Search

BUS020C418S Managing Financial Resources Assignment Level 5

University:

  • Unit No:
  • Level: Undergraduate/College
  • Pages: 24 / Words 5964
  • Paper Type: Assignment
  • Course Code:
  • Downloads: 3236

INTRODUCTION

For managing a successful business, there is a strong need to adopt a business operation in an effective manner. now, it can simply be said that the manager of Milner Chemical Plc is planning to expand their operations and for that, there is a strong need to have finance. The cited organisation is planning to list their shares on the London Stock Exchange and for that, there is a need so that the business operations in an effective manner (Ahnquist, Wamala and Lindstrom, 2012). cost of capital is used by the organisation so that the business can make an efficient strategy for financial planning. Now, it is observed that the management of the cited organisation is required to adopt their business objectives in an effective manner. Various financial tools would help to make an efficient strategy. Various financial tools are used by the organisation in order to render an efficient strategy in an effective manner.

TASK 1

1. Advantages and Disadvantages of Attaining a Listing in a Stock Exchange:

There are so many benefits and drawbacks which occur at the time of listing on the stock exchange. Now, it can be rightly said that the management of the cited organisation must have to adopt regulatory norms while exercising listings of the securities. Some of them are mentioned hereunder:

Need to Consult Directly With Our Experts?

Contact Us

Advantages:

For listing shares of Milner Chemical plc in the London stock exchange. There is a strong need to adopt listing norms for making the business organisation in an effective manner. By exercising the listing of the securities, the cited organisation needed to adopt their business objectives in an effective manner. here are some of the advantages mentioned hereunder:

  • Form a market valuation for the organisation and assist opportunities to enhance capital for expansion and possibilities of realising a few of the investments.
  • Provided access to the acquisition currency and transparency throughout the value of the organisation. The listed organisation mostly implements their shares, as opposed to cash, to form acquisitions. This could be mostly implemented at the time of using a buy and build strategy at the time of cash which could be highly used in the other areas. If there is an objective valuation for shares, the target organisation is going to assess what they are getting if offer them a share in the business.
  • Enhances employee commitment by offering them something of clear value. When share prices do go up and down and few vendors would not consider payment in the shares, however, they might often make part of the buying consideration (Almalki, FitzGerald and Clark, 2011).
  • This could be differences for employees along with options to assess the value which have been rendered. On the other way, employees of the listed organisations which provided shares or options could be overviewed accurately.
  • Form a public profile and enhanced ability to fascinate more calibre board members. In order to come to that level of calibre, organisation is required to adopt this in an effective manner. In order to get more people of that calibre into the organisation, being listed genuinely helps, as they are required to form listed status which renders a mostly liquid incentive plan.
  • Enhance supplier, Investor and consumer confidence and enhance standing in the marketplace. This could assist the organisation to make the business globally. Listed organisations must go via a due diligence process before they can be listed in the London Stock Exchange market. Checks and balances are formed which could lead to enhanced confidence, emerging in more supplier credit terms, better connection with consumers and more valuations from investors (Boulware and et. al., 2016).

Cons:

  • Reliability and Scrutiny: Public organisation are just like public property. Because they are forecasted to comply with the rules of the markets they populate. Organisations on the London Stock Exchange are required to implement advisors who would comply all the compliance officer in an effective manner.
  • Cost: The amount of the cited management time and important costs are linked with the floatation and continued listing must be under-estimated. From the process of floatation itself, which could form diverse months, to the time-consuming administration of regular and regular statements. There are so many activities to handle.

2. Methods of Obtaining Listing in the London Stock Exchange:

In case any new venture which is established for the very first time in the market needs to be listed on specific stock exchanges. There are various processes a company needs to take into consideration during the time of listing a business on the London Stock Exchange in the main primary market. There are so many steps which are required to be adopted while listing the securities on the London Stock Exchange. These are mentioned as under:

Appointing advisors: For accessing the London Stock Exchange, there must be appoint specific advisor in place. They must have an appropriate time of market experience or can need to seek specific suggestions to hire new ones. Every adviser is planning a crucial role in the application and entry process for the main market. Some of them are:
A sponsor: It is essential for the company to select the best sponsors that are used to guide companies through the application and procedures of making the step into the main market. They would be held responsible for guiding the company through their valuable ability and experiences in the admission process and making recommendations on UK listing boards as legal needs.
Broker: It is said to be an important person who will assist with the pricing of shares and aid in generating valuable interest in their business through marketing companies trading and thereafter to attain future aims (Cascio, 2018).

