7025AFE Managerial Finance Assignment Sample
7025AFE Managerial Finance Assignment Sample
Introduction
The financial activities of a business can generate effective identification of a business in a competitive market. The study has aimed to critically identify the financial activities of Stones Limited, which operates in the UK market and provides a variety of services to SMEs for more than 15 years. It can highlight the decision-making techniques such as NPV, and sources of funds and measure the underlying issues in the company. It can also recommend better solutions and procedures for developing its services in the further business execution process. An overall conclusion of the business can help to summarize the overall issues as well as a potential development for the business.
Different sources of funding
Capital:
The business has generated major sources of funding in this company, which has generated huge development for the overall business and created an effective source. As per the views of Falato et al. (2021), it has been determined that the £7,000 has been highlighted as start-up capital for this business. It has been measured that the business has considered the overall development procedure and gathered resources from this fund as initial cost.
Debt:
The business has also generated utilization of debt and other liabilities in the business, which created more effective usage of the business’s financial resources. According to the opinion Mughini-Gras et al. (2019), it has provided the best services and gained the required level of finances in this business market. The operators of the business have generated major debt values for the overall business market. Concerning this, the borrowings from financial institutions have generated more productive outcomes for this company.
Equity:
Stones Limited, UK has highlighted the major execution of the business process by determining the equity shares in the competitive market. However, it has issued a large number of shares in the business operations for developing its financial operations. As stated by Bloom et al. (2019), these equity share factors have helped this business to develop its productivity and enhance its capacity to trade with the major companies across the global platform.
Therefore, this is a major source for this company to develop their financial trades and create a better-performing capacity for the overall business. In addition to this, it has generated better-performing capacity for the overall business. On the other hand, it has highlighted the engagement of new stakeholders as well as new shareholders in the business. As per the views of Kumar et al. (2020), these factors have helped to develop the brand image in the business market and created a more effective evaluation of the financial performing capacity of this company.
Advantages and disadvantages of sources of funding
Advantages:
Fulfilling the requirement of finances:
A business can have a requirement of major financial resources for executing the initial transactions in the business operations. However, it can be determined that the business can generate efficiency levels in business operations. Hence, financial resources can provide the best services and fulfil the overall necessity of business activities.
Creating more potential for enhancing their overall profits:
According to Rowe and Perry (2020), the revenue of the business can effectively be developed through these resources. Therefore, having more profitability and getting inclined more shareholders in the business development.
Having more financial trades and a competitive position
As stated by Martinez (2020), critically develops the capacity of a company and can help to develop several new trades in the business market. In association with this, the overall changes in the financial activities can create a more developing scope for the entire business market and can generate better development in the upcoming financial years. However, there are more advantages to having more financial resources in a business.
Disadvantages:
Changes in sources can create issues.
The financial requirement of a business can generate more issues in terms of having fewer resources. In contrast with this, the number of current investors can generate huge issues by having more obstacles in the financial aspects of the business. Therefore, the overall measurement of the financial aspects has generated key changes in the overall performing capacity of the business execution. As opined by Veleva, S.S. and Tsvetanova(2020), the changes in the valsartan of the financial investments or loans or other resources can more issues in taking the best decision in the business operations.
Can create a lack of finances often:
As per the opinion of Pearmanet al. (2020), the lack of finances such as the market valuations of their shares and other key factors can create problems in executing their overall marketing factors. However, these factors can lead to more problems for business operations. Other than that, it can be determined that the identification of the key factors can generate more problems for the overall business development in these business markets.
Reduction in investments can generate fluctuated profitabilities:
The capital investments of the business can develop or decrease their overall productivity in the business development. In addition, the changes can create more development of the business operations in this business market. As stated by Taqueset al. (2021), it can also create less return on the investments, which may create a reduction in the investors in the business market.
