contents finance
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business finance, strategy, accounting,TRANSCRIPT
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Yee Mon Phu Managing Financial Resources and Decisions Assignment-1
ContentsExecutive summary .........................................................................................................................2
Introduction ......................................................................................................................................2
1.1 Sources of Finance .....................................................................................................................3
1.1.1 Business Finance .................................................................................................................3
1.1.2 Range of Sources to Montezuma ........................................................................................4
1.1.3 Other ways of borrowing ....................................................................................................4
1.2. The implications of the different sources of finance ................................................................5
1.3. Appropriate sources of finance for Montezuma .......................................................................7
1.3.1. The expansion business from Sole-Trader to Partnership .................................................7
1.3.2. The expansion business from Private to Public Limited Company ...................................8
2.1. The costs of sources of finance for Montezuma .....................................................................10
2.2. Explaining the Importance of financial planning ...................................................................11
2.2.1. Financial planning ............................................................................................................11
2.2.2. Importance of Financial Planning ....................................................................................11
2.3 The information needs of different decision markers ..............................................................12
2.4. The impact of finance on the financial statements .................................................................13
Conclusion .....................................................................................................................................14
Reference List ................................................................................................................................15
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Yee Mon Phu Managing Financial Resources and Decisions Assignment-1
Report
Montezuma Pvt. Ltd
To : Ron
From : Student Money related Trainee Financial Controller
Date : 15.5.2015
Subject : AssessingEvaluating the diverse wellspringsdifferent sources of fund properfinance appropriate to the extensionexpansion stage
Official outline
Executive summary
I am recently selected Learner Money related Guidenewly appointed Trainee Financial Advisor in a Mexican Eatery;Restaurant; I am composingwriting a report to Mr. Ron, assessing evaluating the distinctive wellspringsdifferent sources of fund suitablefinance appropriate to firestart up stage and its development organize moreover.expansion stage also. The report ought to should address the accompanying errandsfollowing tasks and issues:
Firstly, I distinguishidentify and depictdescribe the different wellspringsvarious sources of fund accessiblefinance available to Mexican eatery. Besides, restaurant. Secondly, I evaluateassess the ramificationsimplications of the distinctive wellspringsdifferent sources of moneyfinance to Mexican eatery identified with danger, lawful, monetaryrestaurant related to risk, legal, financial and weakeningdilution of control and insolvency.bankruptcy. Thirdly, I select proper wellspringsappropriate sources of fundfinance for Mexican eateryrestaurant and make proposalsrecommendations on the most ideal methods for best ways of raising account.finance. Fourthly, I evaluateassess and contrast different expenses included and every wellsprings of money compare various costs involved with each sources of finance to Mexican eatery Restricted. At last,restaurant Limited. Finally, I clarifyexplain the significanceimportance of monetary making arrangementsfinancial planning for Mexican eatery. restaurant.
Presentation
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Yee Mon Phu Managing Financial Resources and Decisions Assignment-1
Introduction
Montezuma Pvt. Ltd is New Mexican eateryrestaurant that has quite recently just been built up established by Mr. Harry Wong and Mr. Ron Douglas. In spite of the fact that organizationAlthough company has not gone to beneficial exercisesproductive activities but rather organization company has plan to create produce and market the new channel. Later on,filter. In the future, Montezuma hopesexpects to make huge interests significant investments in deals, deals backing, and item improvement work force.sales, sales support, and product development personnel. This will include buying extra apparatusinvolve purchasing additional machinery and hardwareequipment to deliverproduce quality channels what's morefilters in addition staff preparing.training. The most essential important thing with the organizationcompany is capital.
Budgetary arranging is essentialFinancial planning is very important with Montezuma in light of the fact thatbecause if the organization doesn'tcompany doesn’t plan to utilize use capital, it can be bankrupt. It will be saidmentioned about influents of deficienciesshortages and surplus to the organizationcompany in this report. We are going to talkdiscuss about this organization wellsprings of money, budgetary choices, accountcompany sources of finance, financial decisions, finance as a source, and monetary executionfinancial performance in this exchange. discussion.
