Managing Financial Resources For Asmall Business Enterprise Essay
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[ MANAGE FINANCIAL RESOURCES FOR ASMALL BUSINESS ENTERPRISE]
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Q1.1 (E1.4) Identify sources and costs of funding and optimal funding terms.
Owner cash- Owner cash, also called owner’s investment or contributed capital, is the amount of money that the owner puts into the company. In other words, this is the amount of money that owner contributes to the business either to start it or to keep it running. Owners contribute cash to their business when it needs extra financing for capital projects or expansions.
Bank loan- it is the certain amount of money loaned at interested by a bank to the borrower for a particular period time so that they can start a new business.
Q1.2 Identify; short, medium, and long-term financial performance indicators. Establish targets to enable ongoing monitoring of financial performance.
Return on Average Equity
Net Profit/Average Equity x 100
– Expense percentage
• Expense/Sales x 100
– Current ratio
• Current Assets/Current Liabilities :1 (note can not ÷ by 0)