Reporting accounting: It will be independently analysing the company's financial position by producing a wide number of reports to fulfil particular legal needs and to assist directors in order to meet their requirements.

Lawyer: It will be able to give advice to any legal issues that can arise in the process of making entries into the market. It consists of essential disclosure needs and regular obligations that are presented during the period of time.
Preparing a company for the stock market: There are various aspects of a company before starting the listing procedures. Some of them are discussed below:
Asset and liabilities: It must be ensured that a company owns or controls every asset required for the purpose of operating the company and that can cover debt obligations.
Shareholder arrangements: It ensures that all current shareholder must agree on a time limit restriction on the basis of selling their share during flotation.
Share capital: It needs to organise total splits of a company's new share capital or organisation of current capital which is being kept by the company.
IPR: It ensures that any valuable IP of an organisation must be protected before flotation into the share market (Chartier, 2014).

Insurances: It will be considered one of the main aspects which make the company follow certain policies that are up to date and provide valuable cover in case any damage arises to the company.
Joining the London stock exchange market: It is mainly related to the total length of time it will take to join the main market which will depend on a wide number of impacts which consists of a selected route to the market. Some of them are needed to agree on a realistic timescale for joining the stock market. Some of them are mentioned below:
Creating companies prospectus: It must be produced as a prospectus which would be proven through the UKLA. These would be considered primary marketing documents and can contain sufficient data for investors.

Application for admission to trade: They can apply to both the London Stock Exchanges and UKLA to consider the company's securities to the primary market.
Marketing company's flotation: It would be promoting companies between potential investors to ensure their growth and success on registration day. In this process broker can make proper help in to stage.
Completion of underwriting agreement: This would be entering into the process of underwriting contracts among relevant parties such as owners, directors and shareholder.
Keep an impact day: This must be happening in case the prospectus is taken and all essential approval and floatation get announced.
Henceforth, all tasks related to the company's shares will be provided to trade on the stock market and trading can be started after all the permission is taken from LSX (Chartier, 2014).

3. Methods of Raising Capital in the London Stock Exchange:

It is well known that the London Stock Exchange is considered the home to about 2500 companies and is given the choice of opening four markets which are; the main market, the professional securities market, the specialist fund market and AIM. It can also be depicted that raising capital is one of the major factors because of which the company chooses to list on the Main Market. It is a beneficial situation for both companies as they will face sudden gains in their profits if they shift to public equity capital.

  • The Main Market is considered the home to larger and more established companies. If companies want to operate on the London Stock Exchange then they will have to get approval from the UK Listing Authority (UKLA), a division of the Financial Conduct Authority (FCA) and once they are approved then LSE cannot stop those companies are trading in the main market. 
  • PSM is the kind of market where companies are raising capital via the issue of specialist securities, such as debt, convertibles, depository receipts and professional and institutional investors as well.
  • In the Specialist Fund Market, they are targeting institutional, professional and highly knowledgeable investors only.
  • AIM is considered as world's leading market for small as well as growing companies. So, companies who are entering through this segment then they are required to become a public company and their structure should not be of a sole trader or a partnership (Fotaki, 2011).
  • We Promise Exceptional Assignment Writing & No AI Shortcuts !

    View Samples Order Now Assignment help

    Some of the methods are:

    Initial Public Offer:

    One of the most common methods that can be used by companies to raise capital at the London Stock Exchange is through Initial Public Offers (IPO). In this, the financial advisor of the company will offer the shares of the respective company to the private and institutional investors and then start the process of underwriting. An IPO draws the attention of private investors who are considered very important for developing the liquidity of a company's shares. This is also considered the most expensive method to reach the market and that is why it is usually used by large-sized companies or those organisations who are looking to raise considerable amounts of capital (Genet and et. al., 2011). 