1.1 WellspringsSources of Fund Finance
1.1.1 Business Fund Finance
FundFinance is key essential for a business'business’s operation, advancement and extension. Beginning an eaterydevelopment and expansion. Starting a restaurant business is not a simple assignment,n easy task, as there are number of eateriesrestaurants that have been opened and these eateries contendrestaurants compete with one another amazingly.each other incredibly. I chosedecided to run Mexican sustenance eateryfood restaurant which will include an alternateadd a different dishes of nourishmentfood to the conventional nourishmentstraditional foods menu and it will cook prevalentcater superior quality sustenance.food. The eateryrestaurant business is famously intensenotoriously tough as it obliges enormous requires huge number of operations in it to be completed. At first carried out. Initially I will open an eatery restaurant on rent.
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Yee Mon Phu Managing Financial Resources and Decisions Assignment-1
The aggregate Venturestotal Investments will be £250,000 give or take approximately as it will take care of alternate expenses cover the other costs which may incorporate include the accreditation expenses certification cost and getting permitlicense for running. The Working capital will require need by the business (e.g. CrudeRaw Materials), StipendAllowance for sumsamounts that owed by clientscustomers once offersale of Mexican eatery startsrestaurant begins and the DevelopmentGrowth and advancementdevelopment (e.g. additional interest extra investment in limit). Wellspringscapacity). Sources of financed can be named Inward and Outside, Transientclassified as Internal and External, Short-term and Long haul-term or ValueEquity and Obligation.Debt. The conceivable wellsprings of account accessiblepossible sources of finance available to a business are;
1. On hand shareholder and chiefs stores directors funds
2. Family and Companions Money related Backing Friends Financial Support
3. Clearing Banks (Business Overdrafts, Term Advances) Loans)
4. Loans from Business supporting associations organizations
5. Business Holy messengers (www.businessangelnetwork.co.uk/national-business - heavenly attendants system)
1. 6. Business Angels (www.businessangelnetwork.co.uk/ national- business -angels-
network)
Community Advancement Account AffiliationDevelopment Finance Association (CDFA - www.findingfinance.org.uk)
7. Business Financing Organizations (www.businessfinanceforyou.co.uk) Institutions (www.businessfinanceforyou.co.uk)
8. Hire purchasebuy and renting leasing
By striking balance in the middle of value and riskequilibrium between equity and liability it is guaranteedensured that subsidizing funding structure suits the business. These are the wellspringssources of accountfinance that are accessibleavailable for running Mexican eatery. restaurant.
1.1.2 ScopeRange of Sources to Montezuma
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Yee Mon Phu Managing Financial Resources and Decisions Assignment-1
Harry Wong has secretly createdprivately developed to offer widebroad range Mexican wines and with his partner colleague Ron Douglas has numerous createdmany developed experience for coddles the greater partcaters to all of its clientscustomers by giving as per every clientproviding according to each customer taste, down to the littlest point of interest. With a specific end goalsmallest detail. In order to do this, the organizationcompany can have private source, for example, individual sparing, such as personal saving, credit unions, accomplices and so forth. Be that as it may, the organizationpartners etc. But the company has some other accessible wellspringsavailable sources of fund. finance.
For Montezuma, the wellspringssources of account finance are openaccessible in connectionrelation with Sole merchants, organizationtraders, partnership and Constrained organizations.Limited companies. Sole dealertrader is for the most part includedmainly involved in running of organizationscompanies and needshas to manageafford the cost of the fundingcapital to beginstart the business. At that point, benefits Then, profits of business are just all for sole merchant.trader. As the sole dealer,trader, Montezuma can discoverfind the fundfinance sources by obtaining cash borrowing money from the Bank, Business Blessed messengersAngels and by making deals.sales.
Firstly, being the sole broker,trader, own capital cash money is the suitable approachway to beginstart the business. After that, we can useexpend to maintain run the business by getting cashborrowing money from the banks and accepting cashreceiving money from financial speculatorsventure capitalists with business foundation picture.background image. In the same cases, Montezuma can utilize alternate methods for getting use the other ways of borrowing as the above displayed. presented.
