, Compare and analyze the following ratios:9

CONCLUSION10

REFERENCES11

APPENDIX13

Managing Finance

Introduction

The assignment has been divided into five Tasks. First task will include entire cash budgeting part. In the second task unit cost and pricing per unit will be calculated on the basis of pricing decision will be made using relevant information. Third task will cover investment techniques such as Payback period, Net Present Value and on the basis of this a recommendation will be made to company. Ration analysis will be covered in fourth task of Samsung. In last task sources of finance available to a business and its implication on business will be covered.

Discussion

Task 1: Yardley Wood Store

a. Prepare a cash budget for the first six months of the trading. Show all your workings.

Net inflows for Yardley Wood Store in first month would be zero since company has given one month credit facility to from the date of sales to their customer. Hence, they will receive their collection in the next month. Net cash outflows would be higher in first month due to investment in plant and machinery and higher additional equipment cost. Yardley will experience negative cash flow of £1,135,000 in first month while net cash flow will be positive in next months. As far as net Cash Flow is concern, in first four month they will have cash deficit while surplus cash in remaining months (Barrow, 2012, p. 75).

b. What is the amount of finance needed in the first six months of the operation?

Company would need additional finance in initial month due to higher cash outflows and lower cash inflows. In first month Yardley Wood Store need £1,135,000, while in following month Yardley will ...