    Placing:

    This is also an effective method in which the shares of the company are being offered to only a selected base of institutional investors. Here, the capital is being raised at a lower cost and with greater freedom. Along with this, the company also gets the option to choose their investors as well.

    TASK 2

    2.1

    a). Cost of Preference Shares:

    This is calculated by using the following formula:

    Dividend/ price

    Here,

    Preference shares interest would be 12% which is less than the ordinary share price was 2. Which is less than the price of the organisation in order to calculate the cost of preference shares.

    The cost of preference shares is 12/1.2= 10%.

    b). Cost of Equity Shares:

    Ke= (D1/Po) +Growth

    Here,

    P0=Current Price

    D1= Expected dividend

    G= Growth

    (0.108/2)+8%= 13.4%

    c). Cost of Debenture

    = .010(1-.20)= 8%

    d). Weighted Average Cost of Capital:

    WACC= We*ke+Wp*Kp+Wd*Kd

    = (.3636*13.4)+(.1818*10)+(.1818*8)=4.86+1.82+1.45=8.13%

    Here,

    We= Equity weight

    Ke= Cost of equity

    Wp= Weighted preference

    Kp= Cost of preference

    Wd= Weighted debt

    Kd= Cost of debt

    2.2 Importance of Financial Planning:

    Financial planning is a kind of process in which forecasting the capital needed and identifying its fulfilment. This is the procedure of making policies for procurement, investment and administration of the funds of a company (Ginter, 2018).

    Objectives of financial planning: This has so many objectives to look forward to:

    Identifying capital needs: This would have relied on aspects such as cost of current and fixed assets, promotional expenses and long-range planning. Capital requirements are required to be overviewed with both of the aspects: short term and long term needs.

    Identifying capital structure: Capital structure simply means the consisting of capital. Which covers decisions of the debt-equity ratio for both short term and long term (Kringos, Boerma, van der Zee and Groenewegen, 2013).

    Forming financial policies which are related to cash control, lending, borrowing etc.

    Importance of financial planning: This is the process of forming objectives, policies, procedures, programmes and budgets related to the financial activities of the concern. This guarantees efficient financial and investment policies. The importance could be outlined as under:

    • Appropriate finances are required to ensure this.
    • Financial planning assists in ensuring an accountable balance between inflow and outflow of financial henceforth stability can be achieved.
    • Financial planning confirms that suppliers of finances are helpful in investing tools of organisations that exercise financial planning (Hunter, 2016).
    • Financial planning assists in forming growth and growth programmes that could assist in the extensive run survival of the organisation.
    • Financial planning assists in limiting uncertainties that could be hurdles to the emergence of organisation. This assists in guaranteeing stability and profitability in the concern.

    2.3 Informational Needs of Directors, Senior Managers and Junior Managers

    Directors, senior managers and various junior managers totally relied upon the informational needs of the statement which would help to gain sustainability for the firm. now, this can be simply said that the financial information would assist in gaining sustainable development in an effective manner that would help to gain efficient development. Managers and directors of the cited organisation are required to make certain discounts which would help out to gain sustainability in an effective manner. Now, there is a strong need to make certain objectives in an effective manner. Now, this can be rightly said that the managers of the cited organisation are required to form an effective strategy (Kakuma and et. al., 2011).

    2.4 Impact of Finance on the Financial Statements:

    Finance is the major problem which assists in making the business objectives an effective strategy. A finance statement is a major tool which ultimately assists in making strategy in an effective manner. With the help of a financial statement, anyone can assess the financial position of a company. Which ultimately helps to gain sustainability for the organisation. Henceforth, there is an impact on the financial statements. This would help to gain sustainable development for the firm by way of taking an efficient financial problem.