1.1.3 Different methods for obtaining Other ways of borrowing
OrganizationPartnership is the sorttype of connectionrelation that is the collaborationcooperation of two or more persons with the same planaim to get benefitsprofits on the same business. Association sortPartnership type of connection doesn't relyrelation doesn’t depend on upon laws. It specificallydirectly upon on simply just their own assentionsagreements and after that acknowledgesthen accepts the proportionratio of understandingagreement shares. In the event that If Montezuma maintainrun the business in the connectionrelation of association,partnership, the wellspringssources of money finance is for the most partmainly from the accomplices'partners’ own capital then we can get borrow from the bank effortlesslyeasily as the business sufficiently huge. Additionally, alternate methods for acquiring, for example, Considering, Renting, Contract obtaining etc. large enough. Moreover, the other ways of borrowing such as Factoring, Leasing, Hire purchasing and so on.
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OrganizationCompany is the sorttype of business that worksoperates with more than two individuals taking into account lawfulpeople based on legal laws. Its control on the organizationcompany is change relyvary depend on upon the offer sumsshare amounts on that business. The organizationcompany law is that 51% of offer proprietorshare owner can control the organizationcompany and that proprietorowner is more intensepowerful than others. As Montezuma, in the event that if we maintainrun the business with the organization sort,company type, we can pick upgain the wellspringssources of accountfinance by offering standardselling ordinary shares to open.public. Being the organization sort,company type, we can acquire cash borrow money from the bank, from financial speculators simplerventure capitalists easier than association sort.partnership type. In the same way, we can gain cashearn money from considering, receipt reducing, rentingfactoring, invoice discounting, leasing and Contract buyingHire purchasing upon the needs and prerequisitesrequirements of organization. Along these lines,company. Thus, as above actualitiesfacts Montezuma ought to maintainshould run the business inside of organization connection in light of the fact that within company relation because it is more suitable than others and it can transferupload the wellspringssources of money effectively. finance easily.
1.2. The ramificationsimplications of the distinctive wellspringsdifferent sources of money finance
WellspringsSources of money impact finance influence the business operations as it were.to a great extent. It is extremely advantageousvery convenient to obtainacquire the trusts yet funds but once the business does not work according to arrangingoperate as per planning the impactinfluence and the weightpressure of procured assets increment to a disturbingacquired resources increase to an alarming state. The expensecost of storesfunds and their weight unbelievably exasperateburden incredibly disturb the business operations. On a very basic level, Fundamentally, business may gain finances acquire funds either from obligationdebt financing or valueequity financing. The expensecost of valueequity financing is profit installmentsdividend payments which mean less held income. In the event that retained earnings. If a business goes for the choiceoption of obligationdebt financing the expensecost of obligationdebt financing will be intrigue installmentinterest payment which impliesmeans less working payoperating income and high influence. leverage.
Consequently,Therefore, the control of the business will go into the hand of loan bosses.creditors. The right blendcorrect mix of the money relatedfinancial structure will be useful beneficial for the business. At the point when new companies When start up businesses is started, without a doubt the money relatedinitiated, the absolute financial structure will come aboutresult the achievementsuccess of the business. There are numerous approaches to discover the obligations. Charge conclusionsmany ways to find the debts. Tax deductions are the huge considerationenormous attention for obligationdebt financing. In this way,So, we can acceptassume that essentialprincipal and interest installmentspayments for a business advanceloan as costs of doing business. expenses.
