INTRODUCTION
In an organisation, there are various kinds of resources available like human, physical, financial, technological and more. Among these, human resource play a crucial role in accomplishing targeted goals and objectives in set period of time while other materials enable them to do function in appropriate manner (Hai-xia, 2011). This project entails the importance and purpose of managing such kind of resources in an enterprise. It also describes way to manage human resource, raise funds from different source as well as an interpretation on key financial statements is also given. For this context, a large company of UK named by LIDL has been taken which deals in supermarket business.TASK 1(Covered in leaflet).
TASK 3
P4 Sources of internal and external finance
In order to run a business properly, a company requires money in sufficient manner. By the term finance, it entails the management of desired amount of money and allocate from different sources (LIU and YAN, 2015). For an instance- If an organisation sells its products or services to people then they are considered as source of obtaining finance. It can be distinguished in two broad terms that are:-
Internal Source of finance: Rather than to induce loan from banks and investors, a company can get necessary funds from internal source i.e. use own money for financing in operations. In context with LIDL, this kind of finance helps in saving money on payments of interest or getting free from being accountable to investors. It uses following source to generate finance in business-
- Retained Profits: This source is used by such companies that operate business on large level with shareholders and stock. They used to recycle profit as working capital instead of using the same for paying it as dividends.
- Sale of Assets: In this context, management of LIDL can sale such assets to other companies like machineries, equipments, transport and more which have no use in business. It will help to cover a cash-flow emergency in quick manner.
- Reducing working capital:It is a type of strategy used to manage available cash in adequate manner. Under this context, employers used to concern more on longer payment terms rather than shorter billing items so that funds can be received faster.
External Source of finance: It states process of arranging funds from outsiders rather than retained earning from internal activity of business (Xie-kui and Dan, 2015). This source of financing can be segregated on the basis of long-term and short-term purpose that are-
- Long-term source: It includes equity shares, debentures, term loan, preferred stock, venture capital, leasing and hire purchasing. For big enterprises like LIDL, equity shares and debentures are considered as common source but costly as compared to finance on debt. While hire purchase is normally provided by suppliers to buyers with an alternative to buy assets of company at the end of its term.
- Short-term source:Bank overdraft, trade credit, factoring in debt etc. are defined as short-term source of finance. As companies are required money for day-to-day operations in which requirement of cash is generated due to a gap between collection and payments. Therefore, to fulfil this gap, management of LIDL used to take bank overdraft. While trade credit is given by suppliers or creditors which allows a firm in delaying its payment for certain period of time (LIU, SU and QI, 2012).
P5 Interpretation on contents of a balance sheet, trading and P&L account
Income statement of LIDL |
|
|
Currency in GBP. All numbers in thousands |
|
|
Revenue |
31/01/18 |
31/01/17 |
Total revenue |
8267 |
8212 |
Cost of revenue |
2999 |
2612 |
Gross profit |
5268 |
5600 |
Operating expenses |
||
Selling general and administrative |
7380 |
5543 |
Total operating expenses |
10488 |
8114 |
Operating income or loss |
-2221 |
98 |
Income from continuing operations |
||
Total other income/expenses net |
3 |
4 |
Earnings before interest and taxes |
-2221 |
98 |
Interest expense |
- |
-2 |
Income before tax |
-2218 |
102 |
Income tax expense |
-125 |
-85 |
Net income from continuing ops |
-2093 |
187 |
Non-recurring events |
||
Net income |
||
Net income |
-2093 |
187 |
Net income applicable to common shares |
-2093 |
187 |
Income statement |
|
Revenue(ttm) |
8.27M |
Revenue per share(ttm) |
0.03 |
Quarterly revenue growth(yoy) |
-2.50% |
Gross profit(ttm) |
5.27M |
EBITDA |
-1.84M |
Net income avi to common(ttm) |
-2.09M |
Diluted EPS(ttm) |
-0.9 |
Balance sheet |
|
Total cash(mrq) |
3.23M |
Total cash per share(mrq) |
0.01 |
Current ratio(mrq) |
3.2 |
Book value per share(mrq) |
0.03 |
Cash flow statement |
|
Operating cash flow(ttm) |
-720k |
Levered free cash flow (ttm) |
-969.12k |
Trading information |
|
Stock price history |
|
Beta |
0.14 |
52-week change 3 |
-28.75% |
S&P500 52-week change 3 |
14.79% |
52-week high 3 |
10.45 |
52-week low 3 |
5.999 |
50-day moving average 3 |
7.535 |
200-day moving average 3 |
6.95 |
Share statistics |
|
Avg vol (3-month) 3 |
50.81k |
Avg vol (10-day) 3 |
32.5k |
Shares outstanding 5 |
244.18M |
Float |
146.08M |
Interpretation: From this financial statement, it has interpreted that LIDL Company as compares to last year, it has not achieved much success in terms of sales performance ans revenue.
TASK 4
P6 Use of budget for financial control
A budget in a firm provides a road map which describes entire detail about estimated outcomes through which manager of a firm can make decisions as per set goals (Junyi, 2014). It helps in three main aspects of business that are:
Planning: When a budget reflects expected sales in a certain period then manager can analyse costs of the same and determine resources or raw materials need for that. For an instance- if sales of a business is increasing 4% over budget for specific time then management can add this in further calculation.
Forecasting: Budget of previous financial year helps managers in preparing budget for following year by applying strategies that are helpful in last year for gaining profitability.
Continuous improvement: With weekly performance of business in terms of sales, managers can evaluate ways through which improvement may be done (Chen, Nasongkhla and Donaldson, 2015). Budget helps them in providing clues as where they need to concentrate more for improving financial performance.
P7 Financial State of LIDL
This statistic reveals profit gained by LIDL from 2014 to 2017. It shows that operating profit of this company dropped continuously i.e. amounting 68 million euros in 2017 which was near about 2 million euros less as compared to 2016.
CONCLUSION
It has been concluded from this report that behind success of every organisation, management play an important role who helps in allocating different resources as well as manage them in proper way. It includes human, physical, technological and other non-financial resources which have played different-different role in operating functions of business. Along with this, financial resources are considered as most essential initiatives without which entire functions of a company cannot operate. So, various kinds of financial sources are also described in this assignment.