    TASK 3

    3.1 Production Budget in Units and in Unitary Terms:

    The production budget is calculated:

    Budgeted production of Gold tap

    Particulars

    Per unit cost (£)

    2000 units

     

    Direct material

    20

    40000

     

    Direct labour

    50

    100000

     

    Variable overhead

    10

    20000

     

    Fixed overhead

     

    80000

    Total budgeted cost

    240000

     

    add: profit margin of 25%

    60000

    Expected selling price

    300000

     

    Selling price per unit

    150

     

    Profit and loss statement

     

    Sales

    600000

    Less: Expenses

     

    Direct material

    -40000

    Direct labour

    -100000

    Variable overhead

    -20000

    Fixed overhead

    -80000

    Budgeted profit and loss

    360000

     

    Material rate

    Cost of material per Kg as per 2000 units

     

    material in Kg

     

     

    500 Kg

    2500

     

     

     

    Labour our rate

    10000

    50

     

     

    Budgeted production of silver tap

    Particulars

    Per unit cost (£)

    4000 units

     

    Direct material

    15

    60000

     

    Direct labour

    25

    100000

     

    Variable overhead

    10

    40000

     

    Fixed overhead

     

    80000

    Total budgeted expenses

     

    280000

     

    add: profit margin of 25%

     

    70000

    Expected selling price

     

    350000

     

    Selling price per unit

     

    87.5

     

    Profit and loss statement

     

    Sales

    350000

    Less: Expenses

     

    Direct material

    -60000

    Direct labour

    -100000

    Variable overhead

    -40000

    Fixed overhead

    -80000

    Budgeted profit and loss

    70000

     

     

    Material rate

    Cost of material per Kg as per 4000 units

     

    material in Kg

     

     

    1333.33 KG

    12000

     

     

     

    Labour our rate

    100000

    25

     

    3.3 Cost of Capital of the Cited Organisation:

    Year

    Cash flow

    Present factor @ 10%

    PV

    0

    -10,000,000

    1

    -10000000

    1

    1,240,000

    0.909090909

    1127272.727

    2

    2,200,000

    0.826446281

    1818181.818

    3

    3,280,000

    0.751314801

    2464312.547

    4

    4,320,000

    0.683013455

    2950618.127

    5

    5,160,000

    0.620921323

    3203954.027

     

    200,000

    0.620921323

    124184.2646

     

     

    Total PV

    11688523.51

     

     

    Payback period

    4.16 Years

     

     

    Accounting Rate of Return

    300%

     

     

    NPV

    1688523.511

     

    b). Evaluate the Viability of an Investment Appraisal Proposal:

    Investment appraisal proposals are the best tool which are used by the organisation. The viability of the investment appraisal proposal is seen as great as this can be rightly said that the net present value of the cited project is effective which is 10688523.51 which does seem to be great and positive this also shows the viability of the project. The project will recover its total money in just 4.16 years (Kirch, Henderson and Dill,  2012).

    TASK 4

    4.1 Explain the Types of Information Rendered by Each Statement:

    There are various kinds of information which helps for making the business objectives in an effective manner. now, the Management of the cited organisation must have to provide comprehensive statements according to the needs of the cited organisation to make an efficient objective in an effective manner. Various stakeholders require information as per the needs of various stakeholders in an effective manner (Singer and et. al., 2011).

    4.2 Different Formats of Income Statements:

    Organisations

    Clubs and societies

    Fixed to earn income by offering goods and services

    Fixed to encourage activities of interest to its members.

    Offer goods and services higher than cost price to gain profits.

    No value is placed on common facilities rendered to members.

    Amounts attained and paid are recorded in the cash book.

    Money attained and paid were recorded in receipts and payment accounts.

    Trading account is to calculate gross profits.

    If a club runs a hotel, bar, or trading account is formed to measure profit.

    A key source of revenue is sales or fees attained.

    Here, the income source is the subscription amount received from members.

    P&L account formed measured net profit according to gross profits+ other income expenses.

    The income and Expenditure account is formed to measure surplus or deficit as income less expenditure.

    Balance sheet equation as the assets= Owners equity+ Liabilities.

    Balance sheet equations such as assets accumulated fund+ liabilities.