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Yee Mon Phu Managing Financial Resources and Decisions Assignment-1
OfferingSelling the debentures
The strategymethod is most effortlesseasiest to get cash yetmoney but the offer accomplice share partner own over half organization offerabove 50% company share or debentures; different accomplicesother partners can reach under that individual.person. Debentures is an obligation debt or may be known as acquired cashborrowed money and is like Offer withsimilar to Share except for the exception of the wayfact that the cash picked up money gained by issuing debentures is not an earning but only a winning but rather just an obligationdebt which the organization needscompany has to pay back or possiblyat least pay the enthusiasminterest on the sum gotamount received per debenture. Debenture holders not at all like offerunlike share holders don't not have a privilege right to vote yetbut can en-en-cash the money the cash loans wheneverlends at any time since the overall revenuesprofit margins are verging on settled. If there should arise an occurrence of offeralmost fixed. In case of share capital the position of an organization company in the business market is not generally always the same. An offer share holder musthas to be up and comingto date for the present circumstancecurrent situation and future patternstrends of the organizationcompany whose shares he purchases.buys. In case the event that the organizationcompany is relied uponexpected to go in misfortuneloss the shares can be sold at a lessening cost. reducing price.
Issued OfferShare Capital
Issuing conventionalordinary shares is presentlynow being utilizedused by numerous
organizations many companies when they needwant to extendexpand business or pay for
venture.investment. Yet it is not straightforwardsimple for an organization company to issue
conventionalordinary shares without precedent for the first time in Mexican. NormalOrdinary
shareholders have the benefitprivilege of acceptingreceiving a piecepart of organization
benefits by means ofcompany profits via dividends which is in light ofbased on the estimation
value of shares held by the shareholder and the benefitprofit made for the year by the
organization. Organizationscompany. Companies can issue standardordinary shares keeping in
mind the end goalin order to raise money finance for long haul budgetary-term financial needs.
InclinationPreference shares are another sorttype of shares. InclinationPreference
shareholders get an alteredreceive a fixed rate of profits dividends before the customary
shareholderordinary shareholders are paid. Montezuma should try to raise fund for expansion by
issuing preference share because it is easier to deal with control dilution and dividend payment
method arrangement.
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Borrowing from the bank
Banks can be good sources of funding. For small ventures, business may be able to
secure a personal loan or loan of credit, for longer operations, business may be able to leverage
assets-large industry or equipment by using them as collateral to secure the loan. If the company
borrows money from the bank, it enables to keep the cash on hand to use an operating capital or
for personal survival drawing a down period in business. Additionally, if business goes bad, it
can negatively impact on business that can become bankruptcy. And then, need to pay interest on
the loans. The amount of payment will be due on the time regardless of whether the business is
bad or good.
For Montezuma, to expend the business Montezuma has various ways to find the sources
of finance. But, Montezuma should think about the taxes by choosing the finance source.
1.3. Appropriate sources of finance for Montezuma
1.3.1. The expansion business from Sole-Trader to Partnership
A sole trader is an individual in business. Generally sole traders businesses are small with
their own name. It is the most common organization. The available sources for sole trader are:
personal saving, working capital, borrowing money from the Bank, Business Angel and by
making sales.
These changing efforts tend to partnership be more successful when requests deal with
issues of high national priority and when an explanation is provided as to how the additional
resources will be used. Extension organizations are supported financially from a variety of
sources. Publically funded organizations receive support from: Bank Overdraft, Venture
Capitalists, Leasing and Hire Purchasing. The advantages and disadvantages of sources of
finance to support expansion business sole-trader to partnership are;
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Sources Of Finance
Advantages Disadvantages
Personal Savings✔to lend money to the business.
✔carry a lower rate of interest or free
not an option where very large-amounts✗
of funds are required.
Loans Large amounts can be borrowed.✔
Suitable for long-term investments.✔
✗Interest is charged.
✗Loans effect on company’s gearing ratio.
Bank overdraftI✔ deal for short-term cash flow deficits.
✔Easy and quick to arrange.
✗Interest is variable rate and daily paid
B✗ ank charges an overdraft fees.
Hire purchase✔ Asset can use before it’s paying in full.
✔ Instalments plan & taxable income
✗Owner as lender until last payment
A✗ sset cost is more than the original
Lease ✔Asset payments are only for the usage
✔Lease obtain easier than commercial loan
✗Finance lease provided to buy the asset
✗If pay than value, the lessee will ends
Venture capital
I✔ nvest large sums of money
✔bring a lot of experience and expertise
P✗ rofits shared with the investor.✗As venture capitalist influence by strategic decisions and control
1.3.2. The expansion business from Private to Public Limited Company
Although the sole trader route, which is commonly referred to as being self employed, is
the most popular way of running a business, there are significant advantages and disadvantages
of operating as a limited company. Varying in size from small own businesses to large PLCs.