Evaluation of NPV and recommendation regarding NPV:
| £’000 | ||||||
| Year | 0 | 1 | 2 | 3 | 4 | 5 |
| New system’s costs | 12,500 | 12,625.04 | 12,751.33 | 12,878.88 | 13,007.71 | 13,137.83 |
| Cumulative working capital | ||||||
| 850 | 550 | 750 | 250 | 650 | ||
| Sales Revenue | 1,500 | 5,200 | 6,800 | 5,500 | 3,600 | |
| adjustments | 5,252.04 | 6,868.04 | 5,555.04 | 3,636.04 | ||
| Less: | ||||||
| Segment 1 | -550 | -620 | -980 | -1,000 | -1,200 | |
| Segment 2 | -1,200 | -1,600 | -1,700 | -2,100 | -1,900 | |
| Overheads | -200 | -250 | -360 | -340 | -310 | |
| adjustment (overhead and WC) | 0 | 505.04 | -111.06 | 313.14 | -313.06 | |
| cost DE (1) | 144000 | 149760 | 155750.4 | 161980.42 | 168459.633 | 175198.018 |
| cost DE (2) | 154000 | 160160 | 166566.4 | 168232.02 | 169914.304 | 171613.407 |
| Total costs | 14,675 | 23,953 | 26,797 | 24,713 | 20,374 | |
| 307970 | 320602 | 327421 | 335587 | 343398 | ||
| cash flows | 293295 | 296648 | 300624 | 310874 | 323024 | |
Table 1: Adjustments for determining the overall cash flows for 5 years (Source: Created by the learner)
These adjustments have highlighted the key changes that have been considered in this task for the 5 years. It has also highlighted the overall identification of the business that has been affected by the major changes due to revenues that have increased by 4% in price terms per year from financial year 1 as well as year 2. In addition to this, it has also generated an increase in the overheads along with the working capital that has increased by 4% per year from financial year 1 and year 2. Concerning this, it has also highlighted major changes in the “working capital is cumulative ” that have recouped at the end of year 5.
Further, it has also been determined that the overall analysis of the key factors have highlighted the “cost of Segment 1 and Segment 2”. According to Leskinenet al. (2020), these factors have risen with an inflation rate of 4% “per year from the beginning of year 1”.
Analysis of the company’s NPV:
| Cash flows (£) | Cash Flows (million) | DCF @ 8% | PV (@8%) |
| Year 0 | 293294.96 | 1.00 | 293294.96 |
| Year 1 | 299614.9943 | 0.93 | 277421.291 |
| Year 2 | 303630.7409 | 0.86 | 260314.4212 |
| Year 3 | 313983.1076 | 0.79 | 249249.9139 |
| Year 4 | 326254.7805 | 0.74 | 239807.0033 |
| Total cash flow | 1536778.583 | 3.58 | |
| NPV = | 1320087.589 | ||
Table 2: Identification of the changes in the Cash flows by NPV for 5 years (Source: Created by the learner)
The above analysis has generated the change in the overall development of the business. It has highlighted cash flows and the present valuation of the company for these considered years. According to the views of Rosłonet al. (2020), it has highlighted a stable NPV for the business market. Moreover, these factors have highlighted the betterment of the business and highlighted more effective outcomes for the overall analysis.
It has been determined that the company has created more development in the last few days. As per the views of Asadujjamanet al. (2020), the effective trade of the business has been identified and measured for operating in the competitive market. In association with this, it has been measured that the overall development for the obviousness has generated an NPV of 1320087.58, which critically identifies a stable and strong financial position for the business in the global platforms.
Recommendations for developing NPV:
The current NPV margin of the business has highlighted major scopes for having profits for this business. However, for developing these changes in the business executions, the operators of the business can develop the cash inflows for having more revenue in the business operations. As argued by Mari (2020), the investors or the shareholders of the business can tend to engage more customers in this business for developing their operating procedures in this business. Other than that, it can generate a more effective evaluation of the entire business market. The overall operators can tend to expand their business operating areas, which can help to engage more customers in this organization. Therefore, it can be determined that the underlying financial changes can affect this company by creating more expenses in these years.
Utilization of as Breakeven analysis and Budgets for 3 months:
| March | April | May | |
| budgeted sales | 500 | 500 | 500 |
| SL | 200 | 200 | 200 |
| loan | 11666.67 | 11666.67 | 11666.67 |
| Rent | 17000 | 17000 | 17000 |
| Cleaning | 1600 | 1600 | 1600 |
| Loan Interest | 3200 | 3200 | 3200 |
| General insurance | 7600 | 7600 | 7600 |
| Light and heating | 4100 | 4100 | 4100 |
| Local authority charges | 4250 | 4250 | 4250 |
| marketing | 41,000 | 41,000 | 41,000 |
| Admin cost | 19000 | 19000 | 19000 |
| staff salary | 33000 | 33000 | 33000 |
Table 3: Analysis of the company’s budget for the next three months (Source: Created by the learner)
This analysis has generated a more effective growth portrait by measuring the overall changes for the three month’s budget in this company. In addition to this, it can highlight budgeted sales of 500 each month. Additionally, it has highlighted Rent for 17000, cleaning for 1600, Interest of Loan for 3200, General insurance for 7600, Light and heating for 4100 and Local authority charges for 4250. These factors have also highlighted the marketing costs for 20000, Admin cost for 19000 and staff salary for 33000 each of March, April and May accordingly. According to the views of Knokeet al. (2020), these factors have developed the overall performing capacity of the business in the competitive market and highlighted a major potential for having a better sales margin in the upcoming business trades of the company. Therefore, it also can be determined that the identification of the key functions of this business has generated more development in the upcoming activities and operational factors.
