Managerial Resources Assignment Roehampton University

Sources of funding

In relation with ascertaining various funds for the operations there are several sources of funding which will be helpful as per meeting the suitable requirements of firm. It includes internal and external sources of funding which will be appropriate sources on which COCO limited can gather a required amount of funds (Al-Malkawi and Pillai, 2018).

Internal Sources:

COCO Limited can gather satisfactory level of funds for the sources through internal sources which is comprised with various advantages and disadvantages. However, there will e various internal sources of funds analysed such as:

Sources of funding	Advantages	Disadvantages
Owner's equity	· It includes the funds which were being invested by the owner's of organisation which are operating sole proprietorship, partnership etc. · There is no need of making payments to any interest over the spent funds.	· It will not be adequate and appropriate as per meeting requirements of funds in all the operational activities of firm.
Retained Earnings	· These are the earnings which were remained after making payments to the dividends to equity holders. · It will be an appropriate source which in turn will be useful for making expansion and diversification of sources. · Through these sources the firm make allocation of funds in the variolous tasks or operations.	· It has the biggest disadvantage is that there will be manipulation of the funds or it will be misused by professionals in the organisation (Garner, Kim and Yong Kim, 2017). · It involves over capitalisation and tax evasion on which firm reduces their taxable charges through it.
Debt collection	· These are the amount which the firm has not yet recovered through debtors in the basis of sales. · Debt balance will be tax free as there will not be any charges against such payments which are yet to recovered by a firm. · Collection of such debts will be helpful in gathering the appropriate revenue and gains through such operations.	· It may affect the consumers and buyer relationship of the business. · In relation with such activities there will be reduction in level of sales and it may affect the numbers of consumers.

 

External sources:

These are the sources through which COCO limited can gather the most appropriate and satisfactory required amount of funds. It can be generated through external sources such as:

Sources of funding	Advantages	Disadvantages
Equity capital	· By selling proportionate equity of a firm in the market which will be effective as per rising capital structure of entity. · Business professionals will become able to gather the satisfactory amount of funds for the operations which in turn will be adequate for improving brand image in market.	· It will require appropriate time for proper decision making as well as promoting the operational activities of firm. · Firm has to make payment for dividends which will reduce their profit generate in a period (Wei, Xu and Zeng, 2017).
Borrowings	· It comprises with the long term and short term borrowings taken by organisation a per meeting the operational needs in the right time. · It will be beneficial as company and people will have satisfactory amount of funds for operations which generate them desired amount of funds.	· In relation with taking loans from banks and financial institutions there will be requirements of making payments of interest over such borrowings. · Loans and borrowings has been brought by the firm in against security of its ownership or any assets.
Governmental grants	· To meet the financial needs as well as initiating business operations the government of various locations are planning to bring the satisfactory amount of funds for the operations (Pros and Cons of Grants, 2017). · It will be a helpful source as there are no requirements of making payments to any taxes over such a collected amount.	· It will be a very time consuming process as government will grant the money to organisation as per making various investigation over financial stability and needs of business. · There are most of the grants are for short term period which will not be that satisfactory as per meeting the long term requirements.

Investment appraisal

Planning relevant with the expansion of business operations as well as implicating new projects in the operational practices will be manages through estimating adequate capital budgeting. Thus, investment appraisal will be helpful to the industries in terms of making suitable control over operations as well as management of performance. It comprised with various techniques such as NPV, ARR, IRR and payback period. Thus, determination of profitability and fruitfulness of the proposed plan of COCO limited will be measured through implicating such techniques in analysing the outcomes (Mansour and Bhatti, 2018). Moreover, there will be discussion based on analysing advantage and limitation of various investment appraisal tools.

Coco super:

Year	0	1	2	3	4	5
Sales revenue	100	1400	5000	4800	3800	3200
Less:	Â	42	150	144	114	96
Â	Â	1442	5150	4944	3914	3296
Component A	Â	580	500	820	860	1000
Â	Â	14.5	12.5	20.5	21.5	25
Â	Â	594.5	512.5	840.5	881.5	1025
Component B	Â	1200	1050	1400	1800	1700
Â	Â	30	26.25	35	45	42.5
Â	Â	1230	1076.25	1435	1845	1742.5
Overheads cost	Â	220	220	230	200	200
STO 1	Â	328	328	328	328	328
Â	Â	11	9.9	8.91	8.019	7.2171
Â	Â	90.2	81.18	73.06	65.76	59.18
STO 2	Â	182	182	182	182	182
Â	Â	14	12.88	11.8496	10.9	10.03
Â	Â	63.7	58.6	53.92	49.6	45.63
Â	Â	2198.4	1948.534	2632.48	3041.86	3072.31
Gross profit	Â	-756.4	3201.466	2311.52232	872.1417744	223.685548448
Annual capital portion @ 25%	Â	-189.1	800.3665	577.88058	218.0354436	55.921387112
PBT	Â	-567.3	2401.0995	1733.64174	654.1063308	167.764161336
Corporation tax @ 19%	Â	-107.787	456.208905	329.3919306	124.280202852	31.8751906538
Net profit	Â	-459.51	1944.89	1404.25	529.83	135.89

