Understanding finace
Centre: Mdina Partnership 019784.
Learner Name: Joseph Bonello.
Registration: AWG8958.
Date: 26th January, 2014.
Understanding Financial Management.
Introduction
All organisations, whether business or non-profit making, require funds to be able to operate. As such an element of accountability is always present in organisations. This implies that records must be kept of all transactions undertaken on behalf of the organisation. This means that all income and expenditure must be somehow recorded!
Understand finance within the context of an organisation.
Describe the organisation’s sources of finance or funding;
There are a number of ways of raising finance for a business. The type of finance chosen depends on the nature of the business. Large organisations are able to use a wider variety of finance sources than are smaller ones. Savings are an obvious way of putting money into a business. A small business can also borrow from families and friends. In contrast, large companies raise finance by issuing shares. Large companies often have thousands of different shareholders.
Sources of finance Uses of finance
Shareholders → Finance to set up and expand a business.
Bank → Loans to finance capital projects. Overdrafts to manage cash flow.
Creditors → Short term credit until goods have been sold. To gain extra finance, a business can take out a loan from a bank or other financial institution. A loan is a sum of money lent for a given period of time. Repayment is made with interest. The lender of money needs to know all the business opportunities and risks involved and will therefore want to see a detailed business plan. The lender may also want some form of security should the business run into financial difficulty, and may therefore prefer to provide a secured loan.
Another way of raising short-term finance is through an overdraft facility with a bank. The borrower is given
Learner Name: Joseph Bonello.
Registration: AWG8958.
Date: 26th January, 2014.
Understanding Financial Management.
Introduction
All organisations, whether business or non-profit making, require funds to be able to operate. As such an element of accountability is always present in organisations. This implies that records must be kept of all transactions undertaken on behalf of the organisation. This means that all income and expenditure must be somehow recorded!
Understand finance within the context of an organisation.
Describe the organisation’s sources of finance or funding;
There are a number of ways of raising finance for a business. The type of finance chosen depends on the nature of the business. Large organisations are able to use a wider variety of finance sources than are smaller ones. Savings are an obvious way of putting money into a business. A small business can also borrow from families and friends. In contrast, large companies raise finance by issuing shares. Large companies often have thousands of different shareholders.
Sources of finance Uses of finance
Shareholders → Finance to set up and expand a business.
Bank → Loans to finance capital projects. Overdrafts to manage cash flow.
Creditors → Short term credit until goods have been sold. To gain extra finance, a business can take out a loan from a bank or other financial institution. A loan is a sum of money lent for a given period of time. Repayment is made with interest. The lender of money needs to know all the business opportunities and risks involved and will therefore want to see a detailed business plan. The lender may also want some form of security should the business run into financial difficulty, and may therefore prefer to provide a secured loan.
Another way of raising short-term finance is through an overdraft facility with a bank. The borrower is given