The other source of finances can be available for company expansion from private to
public. The term debenture is a strictly legal term but there are other forms of loan or loan stock.
A loan is for a fixed amount with a fixed repayment schedule and may appear on a balance sheet
with a specific name telling the reader exactly what the loan is and its main details.
Short-terms loans, long-term loans
Have to pay the interest.
Need to regulate the period interest of loan can be high when organization getting
profit but when organization is not getting profit, it’ll be expansive.
Need to offer assets or property for the security purpose.
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In either type of company, the owners are called shareholders because they share the
ownership and share the profits of the good times and the losses of the bad times. Once they have
paid in full for their shares, the owners face no further risk of being asked to contribute to
meeting any obligations of the business. Hopefully, the business will prosper and the owners
may be able to receive a share of that prosperity in the form of a cash dividend. A cash dividend
returns to the owners, on a regular basis and in the form of cash, a part of the profit created by
the business.
Share Issue is the sources of finance suitable for a limited company. The advantages of
share issue are; it doesn’t have to be repaid and no interest is payable. The disadvantages are;
Profits will be paid out as dividends to more shareholders and ownership of the company could
change hands. Ordinary shares are usually offered to anyone who wants to buy (public). People
buy share because they want to receive the dividends when company make profits. Yet ordinary
share does not guarantee someone who owns it a constant dividend every month. Besides,
ordinary share could be exchanged between people without any regulations.
Preference share which provides a specific dividend that is paid before any dividends
are paid to ordinary holders, and which takes precedence over ordinary share in the event of
liquidation. Preference shares represent partial ownership and pay a fixed dividend that does not
fluctuate, although the company does not have to pay this dividend if it lacks the financial ability
to do so. The main benefit to owning preference shares are that the investor has a greater claim
on the company's assets than common stockholders. Preferred shareholders always receive their
dividends first and, in the event the company goes bankrupt, preferred shareholders are paid off
before common stockholders.
Borrowing from the Bank can be another good source of funding for the small business.
The core advantage of borrowing is that it enables us to keep our cash on hand and use it as
operating capital for the down period of the business. If the situation of the business is not good,
bankruptcy can be declared for saving most personal assets.
One of the peak disadvantages to bank loans is that they are very tricky to obtain unless a
small business has a considerable track record or valuable collateral such as real estate. The
disadvantage of acquiring bank loan is interest payment which will increase the leverage of the
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company and loan payment will become due unless its full amount is not paid. Interest rate for
bank loans is usually high for the start up business.
Finally, I have to verify the fitting source of finance for my business as New Mexican
Restaurant Company. The answer for my financial support seems to be included in the way I
choose type of ownership.In this case, borrowing from the bank is the best way out because of its
suitability for confirmed ownership’s type as a private limited based company. The most
appropriate source of finance for Montezuma; such as selling the debentures, ordinary shares
issued, Preference Shares issued and Borrowing from the Bank.In either case, For
Montezuma, their aim is the middle-to higher-income local market area residents and tourists.So,
Montezuma just needs to run the business as “private limited companies” because it already has
the interest of regular royal customers, a strong market and mild competitive climatein the state
of Queensland.
2.1. The costs of sources of finance for Montezuma
In Montezuma can use above the ways; there can be the cost of lending money, share-
capital, retained earnings and bank loans. The cost of debt financing (loans) is interest. The
cost of equity financing (investments) could include dividends or a share of the profits.
Comparing the two may involve a cost of capital calculation and analysis. We would in effect
compare the interest charges on a loan with the percentage of our company’s retained earnings or
accumulated profits that really belong to the investor.
If we use the bank loan for Montezuma, interest is the main cost. If we take out a loan of
$100,000 and pay 13% interest, the cost $13,000 per year and we need to pay regularly for
interest. Apart from this, we use the other ways of borrowing, we need to pay high interest rate
more than bank loan interest rate.