NPV analysis for Coco Super

Year	cash flows	Discounting factor @ 9%	Cash outflows
0	Â	Â	Â
1	-459.51	0.917	-421.57
2	1944.89	0.842	1636.98
3	1404.25	0.772	1084.34
4	529.83	0.708	375.34
5	135.89	0.65	88.32
Â	Â	Â	2763.41
Â	Â	Initial cost	13800
Â	Â	Net present value	-11036.59

Coco Platform:

Year	0	1	2	3	4	5
Sales revenue	Â	1680	5400	3960	3960	2880
Less:	Â	50.4	162	118.8	118.8	86.4
Â	Â	1730.4	5562	4078.8	4078.8	2966.4
Component A	Â	580	500	820	860	1000
Â	Â	14.5	12.5	20.5	21.5	25
Â	Â	594.5	512.5	840.5	881.5	1025
Component B	Â	1200	1050	1400	1800	1700
Â	Â	30	26.25	35	45	42.5
Â	Â	1230	1076.25	1435	1845	1742.5
Overheads	Â	220	220	230	200	200
STO 1	Â	328	328	328	328	328
Â	Â	11	9.9	8.91	8.019	7.2171
Â	Â	90.2	81.18	73.06	65.76	59.18
STO 2	Â	182	182	182	182	182
Â	Â	14	12.88	11.8496	10.9	10.03
Â	Â	63.7	58.6	53.92	49.6	45.63
Â	Â	2198.4	1948.534	2632.47	3041.85	3072.3
Gross profit	Â	-468	3613.4	1446.3	1036.94	-105.9
Annual capital allowance @ 25%	Â	-117	903.3	361.5	259.2	-26.4
PBT	Â	-351	2710	1084.7	777.706	-79.43
Corporation tax @ 19%	Â	-66.69	514.9	206.1	147.76	-15.09
Net profit	Â	-284.31	2195.18	878.64	629.94	-64.34

 

Year	cash inflows	Discounting factor @ 11%	cash outflows
0	Â	Â	Â
1	-284.31	0.901	-256.1351351351
2	2195.18	0.812	1781.6573330087
3	878.64	0.731	642.4539952663
4	629.94	0.659	414.9609898529
5	-64.34	0.593	-38.1826584473
Â	Â	Â	2544.7545245454
Â	Â	Initial cost	7600
Â	Â	Net present value	-5055.25

 

Net present value:

This analysis is comprised with analysing the present value of future cash flows of the organisation. Thus, on which firm's will become able to analyse the profitability and fruitfulness of projected plans of business. On the basis of above listed measurements it can be said that COCO Limited will have profitable gains as if they proceed the operations for COCO platform project. It is because of less negative outcomes derived from such observation.

Limitation of NPV:

There are various disadvantage of this appraisal techniques such as it does not measure the size the project and the outcomes derived from such analysis are mainly not being effective as per having suitable analysis over the facts (Baker, Jabbouri and Dyaz, 2017).

Average rate of return:

To demonstrate the probability of firm in relation with making the adequate efforts as well as determining qualitative techniques which represent the profitability earned over projected plan of business. COCO limited will be helpful and beneficial as if they implicate the use of such techniques in making the profitable ascertainment of projects they are planning to have.

Limitations:

There can be various disadvantage of this investment appraisal techniques as it ignores the time factors, it uses the alternative funds for operations (Neupane and Neupane, 2017). Moreover, professionals at COCO Limited will not have reliable and accurate outcomes through such techniques.

Internal rate of return:

These are internal rate of return over projected plans which comprised with the estimated cash flows of firm. COCO Limited will be benefited as if the professionals will implicate the use of this technique into operations. It brings the ability to compare the profitability of projected plans and the return a firm will have over their investment amount in such plans.

Limitations:

Professionals at COCO limited will have suitable advantages in terms of acknowledging the various limitation of these techniques (Sundarasen, Goel and Zulaini, 2017). It does not consider the project duration and future costs which will not be helpful as per making further expansion plans of business.

Cash budgeting

By considering the operational activities of COCO limited there has been analysis based on examining the factors as well as making suitable changes into operational activities of the firm.

