finance for manager

Topics: Finance, Corporate finance, Debt Pages: 18 (5549 words) Published: January 9, 2014


finance for manager

Table of content
Q1: Sustainability of Debt Finance Management
Introduction…………………………………………………………………………………………….3 1.1 Literature review…………………………………………………………………………………..3 1.2 Assumption and argument for this debt financing findings from ICAEW……………………5 1.3 Financial ratio analysis for the debt financing situation of the chosen listed company……6 1.3.1 Debt financing performance………………………………………………………………6 1.3.2 Operation performance……………………………………………………………………8 1.3.3 Systematic debt financing performance…………………………………………………9 Conclusion………………………………………………………………………………………………9 Q2: Evaluate the role of finance director in an organization Introduction……………………………………………………………………………………………10 2.1 Literature review of roles of finance director………………………………………………….11 2.2 Roles of finance director of Tesco Plc and comparison of other job advents……………..12 2.2.1The evaluation of roles of financial director of Tesco Plc………………………………12 2.2.2 Other jobs advents for comparison………………………………………………………14 2.3 Effective evaluation of availability of sources of information…………………………………15 Conclusion…………………………………………………………………………………………….16 Q3: Evaluation for the usefulness of budgeting and budgetary control in Tesco Plc Introduction …………………………………………………………………………………………...16 3.1 Literature review in budgetary control………………………………………………………….16 3.2 Budgetary control in Tesco Plc………………………………………………………………….18 Conclusion…………………………………………………………………………………………….21 4. Reference……………………………………………………………………..22 5. Appendix………………………………………………………………………25

Question 1
Sustainability of Debt Finance Management
Introduction
Chief Executive of ICAEW proposed the finding that a more sustainable pattern of British companies are to survive the financial management and learning with less debt (Malcolm & Edwards, 1998). But whether this finding is convincing is unknown. Evaluation of the debt finance statement is needed to implement in this essay. It is apparent for this essay to focus on two aspects of the comment from ICAEW, one is whether the financial management of UK businesses is experiencing a more sustainable situation and the other is the actual debt development and the development situation of UK businesses. And this essay is going to argue this finding with the framework of literature review, assumptions and financial analysis. This essay is going to pick Tesco Plc for subject of analysis.

1.1 Literature review
Literature review is helpful to comment the findings from ICAEW about the impact of the sustainable model of financial management on debt conditions of UK businesses. The framework of the literature review consists of advantage (importance) and disadvantages (risks) of debt financing and impact factors affecting the debt finance management.

The importance of the debt management for the corporations
To many entrepreneurial organizations, debt is tempting and is glamorous genre of financing. It is widely accepted that external debt are close companions of external equity, and since the equity is necessary for the entities, debt are indispensable for the companies (Pratt & Morris, 1987). Besides, many advantages are generated from the debt financing of the company. Firstly, debt financing is an efficient leverage tool for shareholders of the companies to produce profits with the help of debt capitals (Ruud, 2012). Although the debt capitals are used at the price of financial interest or costs, namely that it is possible to reduce earnings before tax, shareholders still take this risk to use the debt leverage financial tool to add more value of their capital amount and keep sufficient internal funds available to take advantage of attractive investment opportunities. What is more, debt financing is helpful in reducing agency costs of free cash flows (Michael, 1986). Because agency cost is an eternal paradox in the corporate management, shareholders and managers...
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