Mock Paper on BMM 5412 Financial Management

Q.1

1. In the scenario has some points which detain the financial structure and the problems of the organization.For this the organization should face some problem in the progress in the future.For this the organization should face some loss in the market.

The internal risk of the organization are

1. i) Labor issue- It is the main issue for every organization . If the laborers are not able to do their work in time it should effect on the production of the organization .For this the organization should face some loss on the revenue. On the other side the laborers are play an important role for the organization . If laborers are not do their work, the organization should shut down.
2. ii) technology issue- The next thing is the technology issue if the organization needs to maintain the production or the work so it should depend on the technology for implementing the job. For this if the technology is poor it affects the work. For this organization to pay a loss in the market. So technology is the important part for any organization in this scenario.The Pot Dog Co Ltd is a manufacturing company so it needs good technology to produce good products.

iii) Economic downfall- It is the most important part for the organization .Because every organization is doing business in the market. If the market crashes it has an effect on the business . So the profit of the organization reduces .

The external factors are

1. i) Credit risk-To start a business needs the capital, which should establish a business. For this the organization should take some loan or some kind of that to start the business.If the organization can’t generate the profit from the market it can’t return the loan amount.
2. ii) Liquidity risk- To do a business owner should invest the revenue to get slime profit from that its a risky process. If the project fails,so the invested money should be lost.

2. To do every business there are some financial goals which needed to be implemented in the business.the goals are
3. i) Increasing revenue- When the organization starts the business it has a motive to increase the revenue which is invested in the business. For this the company should do their production. If the organization increases the revenue ,so it helps to make some development in the organization.
4. ii) Increase the profit margin- Every company should do the business in the market to earn some profit .For this the company makes some progress in the market. In every sector the organization should make sothe development to expand the business.

iii) Business expansion- If the organization generates a good revenue from the market, so it should develop the production line and the other . Which helps to expand the business.

3. For expand the business the organization should new corporate financial goals like
4. i) Decrease the expenses- In this section the organization should reduce the expenses for this the profit margin should be increased and it helps in the progress of the organization.

Q 2.

• Return on investment helps to measure the financial return on a particular investment. In the context of opening a new production division directors can employ various return measures. The company can choose IRR or NPV for capital budgeting.

In the capital budgeting there are various methods that can be chosen to evaluate a particular project. All the approaches have some advantages and disadvantages. In maximum case a company choose internal rate of return instead of NPV

• For this the organization should make some good decisions in the business market. Moreover it helps the organization to make some analysis on the financial structures of the organization.Lectures will enable concepts, theories, and principles to be explained in accordance with the learning outcomes. Tutorials and activity-based workshops will expand on the application of key concepts, theories, and principles to real-world business scenarios. Students will also be encouraged to engage in self-directed study and additional research on selected topics in order to gain additional viewpoints and a better grasp of the themes presented.In the statement there are some companies which transfer the revenue from one place to another through the internet. Our market-focused staff has worked with significant and well-known fintech companies since the company’s inception. Hundreds of organizations within the larger financial sector, including startups, technology companies, retail/e-commerce enterprises, and financial institutions, service and collaborate with us to drive innovation and disruption. We also work with a diverse group of investors, regulators, and asset managers who provide serious revenue to the digital economy.
• In the scenario the organization should get the dividend policy of the organization.It is a kind of the equity but it has some more advantages to implement the thing. The first thing is the payment of the dividend. It is the lumpsumme amount to be paid for that. After that the return of the investment is to be clear. The market-focused gathering has served immense and exceptional fintech partnerships from the soonest days of this area. We serve and work together with heaps of partnerships universally all through the more extensive fintech environmental factors like new businesses, time companies, retail/e-exchange enterprises, and financial foundations the same utilizing development and disturbance. We moreover team up with an enormous cluster of financial backers, controllers, and resource directors that offer gigantic capital withinside the fintech space.Fintechis explained as the section of development which deals with the goals, success as well as related concepts. Fintech Incorporates some thoughts from “the power of  positive thinking” as well as positive psychology but it is separated from “the new thought movement”. In short it means extracting best from an individual. It is the method to success which contains utilizing skill, motivation as well as energy to reach and to enhance the aims which are set by an individual. Individuals who have better Fintech are always wanting to achieve more and advance with their careers as well as develop not only in professional sense but also in personal sense. On the individual level, it illustrates different things to distinct people.