     

    4.3 A & B calculate ratios and their explanations:

    Particular

    2015

    2016

    Industry

    Current Ratio

    12654/8878=1.425

    8928/7060=1.26

    1.85

    Quick ratio

    7568/8878=0.8524

    5428/7060=0.77

    1.21

    Gross Profit Margin

    4312/15712*100=27.44%

    2163/6375*100=33.93

    37.50

    Profit margin

    72/15712*100= 0.45

    388/6375*100=6.09

    7.80

    Return on total assets

    72/14026*100=0.513

    388/13286*100=2.90

    6.70

    Inventory turnover

    11400/5086=2.24

    4212/3500= 1.20

    4.1

    Average Collection period

    15712/7568=365/2.07= 176 Days

    6375/3500= 365/1.82=200 days

    75days

    Interest earned

    8 times

    7 times

    15 times

    Gearing ratio

    3,776/10000*100=38%

    1,868/10000*100=18.68%

    25%

     

    From the above-mentioned report, this is rightly observed that the current ratio of Wordsworth plc in 2015 was 1.425 which was enhanced to 1.26 and in both of the years this could not touch the industry benchmark. The same thing also happens in the quick ratio. Gross profits margin in 2015 and 2016 was 27.44 and 33.93 respectively which were also down to the industry level (Kringos and et.al., 2013). There is nothing that even touches the industrial benchmark except the gearing ratio. This also shows that in 2015 this reached 38% which was less than 18.68% which shows efficiency. Overall, this can be rightly said that the financial position of the Words Worth plc was not up to the industry benchmark. Which did not even show good financial positions (Financial Management Resources, 2017).

    CONCLUSION

    From the above-mentioned report, this can be concluded that Milner Chemical plc is not in a good position to expand their operations in an effective manner. Now, there is a strong need to adopt various financial strategies for meeting the financial needs of the organisation in an effective manner. In this report, the production budget is prepared as per the needs of the various entries. Various ratios are prepared in this report and viability is checked of  Woodsworth plc.

    Need Personalised Assistance from Our Experts?

    Share Your Requirements via Whatsapp!

