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Managing Financial Resources and Decisions
Finance & Accounting
Pages 3 (753 words)
Managing Financial Resources and Decisions Table of Contents Table of Contents 2 Introduction 3 Section 1 3 Section 2 4 Section 3 5 Section 4 5 Conclusion 6 References 7 Introduction This paper is expected to deliver an understanding regarding the share capital allocation and its effects on investor’s decisions of a UK listed company, i.e.
The paper will be divided into 4 sections. Section 1 will be focused on assessing the tangible cost and the opportunity costs incurred by Tesco when raising share capital through shares, bonds and proposed dividends, with hypothetical illustrations. Section 2 will aim at explaining the role and significance of financial planning in Tesco, while section 3 will remain focused on identifying the needs that investors of Tesco might essentially seek in respect to the fund raising activities of the company. Taking note on the changes expected in the PE (Profit-Earning) ratio, EPS (Earning per Share) ratio and ROCE (Return on Capital Employed) owing to its fund raising activities, section 4 will be constructed. Section 1 In correspondence to the three optional measures that Tesco can consider to raise its capitals, it was observed that the tangible cost will be as follows. Correspondingly, the opportunity costs associated with these options will be, As can be observed from the above analysis, it is likely and suggestible that Tesco decides for option 1a, having least opportunity cost of ?5,500,000, considering its next best alternative to be option 1b. Section 2 Financial planning assists large companies in finding out the best possible ways to generate the cash flow and to make the capital investments effective by incurring limited degree of risks. ...
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