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If we can obtain loans from different banks, compare the interest rates and payment
terms they offer. To determine the total interest cost over the life of each loan to have a
comparable base. Small differences in the interest rate can add up to significant amounts over a
long-term loan. Keep in mind that short-term unsecured loans, such as lines of credit, generally
carry a higher interest rate than long-term secured loans, such as mortgages.
Debentures have to be paid a fixed or floating interest depending on the type of
debenture that is issued. Debenture interests are treated as expenses and charged against profits
in the profit and loss account. Debentures can be redeemed when the company has surplus funds.
Ordinary and Preference shares - Dividends has to be paid out of profits to
shareholders as a return for their investment in the business. There are administrative costs
occurring from issuing shares like stock exchange listing fee, printing and distribution fee and
advertising fee.To the owners of a company ordinary shares are issued. They have a nominal or
'face' value, naturally of $1 or 50 cents. There is no relationship between the market value of a
quoted company's shares and their nominal value, but when ordinary shares are issued for cash,
the nominal value of the shares must be equal to the issue price or less than issue price.
2.2. Explaining the Importance of financial planning
2.2.1. Financial planning
It is a process in which in order to meet the goals the present financial situation and the
modifications in the spending pattern presents before a person, organization or even a country.
2.2.2. Importance of Financial Planning
For obtaining enduring profits through the assets available, it is significant to plan
finances. Through financial planning the investments are structured suitably and handled by
experts. If an appropriate plan is developed in advance, every decision concerning our finances
can be supervised. The importance of financial planning is explained in the following points.
Cash Flow: To increase cash flow and monitor spending financial planning helps. By
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undertaking actions the cash flow is increased like- tax plan, careful expenditure and prudent
budget.
Capital: With the help of professional financial planning a strong capital foundation can
be built. Therefore, one can consider about investments and by this means develop his financial
situation.
Income: Through planning it is possible to control income efficiently. For separating
income into tax payments, other monthly spending and savings managing income helps.
Family Security: In the viewpoint of family security financial planning is essential. For
the intention of financially securing the family, various policies existing in the market are
serving.
Investment: A good financial plan helps in choosing the proper investment policy, which
considers the income and spending of a person. It facilitates the person to achieve the set goals.
Financial is one of the most important parts of the business. Therefore, all the company
need to create their financial planning at the end of the year. If the company ignores that,
company can get many disadvantages seriously. As the successful company, Montezuma needs
to make their financial planning and try to get their perspective goals and mission.
2.3 The information needs of different decision markers
Information is needed to the different parties involved with the business for making
financial decisions. The decision makers in sole proprietorship business and their information
needs are explained. Accounting information helps users to make better financial decisions.
Users of financial information may be both internal and external to the organization.
Internal users (Primary Users) of accounting information include the following:
Owner: The main user of business information. He prepares plans and formulates
strategies according to the business information. To analyze the viability and profitability
of the investment and to determining the future course of action, information is required
by an owner.
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Management: for analyzing the organization's performance and position and taking
appropriate measures to improve the company results.
Employees: for assessing company's profitability and its consequence on their future
remuneration and job security.
Accounting information is presented to internal users usually in the form of management
accounts, budgets, forecasts and financial statements.
External users (Secondary Users) of accounting information include the following:
Creditors: for determining the credit worthiness of the organization. Terms of credit are
set by creditors according to the assessment of their customers' financial health. Creditors
include suppliers as well as lenders of finance such as banks.
Tax Authorities: Another user of business information. To determine the credibility of
the tax returns filed on behalf of the business, authority requires financial information.
Investors: The investors analyze the feasibility of investing in the business at first. They
look forward to ensure a reasonable return on their investment before they commit any
financial resources to the business. For that investors require relevant information.
Customers: for assessing the financial position of its suppliers which is necessary for
them to maintain a stable source of supply in the long term.