    Chat Now

    REFERENCES

    • Shanks, N. H., 2016. Introduction to health care management. Jones & Bartlett Publishers.
    • Ahnquist, J., Wamala, S. P. and Lindstrom, M., 2012. Social determinants of health-a question of social or economic capital? Interaction effects of socioeconomic factors on health outcomes. Social Science & Medicine. 74(6). pp.930-939.
    • Boulware, L.E. And et. al., 2016. Race and trust in the health care system. Public health reports.
    • Chartier, Y. ed., 2014.  Safe management of wastes from health-care activities. World Health Organization.
    • Chartier, Y. ed., 2014. Safe management of wastes from health-care activities. World Health Organization.
    • Naledi, T., Barron, P. and Schneider, H., 2011. Primary health care in SA since 1994 and implications of the new vision for PHC re-engineering. South African health review. 2011(1). pp.17-28.
    • Almalki, M., FitzGerald, G. and Clark, M., 2011. Health care system in Saudi Arabia: an overview/Aperçu du système de santé en Arabie saoudite. Eastern Mediterranean Health Journal. 17(10). p.784.
    • Fotaki, M., 2011. Towards developing new partnerships in public services: users as consumers, citizens and/or coproducers in health and social care in England and Sweden. Public administration. 89(3). pp.933-955.
    • Cascio, W., 2018. Managing human resources. McGraw-Hill Education.
    • Genet, N. and et. al., 2011. Home care in Europe: a systematic literature review. BMC Health Services Research. 11(1). p.207.
    • Ginter, P.M., 2018. The strategic management of health care organizations. John Wiley & Sons.
    • Singer, S. J. and et. al., 2011. Defining and measuring integrated patient care: promoting the next frontier in health care delivery. Medical Care Research and Review. 68(1). pp.112-127.
    • Hunter, D. J., 2016. Desperately seeking solutions: rationing Health Care. Routledge.
    • Kirch, D.G., Henderson, M.K. and Dill, M.J., 2012. Physician workforce projections in an era of health care reform. Annual review of medicine. 63. pp.435-445.
    • Kringos, D.S. Adn et.al., 2013. Europe's strong primary care systems are linked to better population health but also to higher health spending. Health affairs. 32(4). pp.686-694.
    • Kringos, D.S., Boerma, W., van der Zee, J. and Groenewegen, P., 2013. Europe's strong primary care systems are linked to better population health but also to higher health spending. Health affairs. 32(4). pp.686-694.
    • Kakuma, R. and et. al., 2011. Human resources for mental health care: current situation and strategies for action.  The Lancet. 378(9803). pp.1654-1663.
    • Luo, Y. and et. al., 2012. Grandparents providing care to grandchildren: A population-based study of continuity and change. Journal of Family Issues. 33(9). pp.1143-1167.
    • Richard, A.A. and Shea, K., 2011. Delineation of selfcare and associated concepts. Journal of Nursing Scholarship. 43(3). pp.255-264.
Download Full Sample
Cite This Work To export references to this Sample, select the desired referencing style below:
Assignment Desk.(2024) BUS020C418S Managing Financial Resources Assignment Level 5 Retrieved from: https://www.assignmentdesk.co.uk/free-samples/financial-management/managing-financial-resources-assignment-level-5
Copy to Clipboard
BUS020C418S Managing Financial Resources Assignment Level 5 Assignment Desk ,(2024),https://www.assignmentdesk.co.uk/free-samples/financial-management/managing-financial-resources-assignment-level-5
Copy to Clipboard
Assignment Desk (2024) BUS020C418S Managing Financial Resources Assignment Level 5[Online]. Retrieved from: https://www.assignmentdesk.co.uk/free-samples/financial-management/managing-financial-resources-assignment-level-5
Copy to Clipboard
Assignment Desk BUS020C418S Managing Financial Resources Assignment Level 5. (Assignment Desk, 2024) https://www.assignmentdesk.co.uk/free-samples/financial-management/managing-financial-resources-assignment-level-5
Copy to Clipboard
Assignment Desk BUS020C418S Managing Financial Resources Assignment Level 5. [Internet]. Assignment Desk.(2024), Retrieved from: https://www.assignmentdesk.co.uk/free-samples/financial-management/managing-financial-resources-assignment-level-5
Copy to Clipboard
Struggling with writing assignments? Take our academic writing services to resolve your problems. We not only provide online assignment help but also various other services like thesis, dissertation, and essay writing services. If you have any doubts about our experts, then we suggest you check our “Samples” before seeking dissertation help from us. Our experts can ease the complexity of your work. All you have to do is ask, “Can you do my assignment?”
Boost Grades & Leave Stress

Share Your Requirements Now for Customized Solutions.

Lowest Price
USD 6

    Delivered on-time or your money back

    100+ Qualified Writers

    For Best Finance Management Assignment Help

    View All Writers
    FREE Tools

    To Make Your Work Original

    • tools Paraphrasing Tool

      Check your work against paraphrasing & get a free Plagiarism report!

      Check Paraphrasing
    • tools Plagiarism Checker

      Check your work against plagiarism & get a free Plagiarism report!

      Check Plagiarism
    • tools Dissertation Outline Generator

      Quick and Simple Tool to Generate Dissertation Outline Instantly

      Dissertation Outline Generator
    • tools Grammar Checker Tool

      Make your content free of errors in just a few clicks for free!

      Grammar Checker
    • tools Essay Typer

      Generate plagiarism-free essays as per your topic’s requirement!

      Essay Typer
    • tools Thesis Statement Generator

      Generate a Compelling Thesis Statement and Impress Your Professor

      Try Thesis Generator Tool

    Professional Academic Help at Pocket-Friendly Prices!

    Captcha Code refresh

        Estimated Price

        USD 6.32 25% OFF
        Total Price USD 6
        182532+Delivered Orders 4500+PhD Writers 4.8/5Client Rating

         
        AD whatsapp

        Limited Time Offer

        Exclusive Library Membership + FREE Wallet Balance