Proper financial planning helps the organization in managing the incomes by allocating the incomes in different expenses of the business, such as tax payments, monthly expenditure, savings, etc McKeown, This is directly increase the cash inflows of the business.
This section provides the knowledge related to the financial data which is essential for decision makers Fitzgerald, It does not create any burden of obligation for the organization. Sales of the asset The assets of an organization are sold at their book value a fter deducting the accumulated depreciation.
This financial statement enables the decision maker to decide further business plans. For a large scale organization like Tesco it is important to raise huge amount of funds in order to fuel certain business activity such as expansion of business or conducting R and D activities, etc.
Sometimes it becomes very complicated to procure a bank loan. Debt financing does not impact the control pattern of the organisation.
Financial planning helps in selecting the most financially viable project for the business where it can invest its funds for generating profits. Thus organisation specific guidelines only are effective in case of retained earnings and no other legal statue monitors the same Lease financing is done between the lessor organisation and the lessee lease provider they may or may not enter into a formal contract for the same.
The debenture holders are paid interest at a fixed percentage. Working capital Working capital is considered as an indispensible source of finance for an organization.
It does not create any risk of bankruptcy. It market capitalisation of the company and hence enhancing its overall credit worthiness These are a permanent source of finance as they are redeemable only at the time of liquidation. These are as follows: Venture capitalists invest in the shares of the company; hence receiving venture capital funds does not create the risk of bankruptcy.
The sale of stock does not create the risk of bankruptcy. It is impossible for a decision maker to understand the exact status of the debt, equity, cash, assets, liability, etc.
As the future of the organization is uncertain so financial planning of the organization helps in taking some useful action by which the losses can be claimed.
Stock Control Legal Issue of Equity Shares has to be as par the legal guidelines set out by the companies act, or any other legal statue in effect thereof Debentures too are issued only in accordance with the Companies act, and the power of the debenture holders is also defined by the statue Term Loans are procured from commercial banks and large financial institutions.
As the company generates finance from different sources. Acceptance of loan from a commercial bank does not dilute the control of the organization. It is the most risk free source of finance.
Thus, there is not set regulation curbing or monitoring the availing of term loan by an organisation Retained earnings are an internal source of fund generation. Thus legal implications of the same depend upon the nature of contract entered into.
Hussain, The advantages of external sources are: Retained profit does not create any risk of bankruptcy for the company.1tf - Download as PDF File .pdf), Text File .txt) or read online. managerial acccounting gaison norrren solution Chapter 01 - Answer.
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Mfrd 1 Words | 13 Pages. Contents Introduction 2 Identify and describe the various sources of finance available to Company 3 The implication of the different sources of finance to Company related to risk, legal, financial and dilution of control, and bankrupt.
4 Select the appropriate sources of finance for Company and make recommendations.
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