Cash budget	June	July	August
Sales Revenue	Â	Â	Â
Strategy formulation	9310	9310	9310
Business planning	12600	12600	12600
Total profit	21910	21910	21910
Â	Â	Â	Â
Cash sales @ 40 %	8764	8764	8764
credit sales @ 60 %	0	13146	13146
Total receipts	8764	21910	21910
Â	Â	Â	Â
Expenses	Â	Â	Â
Staff Salary expenses	13300	13300	13300
Rent paid	5333.33	5333.33	5333.33
Administration expenses	4533.33	4533.33	4533.33
Marketing cost	3266.66	3266.66	3266.66
Insurance received	1666.67	1666.67	1666.67
Business Rates expenses	1000	1000	1000
Loan Interest amount	840	840	840
Electricity and Gas	400	400	400
Telephone expenses	266.67	266.67	266.67
Total payments	30606.66	30606.65	30606.65
Surplus/Deficit	-21842.66	-8696.6	-8696.6533
Cash at the Opening balance	3000	3000	5696.6533
Closing balance	3000	-5696.7	-3000

Break even analysis

By considering the sales and the relevant costs associated with the business operations which in turn will be effective and helpful in determining Break-even analysis of entity. Thus, the below listed analysis reflect BEP of COCO Limited.

Sales revenue	581	581	581
Variable cost per units	428	428	428
Total Contribution	153	153	153
Total expenditure	30607	30608	30609
Total units	200	200	200
Sales (BEP)	15000	15000	15000

Evaluation

According to the all above information, it has been seen the overall performances of the company is all about providing positive results during the period. All the sales and earning can be enhanced in more reliable and efficient manner to attain more suitable profitability in coming period. Moreover, in relation with managing BEP of firm there is needed to have proper execution over the financial and operational practices of business.

Literature relevant with Budgets and Break even analysis

By considering the fruitfulness of various analysis it can be said that there are various operational techniques which will be helpful as per bringing the suitable measurement on financial data set of firm. Moreover, COCO Limited will have satisfactory gains in the required period as per ascertaining the most suitable analysis over operations.

Break Even analysis:

According to Al-Malkawi and Pillai, (2018), to have the most appropriate information regarding firm's sales, variable and fixes costs which will be assistive as per uplifting appropriate analysis over businesses. The level of commercial activity at a given period of total cost and earning of business within an organisation. This evaluating performed at internal part of a business planning which is observed the reality which is being states at individual idea that does not be implemented for increasing profitability position of an organisation

Budgets:

As per the views of Wei, Xu and Zeng, (2017), Budgetary techniques are to be used by professionals which in turn will be effective and helpful as per monitoring the financial activities of firm. Here, professionals of various industries will make appropriate analysis over fund requirements of business on which they will be helpful as per making appropriate study over the facts. It will be helpful too, in terms of analysing funds requirements as well as making alternative solutions to reduce the costs implicated in various activities.

Considering issues

In order to remain for longer period of time in the market. There are certain issues can be taken into account in reliable manner. Some of them are mentioned underneath:

• Check of proper planning before execution: Make proper compulsion with overall performances and take deep analysis of all crucial aspects those are reliable for better future.
• Maintain regular record and valuation: They cannot be complacent though assuming all above data which is being presented in front of the investors to detect leader’s weaknesses.
• Quality would not be an option, it would be necessities: Proper estimation with proper demand and supply can be lead to detect losses that can make huge impacts on the performances (Baker, Jabbouri and Dyaz, 2017). There is stock valuation that is major problems of scrap and wastages during an accounting period.

Recommendation and conclusion

From the above project report, it has been concluded that managerial finance is utmost crucial expected which will be needed to be analyse overall financial position of the company. It has been summarising all specific description of capital sources those are divided in two categories such as external or internal sources. Certain investment proposal tools are also being analyse by using NPV, IRR and ARR. Further, this has been suggested that overall margin can be assist them for valuable finding for present issues those are arises in an organisation are evaluated in more perfect manner.

References

• Al-Malkawi, H. A. N. and Pillai, R., 2018. Analyzing financial performance by integrating conventional governance mechanisms into the GCC Islamic banking framework. Managerial Finance. 44(5). pp.604-623.
• Baker, H. K., Jabbouri, I. and Dyaz, C., 2017. Corporate finance practices in Morocco. Managerial Finance. 43(8). pp.865-880.
• Garner, J., Kim, T. Y. and Yong Kim, W., 2017. Boards of directors: a literature review. Managerial Finance. 43(10). pp.1189-1198.
• Mansour, W. and Bhatti, M. I., 2018. The new paradigm of Islamic corporate governance. Managerial Finance. 44(5). pp.513-523.