14 Apr You as the?business manager?need to be able to determine larger sources of funding by creating a financial plan to help reduce duplication of resources, identify requirements and risks, and
You as the business manager need to be able to determine larger sources of funding by creating a financial plan to help reduce duplication of resources, identify requirements and risks, and determine various financing options. Completing this planning is an important step for all businesses to take if they want to succeed. Larger companies may delegate this process to financial managers, financial analysts, or operations managers.
You decide to create a financial plan for your company to help distinguish between sources, requirements, and risks associated with various types of long- and short-term financing capital structure that your company can potentially use in the future.
Assessment Deliverable
Draft a 3- to 4-page financial plan for your company. This plan should include sections for a business case and profit-and-loss statements. Include the following items:
- A business case that includes a description, type of business, and sources of funding
- Note: Use your Wk 5 Assessment Prep: Business Case Research assignment and feedback.
- A profit-and-loss statement for a 3-year period
- Project revenue. State realistic assumptions, such as growth per year, in your projections.
- Estimate direct costs, including capital, marketing, labor, and supply costs.
- A conclusion that includes an explanation of what working through a financial plan can do for a larger company
Please be indepth, specific and support your analysis and please look at the rubic grading sheet for this week which is week 6 that's attached to make sure you have everything what the professor asking for in this project.
FIN/571 v11
Copyright 2022 by University of Phoenix. All rights reserved.
FIN/571 Grading Rubrics Wk 2 Summative Assessment: Business Valuation Presentation……………………………………………………………………………………………………………..2 Wk 4 Summative Assessment: Financial Market Shareholder Analysis …………………………………………………………………………………………………….3 Wk 6 Summative Assessment: Capital Structures Financial Plan …………………………………………………………………………………………………………….4
Grading Rubrics FIN/571 v11 Page 2 of 4
Copyright 2022 by University of Phoenix. All rights reserved.
Wk 2 Summative Assessment: Business Valuation Presentation
Criteria Exemplary 90–100% A- to A
Proficient 74-89% C to B+
Developing 60-73% D to C-
Needs Improvement 0-59%
F
Key Performance Indicators (KPIs)
Weight: 20%
Identified 2 KPIs that insightfully assessed the company’s financial growth and sustainability
Identified 2 KPIs that sufficiently assessed the company’s financial growth and sustainability
Identified 2 KPIs that partially assessed the company’s financial growth and sustainability
Identified 2 KPIs that vaguely assessed the company’s financial growth and sustainability or did not identify 2 KPIs
Financial Growth Analysis
Weight: 20%
Fully explained the market capitalization and related stock prices to bring meaning to the investor
Adequately explained the market capitalization and related stock prices to bring meaning to the investor
Somewhat explained the market capitalization and related stock prices to bring meaning to the investor
Narrowly or ineffectively explained the market capitalization and related stock prices to bring meaning to the investor
Trends
Weight: 20%
Insightfully related market conditions to identified trends
Sufficiently related market conditions to identified trends
Partially related market conditions to identified trends
Vaguely related or did not relate market conditions to identified trends
Recommendations
Weight: 35%
Recommendations show meaningful analysis of the organization’s financials
Recommendations show adequate analysis of the organization’s financials
Recommendations show some analysis of the organization’s financials
Recommendations show limited or inaccurate analysis of the organization’s financials
Respectful Communication & Interaction
Weight: 5%
Strong ability to engage in transparent conversations and respond ethically in professional intercultural settings; inclusively acknowledges value of others within diverse communities
Sufficient ability to engage in transparent conversations and respond ethically in professional intercultural settings; adequately acknowledges value of others within diverse communities
Limited ability to engage in transparent conversations and respond ethically in professional intercultural settings; limited acknowledgement of value of others within diverse communities
Did not engage in transparent conversations and respond ethically in professional intercultural settings; no or inappropriate acknowledgement of value of others within diverse communities
Grading Rubrics FIN/571 v11 Page 3 of 4
Copyright 2022 by University of Phoenix. All rights reserved.