Analysis of Break-even:
| Break-even | |
| Rent | 17000 |
| Cleaning | 1600 |
| Loan Interest | 3200 |
| General insurance | 7600 |
| Light and heating | 4100 |
| Local authority charges | 4250 |
| marketing | 20,000 |
| Admin cost | 9000 |
| staff salary | 15000 |
| fixed cost | 81750 |
| variable cost | 56000 |
| selling unit | 25750 |
| Sales price per unit | 51.5 |
| Break-even | -923.7 |
Table 4: Break-even analysis (Source: Created by the learner)
The Break-even analysis of the company has highlighted Break-even of -923.7, which also indicates a negative aspect in the analysis. It has also determined more effective growth for the overall performing ability of the business market. As per the views of Ni et al. (2023), it has highlighted that the changes in the overall development for the business has measured more growing capacity in the identification of the business execution process. However, at this point of the business sales, the company faces neither having profits or losses in the business operations.
According to the opinion of Sintha (2020), it can be identified as having a major potential for having losses the overall business in the operating process. Therefore, it has been identified that the negative aspect of the business has highlighted major loss for the business execution. On the contrary, it can highlight that better profitability of this organization can lead to creating losses. However, it has been determined that there is major uncertainty for having losses in these business operations. Concerning this, it can generate major uses for the overall issues for conducting their required investment for the business.
Identification of company performance
Major potential for developing cash inflows and revenue in future:
This business has highlighted having a huge chance for developing their revenue margin in the operational trades for the business process. In addition to this, it can highlight better developing scopes for this company. Moreover, this business has created more opportunities for developing their overall performing capacity in the upco0mh business market. Further, it has also been determined that the overall changes in the business market can create more effective growth for this business.
Huge expenditures:
The current expenditures of the business have generated huge growth potential for the overall trades in the operating activities. Moreover, it has created more chances for losses in the trades of the company.
Effective sales and marketing:
The sales and marketing of the business have highlighted more development in its overall products and services for these years. Based on the opinion of Mari, (2020), it has created goodwill for the entire business market and engaged customers across the globe. These factors have highlighted more development for the overall marketing and optional trades of the business procedures.
Issues for management
Analysis of the business has highlighted major fluctuations in the world. It has also highlighted that the development of the overall expenditures and overall cost has created a major negative impact on the overall execution process in the business. Other than that, the changes in the cash flows have created a major reduction in their profitable situation and revenue margin.
As per the opinion of Oluwayemisiet al. (2020), the discounting factor of the business has generated 8% which has created better consistency in the overall analysis of the business. However, the performance of the company has created a development in overhead and working capital which has led to generating more expenditure for the overall business. Therefore the digital experts from Brazil have laid to generate more costume factor and the sales have been reduced.
In association with this, it can be identified that stones limited have faced issues for creating a budget and potential development in the sales margin. In addition to this it has been figured out whether company performance has decreased and, in a few cases, it has fluctuated for the financial year. As stated by Syrůček, et al. (2022), Therefore the budget preparation of the business has generated the development of expenditures in most cases and a reduction of working hours which has impacted their production and execution process. These issues have negatively impacted this business and created more potential for having a reaction in the further performing capacity of the business.
Conclusion:
The overall study has shed light on Stone Limited which is a company situated in the UK. It has highlighted its overall analysis of the financial trades and the performing capacity for the overall business market. It has also mentioned its overall cash flows for these years and changes in its overall NPV margins. However, the suitable recommendations have helped to determine more productivity for the business market. Additionally, the break-even analysis has assisted in determining the overall loss potential for this company. It has identified issues or development of this company’s performance, which has figured out the major potential for developing cash inflows and revenue in future, huge expenditures and other factors.
References
Bloom, N., Van Reenen, J. and Williams, H., 2019. A toolkit of policies to promote innovation. Journal of economic perspectives, 33(3), pp.163-84.
Falato, A., Goldstein, I. and Hortaçsu, A., (2021). Financial fragility in the COVID-19 crisis: The case of investment funds in corporate bond markets. Journal of Monetary Economics, 123, pp.35-52.
Fitriyani, Y. and Karnawati, T.A., (2022). Entrepreneurship Training and Application of Break Even Point Analysis in the Framework of Generating an Entrepreneurial Spirit and Exploring New Ideas in Wearnes Malang Students. JurnalPengabdianMasyarakat Formosa, 1(5), pp.489-496.
Knoke, T., Gosling, E. and Paul, C., (2020). Use and misuse of the net present value in environmental studies. Ecological Economics, 174, p.106664.