Q 3)

• Formula of working capital = Current Asset – Current Liabilities

= 9,65,000 – 1,20,000

= 8,45,000

The major factor in managing the working capital within the company is using the key metrics to understand the overall working capital performance. An organization  can measure the  working capital in three different ways. They are  quarterly, monthly or yearly. Survey report is very important in this factor. The working capital is very important for an organization to calculate. It not only help to understand the current liability and the current asset of an organization but also it helps to understand the various situation of an organization.   Working capital execution the board works best when moored in KPIs measure working capital tasks through benchmarks giving direction to income enhancements.

Organizations zeroing in on enhancing working capital should focus on explicit working capital measurements and accomplish twofold digit rate increments. As per the study, the functioning capital measurements that are considered most significant are obligation to value proportions, working income, and records receivables turnover (or DSO). Organizations with very much overseen working capital will likewise quantify days payable remarkable (DPO) to follow accomplishment with accounts payables and days stock extraordinary (DIO) to follow stock turnover.

Picking the suitable working capital measurements to examine changes between industry areas and designated functional exercises for working on working capital administration. Individual organizations ought to deliberately follow that they are setting benchmarks for by investigating public contenders’ monetary information and execution. In any case, all organizations ought to persistently quantify liquidity with the functioning capital proportion and the money transformation cycle consistently to screen when working capital administration tasks require enhancements.

• If a company has been experiencing a cash flow problem and a “lengthening of the operating cash cycle” then they can choose various short term finance sources.

The company can choose 1) Trade Credit, 2) Commercial bank loans, 3) Commercial paper, security loans.

• Trade Credit

A firm when start their business and expands the business so it needs to get the materials and the other things from the organization. For this the business should be expanded .Also it helps to develop the business in the market.

• Commercial bank loan- This is the thing which helps to develop the business in the market . It gives the support to the organization .For this organization should do their business in the global way and it should dhelps to generate the revenue from the market.
• Security loans- This Is a kind of capital for the organization which should help to develop the business in the proper way .For thie the loan organization charges some interest on the revenue. As a source of “short-term financing, commercial bank lending appears on the balance sheet” as notes payable and is second only to trade credit. In the short- and intermediate-term money markets, banks play an important role. Banks are relied on to give greater funds as a company’s financing needs expand. In essence, a business firm’s single loan from a bank is the same as a personal loan. A standard promissory note is signed by the firm. The loan can be paid off in one big sum at maturity or over time in payments. A line of credit, as opposed to a single loan, is an agreement between the bank and the borrower about the maximum amount of money that can be borrowed.

Advantage

The main advantage of those is it helps an organization to cope with adverse situations. It helps  an organization to increase its profit margin, It also helps to cut the expenses. It is also helpful for an organization in their long term operation. It is very important for any organization to decrease the cash shortage related problems and it is also helpful for a company in managing the short term finance.

Disadvantage

The trade credit, commercial bank loan, security loan can be a headache for the company. Those can create various hindrances in  the future operation activities of an organization. It is quite obvious that a company has to pay interest against the loans and borrowings. They all increase the liability of the organization. It is very important for any organization to focus on reducing the liability and focusing on increasing the asset. Therefore they need to focus on reducing this. A company can take various loans and borrowings to cover the necessity of the cash. But it can increase the liability of an organi

3. If the readers are entrepreneurs or professional entrepreneurs, there are many reasons why an individual wants to know the behavior of an employer. A clean picture of your financial position can help individuals make more informed decisions about how their business goes and how their assets are allocated. Similarly, when an individual is planning to attract traders or is looking for money, the individual wants to talk about the financial position of the trading company. If the manager wants to see the financial performance of the HR company, an individual can lead the HR team. Without this know-how, it can be very easy to carry out a task without the actual explained funds or tasks that do not contribute to the well-being of the employer. Knowledge of a person ‘s employer’s monetary fitness also can gain an individual as an employee. By expertise whilst a business enterprise is doing well, individuals can ask for advertising or improve on the proper time. When an individual apprehends a person business enterprise is struggling, individual can take steps to both display person really well worth or are seeking for employment elsewhere. While there are numerous metrics individuals can use to assess monetary fitness, one of the most suitable methods is thru monetary declaration analysis. Here`s a have a take a observe the extraordinary forms of analyses individual can behavior to advantage a higher

expertise of a person ‘s employer`s monetary fitness.

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