Wk 4 Summative Assessment: Financial Market Shareholder Analysis
Criteria Exemplary 90–100% A- to A
Proficient 74-89% C to B+
Developing 60-73% D to C-
Needs Improvement 0-59%
F
Economic Conditions
Weight: 30%
Thoroughly evaluated a variety of economic conditions that influenced the company’s performance
Sufficiently evaluated a variety of economic conditions that influenced the company’s performance
Partially evaluated a variety of economic conditions that influenced the company’s performance
Vaguely evaluated a variety of economic conditions that influenced the company’s performance or did not provide a variety of economic conditions
Market Conditions
Weight: 30%
Exceptional comparison of the market conditions in the previous year to the company’s performance of the same year to conclude the influences of market conditions on performance
Adequate comparison of the market conditions in the previous year to the company’s performance of the same year to conclude the influences of market conditions on performance
Partial comparison of the market conditions in the previous year to the company’s performance of the same year to conclude the influences of market conditions on performance
Cursory or ineffective comparison of the market conditions in the previous year to the company's performance of the same year to conclude the influences of market conditions on performance
Year-Over-Year Performance
Weight: 35%
Thoroughly analyzed year- over-year performance for the company prior to making conclusions in the analysis
Sufficiently analyzed year- over-year performance for the company prior to making conclusions in the analysis
Partially analyzed year- over-year performance for the company prior to making conclusions in the analysis
Narrowly analyzed year- over-year performance for the company prior to making conclusions in the analysis or may not have analyzed enough key metrics to make conclusions
Analyze Alternatives
Weight: 5%
Fully recognized a need for a solution and thoroughly explored possible solutions
Moderately recognized a need for a solution and adequately explored possible solutions
Vaguely recognized a need for a solution and narrowly explored possible solutions
Did not or inaccurately recognized a need for a solution and did not explore possible solutions/explored infeasible solutions
Grading Rubrics FIN/571 v11 Page 4 of 4
Copyright 2022 by University of Phoenix. All rights reserved.
Wk 6 Summative Assessment: Capital Structures Financial Plan
Criteria Exemplary 90–100% A- to A
Proficient 74-89% C to B+
Developing 60-73% D to C-
Needs Improvement 0-59%
F
Business Case
Weight: 40%
Included a thorough business case that analyzed funding the business through difference sources
Included a sufficient business case that analyzed funding the business through difference sources
Included an incomplete business case that analyzed funding the business through difference sources
Included a superficial business case that lacked analysis of funding the business through difference sources or did not include a business case
Profit-and-Loss Statement
Weight: 30%
Thoroughly analyzed the project revenue and estimated costs to develop a profit-and-loss statement
Adequately analyzed the project revenue and estimated costs to develop a profit-and-loss statement
Partially analyzed the project revenue and estimated costs to develop a profit-and-loss statement
Inaccurately analyzed the project revenue and estimated costs to develop a profit-and-loss statement or did not develop a profit- and-loss statement
Conclusion
Weight: 25%
Insightfully explained lessons learned based on working through a financial plan
Somewhat insightfully explained lessons learned based on working through a financial plan
Somewhat explained lessons learned based on working through a financial plan
Vaguely explained lessons learned based on working through a financial plan or did not provide a conclusion
Strategic Efforts Toward Inclusion and Equity
Weight: 5%
Thoughtfully engaged in overt and deliberate planning, ethical actions, and collaborations that support diversity and foster inclusion and equity
Moderately engaged in overt and deliberate planning, ethical actions, and collaborations that support diversity and foster inclusion and equity
Narrowly engaged in overt and deliberate planning, ethical actions, and collaborations that support diversity and foster inclusion and equity
Did not engage in overt and deliberate planning, ethical actions, or collaborations that support diversity and foster inclusion and equity
- FIN/571 Grading Rubrics
- Wk 2 Summative Assessment: Business Valuation Presentation
- Wk 4 Summative Assessment: Financial Market Shareholder Analysis
- Wk 6 Summative Assessment: Capital Structures Financial Plan
,
Running head: Business case research 1
Business case research 4
Business Case Research
Latanya Pope
Carol Sommers
4/8/2023
Why funding is needed for Amazon?
