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Managing Financial Resources and Decision

Managing financial resources and decision by using alternative sources of finance including long term and short term approaches to take the business to next level.

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Managing Financial Resources and Decision

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  1. Managing Financial Resources and Decision

  2. 1.1 Alternative source of finance • Long Term • Short Term

  3. Long term finance sources- Provides funds for more than one year. • Venture capital • Equity capital • Loans from banks • Issue of debenture and bonds • Leasing

  4. Short term sources of finance- provide funds for just one year. • Bank overdraft • Trade credits • Advances from customers • Short term loans from banks • Friends and Relatives

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  6. 1.2 Assessing the implication of sources • Venture capital- • High risk seekers • Provides long term funds • Demands for high return • Fixed percentage of sales is to be paid to venture capitalists

  7. Continued • Equity capital- • Major source of finance • Dividends are paid by company • When dividend declared business pay Dividend taxes • Shareholders have voting rights and control

  8. Issue of Bonds & debentures- • Issue debenture is a lengthy and complex process • Puts fixed interest charge on the business • Increases financial leverage of the business

  9. Continued Leasing- Lease rentals are to be paid Maintenance and repairs expenses are to be bear by lessee No Initial amount is paid Provides tax advantage to business

  10. Continued • Bank loans- • Loans are to repaid in installments • Interest rates are high • Bank do no grant whole amount in one time • Controlling of business is influence

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  12. 1.3 Appropriate sources of finance for a business project • Venture Capital • Provides funds for long term period • Venture capitalists provides managerial assistance • Bank Loans • Funds for long term period • Managerial assistance from banks personnel • Personal Savings • No interest is paid • Remains life time

  13. Share Capital • Not repaid by the business • Dividends may be paid • Collect huge funds • Leasing • No initial investment is required • Lease rentals are paid in installments • Provides tax shields • Friends and relatives • Lower rate of interest is paid • No influence over business decisions

  14. 2.1 Analysis of costs of different sources of finance • Venture Capital- • Pay fixed percentage on its sales as returns and bear high risk. • Bank Loans- Interest paid on banks loans are generally high.

  15. Share Capital- It depends on profits earned by business. • Leasing- Under leasing, business has to pay lease rental to the leasor for using assets • Friends and relatives- Interest rate on this source is low.

  16. References • Jordan, B. J., 2012. Financial Management for Episcopal Parishes. Church Publishing, Inc. • Lasher, R. W., 2011. Financial Management: A Practical Approach. 6th ed. Cengage South-Western. • Sources of finance, 2013. [Online]. Available through:< http://businesscasestudies.co.uk/business-theory/finance/sources-of-finance.html#axzz2kWXgGc9L>. [Accessed on 13th November 2013]. • Ittelson, T.R. 2009. Financial Statements: A Step-By-Step Guide to Understanding and Creating Financial Reports. Career PressInc • Lasfer, M., 2007. On the financial drivers and implications of leasing real estate assets: The Donaldsons-Lasfer's Curve. Journal of Corporate Real Estate.9(2). pp.72–96. • Linzner, O.A. and Linzer, S. R., 2008. Cash Flow Strategies: Innovation in Nonprofit Financial Management. John Wiley & Sons.

  17. TO BUY COMPLETE ASSIGNMENTContact us: Call: +61 283 206 050 Email: help@globalassignmenthelp.com.au Global Assignment Help Australia is the leading assignment writing service provider which offers online assignment help, dissertation writing, case study & report writing to university students in completing their academic documents within the submission deadline.

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