The three statements are interlinked; this means that changes in one will definitely change the others. With efficient sales forecasting, Living wood will be able to forecast their cash flows effectively, in turn benefiting the financial planning. Though, in some cases, the cost of hire purchasing equipment ends up to be much higher than the initial amount.
To do this, they must increase their product range. Also, the machinery they have would be around five years old, and may not bring as much finance they will require, and they will also need to find a replacement for it which will again require more capital.
Additionally, having a stable supplier will allow them to reduce costs.
Detailed analysis of Living Wood is conducted further in the Assignment. The Financial Plan helps to know the exact position of the business, that is, where it stands with its competitors.
This will allow Living wood to be able to establish how much profit or loss they made during the year. As Living wood does not have an up to date MIS system, anticipating demand is difficult for the company.
A bank overdraft would be very unsuitable as bank overdrafts are only beneficial for a short period of time.
Bank overdrafts have high interest rates, so are better for smaller amounts. This is because businesses are of different types, and sizes. They also would have to pay the debt factoring company a fee for the transaction, Living wood cannot afford to do this as they need to raise capital.
The following are the four major categories of ratios, and the eight basic ratios from the categories: With the help from the cash budget prepared, I found that Living Wood is not producing as efficiently that they could be.
Living Wood has been in business for five years, and employs around two hundred staff. This will also minimize the risk of a bad investment, as Living Woods is able to return the machinery if it does not work out as planned.
The financial plan will present their predicted future cash inflows and outflows, therefore allowing Living wood to decide whether or not they can afford the machinery and if it is a good investment. Living wood could possibly raise capital by selling their fixed assets; however this might not be the best decision.Managing financial resources and decisions Essay Sample.
Executive Summary Managing financial resources and decisions is a concept of managing the finances of a company for running it efficiently and making decisions which are best fit for the company’s current working and position.
free essay: business finance managing financial resources and decisions grigor grigorov/mrc//nhd mont rose college task 1 programme title hnd. Financial statements provide financial information to the investors and creditors regarding financial performance of the company.
Analysis of financial statements helps the managers to make decisions by understanding the financial condition of the company (Wild,pp). MANAGING FINANCIAL RESOURCES AND DECISION LONDON WOODS LTD Assignment Every business needs four major types of resources classified in two ways: men, money, machine and material or land, labor, capital and enterprise.
Typically, entrepreneurs are dynamic and enthusiastic about their ideas. To be a successful entrepreneur, you need good ideas to fulfil a demand. Managing Financial Resources & Decisions By: * * Introduction Top of FormBottom of Form | In this report we are going to help Mr T Jones to start his.Download