There are two major driving forces that contribute to the need for Amazon to raise funds. The first main reason for funding is to raise working capital. A company's financial health is largely dependent on its working capital, and insufficient working capital can have a significant impact on the company's future. To acquire sufficient working capital to enable them to realize their growth goals, many businesses opt to apply for external funding. A loan can help Amazon meet its funding obligations by covering short-term funding needs and giving it the money, it needs to grow. It can also bridge the gap between supplier payments and orders from customers. According to the British Business Bank's 2019 Business Funding Survey, the most common reason that small businesses seek funding is for working capital (Black et al, 2021).
The second main reason for raising funds is to enable Amazon to support start-up associate businesses. Amazon serves as a platform in which startup businesses grow in. To get their feet on the ground, new businesses need a lot of money. Even though some business owners start their companies with their own money, it can be hard for them to make money on their own. Therefore, most entrepreneurs look for outside financing for their business, all things being equal. Entrepreneurs can obtain external funding in a variety of ways, including applying for bank loans, borrowing money from friends and family, and more. To expand, almost every business needs assets. Investing in business-essential assets is one of the primary uses of business funding. This could include anything the business needs to run, like vehicles, machinery, IT equipment, or anything else. Just make sure the return on investment makes sense when planning business funding around the purchase of assets.
Sources of Funding
Self-funding: This refers to a funds raising plan in which Amazon raises the funds on its own. The main source of self-funded funds is from retained earnings. Retained earnings refer to the profits and proceeds that remain after deducting the expenses and liabilities from the net profits and income. This form of funding has certain benefits such as greater flexibility and control. The organization has a choice to control various decisions and policies on financial management in the organization (Mazzarol et al, 2020). It reduces dilution of control due to maintaining minimum managerial influence.
Borrowing: This source of funding involves the use of financial lenders and institutions in providing finances needed by the organization. Although Amazon will increase the current level of financial liabilities due to interest charged on the borrowed funds, it has an added advantage of reduced taxation.
Requirements
In self-funding, the organization must have a reliable financial reporting framework that ensures precision in recording financial transactions. Also, the source of funds withdrawn must be well-defined in the accounting procedures used in the organization.
In borrowing, Amazon must be assessed on its credibility in meeting financial obligations set. This involves determining the current level of leverage as well as determining the level of collateral in the organization.
Associated risks
Self-funding is faced with a major risk of reduced risk diversification. This refers to the potential risk that is incurred when an adverse event occurs in the organization. With self-funding, Amazon will be the sole investor or sponsor in the project. This means the company holds a major risk of incurring losses because of uninsured events that put the proposed project to a halt.
Borrowing funds carries some risks as a funding strategy. One of the risks is the business can lose assets because of default. If the company fails to pay interest on time, the financial lenders have a right to take over the assets and collateral to the loaned funds. Also, the company increases its liabilities as a result of the increased number of liability items in the organization’s financial statement (Gupta & Ongena, 2022).
Best funding source
The preferred source of funds depends on the timeline in which the obligations of the funds fall due. Amazon can have different sources of funds depending on when the funds are to be serviced. Based on a comparison of the two sources of funds identified in the analysis, the most suitable source of funds for the company on a short-term basis is borrowed funds. Given that Amazon has experienced a decline in working capital, there is a need to focus on a channel that is more of providing short-term lending basis while maintaining significant retained earnings for future expansion. Borrowing provides an added advantage of reduced taxation due to interests’ deduction. This increases profitability, which also boosts retained earnings level in the organization. However, on long term basis, the company should focus on self-funding. This funding strategy ensures low dilution of the company’s control as a result of additional shareholder’s interests.
Cost of capital
|
Cost of borrowing |
|
|
Short term funding source (borrowing): |
3,000,000 |
|
Long-term funding source (long-term): |
2,500,000 |
|
Current APR |
|
|
Short term funding source (borrowing): |
12% |
|
Long-term funding source (long-term): |
12% |
Reference
Black, S., Jackman, B., & Schwartz, C. (2021). An Assessment of the Term Funding Facility. RBA Bulletin, September.
Gupta, M., & Ongena, S. (2022). The Impact of the SBA Funding Programs on the Distance and Pricing of Loans to Small Businesses. Swiss Finance Institute Research Paper, (22-31).
Mazzarol, T., Reboud, S., Mazzarol, T., & Reboud, S. (2020). Workbook: Financing the Venture. Workbook for Entrepreneurship and Innovation: Theory, Practice and Context, 139-151.
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