Regulatory Authorities: for ensuring that the company's disclosure of accounting
information is in accordance with the rules and regulations set in order to protect the
interests of the stakeholders who rely on such information in forming their decisions
External users are communicated accounting information usually in the form of financial
statements.
2.4. The impact of finance on the financial statements
Financial statements keep record of a business’s trading year (Trading, profit and loss
account) and show the financial position of a business as at a date (Balance sheet). Obtaining
finance from different sources bring about a change in the financial statements. This portion of
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the report investigates how each source of finance is recorded and affects the financial
statements.
Types of Financial Sources
Cash FlowProfit & Loss
Account Balance Sheet
Loan Increase in Cash Inflow
Interest charged is depend on Loan
- Increase in Long- term Liabilities
Debenture Increase in Cash Inflow
Interest paid on regular basis
- Increase in Long- term Liabilities
Issue shares Increase in Cash Inflow
Dividend will be paid
- Increase in Share Capital
Bank OverdraftDecrease in Cash Outflow monthly
Overdraft fee and Interest paid on
regular basis
- Increase in Current Liabilities
Financial statements preparation as well as overtrading is very important element that
included in Montezuma PLC, Mexican’s financial planning. Overtrading occurs when the
company is too hasty in expanding business’s operation. If a company becomes overtraded, it is
likely to face up with liquidity problems and running out of working capital. Business’ sale will
increase in profit and loss account, but in a period of inflation. Therefore, the amount of cash and
bank will decrease considerably in the balance sheet.
Excessive borrowing concerned with the company has high liabilities banks and other
potential lender. There will be increase in cash flow and a balance sheet will usually
correspondingly and the interest charged on the loan. The interest charged in the profit and loss
account. This might lead to the collapse and liquidation of the company.
As a result, financial management is very important for Montezuma PLC, Mexican to
prevent unexpected severe condition to company’s finance.
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Yee Mon Phu Managing Financial Resources and Decisions Assignment-1
Conclusion
Here this is my report for Montezuma Pvt. Ltd. It is mention about different resource of
capital that Montezuma can use to improve. It is important to choose an appropriate and cheap
source of finance for the smooth operation of the firm. There are important factors to consider
when choosing a source of finance. However further work need to done. Each method has
advantages and disadvantages I suggest to Montezuma and the company must try to get the bank
loan first. And then it can expand and pay the salaries for the employees.
It is strongly believed that, depend on situation of company at the moment, Mr. Harry
Wong and Mr. Ron Douglas should choose change to “private limited companies”.Montezuma
must wisely deal with some problems from the first step of finding proper source of finance for
the company such as risk, dilution of control, financial, legal, and bankruptcy. Besides, financial
planning is also very important to the company when building cash flow budget and choosing
suitable option to raise money for business expansion. I can tell sure, if the company try to check
daily income and make sure profit and loss account for a business, the logistics will be rotated
well. Montezuma PLC is an expected company with positive prospective in future to grow, gain
market shares in Mexican market.
Reference List
BPP (2004), Managing Financial Resources and Decisions. 1st ed, Great Britain: W M Print.
En.wikipedia [online] “Venture Capital” available from [http://en.wikipedia.org/wiki/Venture_capital] [accessed May 11, 2015].
Financial dictionary (2009) “Financial Planning” [online] available from [http://financial-dictionary.thefreedictionary.com/Financial+planning] [accessed May 12, 2015].
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Yee Mon Phu Managing Financial Resources and Decisions Assignment-1
Find articles (2009) [online] available from [http://findarticles.com/p/articles/mi_m3495/is_10_48/ai_109136178] [accessed on June 14, 2015].
Kienthuctaichinh (2009) “Lap KeHoach Tai Chinh” [online] available from [http://www.kienthuctaichinh.com/2007/12/lp-k-hoch-kinh-doanh-phn-7-k-hoch-ti.html] [accessed July 15, 2015].
Oxford Business English Dictionary – Oxford University Press.
Sbinformation (2009), “Debt and Equity Financing: Two Options for Financing Your
Small Business” [online] available from
[http://sbinformation.about.com/od/creditloans/a/debtequity.htm][accessed on July 24, 2015].
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