Kumar, M.S., Vennila, M., Lad, Y.A. and Mahera, A.B., (2022). Funding Options for Agricultural Start-Ups in India-Challenges and Opportunities. Asian Journal of Agricultural Extension, Economics & Sociology, 40(11), pp.616-627.
Kundu, B. and Hossain, M.B., (2022). COST BENEFIT AND BREAK-EVEN ANALYSIS OF TOSSA AND KENAF FIBRE CROP CULTIVATION AT FARM LEVELS IN BANGLADESH. Bangladesh J, 42, pp.95-102.
Leskinen, N., Vimpari, J. and Junnila, S., (2020). A review of the impact of green building certification on the cash flows and values of commercial properties. Sustainability, 12(7), p.2729.
Maduagwu, E.N., (2022). BREAK-EVEN ANALYSIS: A TOOL FOR EFFICIENT PRODUCTION MANAGEMENT IN MANUFACTURING FIRMS IN ENUGU METROPOLIS. Advance Journal of Management, Accounting and Finance, 7(6).
Mari, C., (2020). Stochastic NPV based vs stochastic LCOE based power portfolio selection under uncertainty. Energies, 13(14), p.3677.
Martinazzi, B.J., Kirchner, G.J., Lorenz, F.J., Bonaddio, V., Hines, S., Kim, R.Y. and Gallo, R.A., (2022). Venous Thromboembolism Chemoprophylaxis in Knee Arthroscopy: A Break-Even Analysis of Cost. The American Journal of Sports Medicine, 50(14), pp.3832-3837.
Martinez Dy, A., (2020). Not all entrepreneurship is created equal: Theorising entrepreneurial disadvantage through social positionality. European Management Review, 17(3), pp.687-699.
Mughini-Gras, L., Dorado-García, A., van Duijkeren, E., van den Bunt, G., Dierikx, C.M., Bonten, M.J., Bootsma, M.C., Schmitt, H., Hald, T., Evers, E.G. and de Koeijer, A., (2019). Attributable sources of community-acquired carriage of Escherichia coli containing β-lactam antibiotic resistance genes: a population-based modelling study. The Lancet Planetary Health, 3(8), pp.e357-e369.
Ni, Z., Li, S., Deng, X., Cai, Y., Zhang, L., Wang, W., Yang, Z.B., Yu, H., Yan, F., Liu, S. and Zou, C.L., (2023). Beating the break-even point with a discrete-variable-encoded logical qubit. Nature, pp.1-5.
Oluwayemisi, A.M.B., Adewole, I.F., Olajumoke, F.T., Adeniyi, S.A. and Ojeme, S.S., (2022). Break-Even Analysis and Decision Making: An Empirical Investigation of Selected Listed Non-Financial Firms in Nigeria. EuroEconomica, 41(2).
Pearman, W.S., Freed, N.E. and Silander, O.K., (2020). Testing the advantages and disadvantages of short-and long-read eukaryotic metagenomics using simulated reads. BMC bioinformatics, 21(1), pp.1-15.
Rosłon, J., Książek-Nowak, M. and Nowak, P., (2020). Schedules optimization with the use of value engineering and NPV maximization. Sustainability, 12(18), p.7454.
Rowe, E. and Perry, L.B., (2020). Inequalities in the private funding of public schools: Parent financial contributions and school socioeconomic status. Journal of Educational Administration and History, 52(1), pp.42-59.
Sintha, L., (2020). Importance of Break-EVEN analysis for the micro, small and medium enterprises. International Journal of Research-GRANTHAALAYAH, 8(6).
Specchia, M.L., Arcuri, G., Di Pilla, A., La Gatta, E., Osti, T., Limongelli, P., Scambia, G. and Bellantone, R.D.A., (2022). The value of uterine oncological surgery in a University Hospital. Results of a break-even analysis: Maria Lucia Specchia. European Journal of Public Health, 32(Supplement_3), pp.ckac131-285.
Syrůček, J., Bartoň, L. and Burdych, J., (2022). Break-even point analysis for milk production–Selected EU countries. Agricultural Economics, 68(6), pp.199-206.
Taques, F.H., López, M.G., Basso, L.F. and Areal, N., (2021). Indicators used to measure service innovation and manufacturing innovation. Journal of Innovation & Knowledge, 6(1), pp.11-26.
Veleva, S.S. and Tsvetanova, A.I., (2020), September. Characteristics of the digital marketing advantages and disadvantages. In IOP Conference Series: Materials Science and Engineering (Vol. 940, No. 1, p. 012065). IOP Publishing.
Know more about UniqueSubmission’s other writing services:
