Tesco Financial Analysis
Task 2: Assessing the sources available to the businesses (a critical analysis of short term, midterm and long term financing)
Finance is the bloodline of any business, and firms must try to tap every possible source of funds available. These sources can be either available externally or internally, as a Financial Manager the key is to explore these opportunities and exploit them. In our case study for BOATLINE Limited, various businesses finance available can be broadly classified into:
a.) Internal Sources.
b.) External Sources.
INTERNAL SOURCES
Internal sources can be where we don’t require agreements beyond the firm’s director. These sources can be: * Reduced Inventory Levels. * Delayed Payments to Trade Payables * Tighter Credit Control * Retained Profits
Internal sources have an advantage that they are flexible. They may also be obtained quickly, especially from the working capital sources and do not need compliance of other parties. For publically listed companies, shareholders (tax paying) might want their companies to retain their profits instead of reimbursing to the shareholders as dividends. Retaining profits would also allow some breathing space for the firm as they would have enough cash to pay their current liabilities if needed. Another sources like tighter credit control, reducing inventory levels and delaying payments to the creditors.
EXTERNAL SOURCES
External sources can be classified into following categories: * Long Term Business Financing * Midterm Business Financing * Short Term Business Financing
Long Term Financing
A company like BOATLINE Limited having substantial balances can go public through National Stock Exchanges (LSE) or Alternative Investments Markets (AIM). Long term financing is when a company raises funds whose payback period is minimum 5 years or more. Various ways of raising funds are:
Shares:
* Ordinary Shares (ordinary shares and are entitled to voting rights) *
Finance is the bloodline of any business, and firms must try to tap every possible source of funds available. These sources can be either available externally or internally, as a Financial Manager the key is to explore these opportunities and exploit them. In our case study for BOATLINE Limited, various businesses finance available can be broadly classified into:
a.) Internal Sources.
b.) External Sources.
INTERNAL SOURCES
Internal sources can be where we don’t require agreements beyond the firm’s director. These sources can be: * Reduced Inventory Levels. * Delayed Payments to Trade Payables * Tighter Credit Control * Retained Profits
Internal sources have an advantage that they are flexible. They may also be obtained quickly, especially from the working capital sources and do not need compliance of other parties. For publically listed companies, shareholders (tax paying) might want their companies to retain their profits instead of reimbursing to the shareholders as dividends. Retaining profits would also allow some breathing space for the firm as they would have enough cash to pay their current liabilities if needed. Another sources like tighter credit control, reducing inventory levels and delaying payments to the creditors.
EXTERNAL SOURCES
External sources can be classified into following categories: * Long Term Business Financing * Midterm Business Financing * Short Term Business Financing
Long Term Financing
A company like BOATLINE Limited having substantial balances can go public through National Stock Exchanges (LSE) or Alternative Investments Markets (AIM). Long term financing is when a company raises funds whose payback period is minimum 5 years or more. Various ways of raising funds are:
Shares:
* Ordinary Shares (ordinary shares and are entitled to voting rights) *