FINANCE FOR BUSINESS
The financing of business helps in understanding the performance of the business entity. Business financing helps the Brambles Limited Company in staying at the top of the payments of tax. Business finance helps the company to provide information which is accurate for getting the loan for the business or for investment. Planning of business finance is the process to determine how an entity will achieve the strategic objectives and goals. Basically, an organization creates plan related to finance instantly after viewing the company’s objective that has been set earlier by the organization.
1.0 The company’s description
Brambles Limited is a company which is logistic in the chain of supply. Brambles Limited Company is operating in more than sixty countries all over the world. This company operates primarily through the company's IFCO and CHEP brands. The company is listed under the Securities Exchange of Australia (ASX). The Brambles Limited Company has its headquarter in Sydney. According to Peirson et al. (2014, p.10), the operations of Brambles Limited Company are largely operated in the zone of Western Europe and North America. The Brambles Limited Company uplifts its performance for their customers. They help their customers by transporting the products via the chain of supply more safely, sustainably and efficiently. The annual sales of the company have been observed to be $ 5200m. The net income of the company has amounted to $208.5m.
The primary activity of the company is the supply of reusable equipment such as crates, pallets and containers to share the use between various participants along the chain of supply. This method is termed as pooling. The consumer products which are fast moving are served by Brambles Limited Company (for instance, grocery, personal and health care, dry foods).
2.0 Identifying company in relation to the structure of ownership governance.
(i) Shareholders with 20.00% of shareholdings and 5% shareholdings and (ii) The main individuals of the company involved are members and board, CEO and the chairman.
Shareholders with 20.00% of shareholdings help in determining the health of the company's system. According to Xiong et al. (2015, p.25), it also helps the company in determining the company's capability for surviving the shocks related to the economy. The company's health is dependent on the unrevealed soundness of the company's independent components and also on its relationship with an ownership-governance main member, the chairman. Therefore, a good ownership-governance contributes the reasonable development of economy by enhancing the company's performance. Shareholders with 5% shareholdings help the company to increase acquiring outside capital. The members and board of the company ensure that the stakeholder and shareholder concerns of the company are occupied into account properly. It also ensures taking into account properly the balanced interest of the company.
3.0 Calculation of the Ratios measuring financial performance
The performance ratio of the Brambles Limited Company has been analyzed as shown in the above table. The performance ratio of the company involved the calculation of activity, liquidity, solvency, market value and profitability ratios. The current of Brambles Limited Company has been analyzed to 0.75 and 0.89 for the year 2017 and 2016 respectively. The debt to capital ratio of Brambles Limited Company has been analyzed to 0.4896 and 0.0638 for the year 2017 and 2016 respectively. Thus, the current ratio of the company as compared on the basis of two years has shown the difference of 0.14. The current ratio for the year 217 has been observed to be less as compared to the current ratio for the year 2016. The other ratios calculated also shows the difference in the ratio for both the year. The debt to capital ratio of Brambles Limited Company for the two years 2017 and 2016 has also been analyzed to be different. The equity return ratio of the Brambles Limited Company for the two years 2017 and 2016 has been analyzed to be 0.073 and 0.167 respectively. Thus, comparative analysis between the company's performance ratio has been seen in the prepared above table. The ratio of one year shows different amount of ratio as compared to the ratio of another year of the same company. Lastly, these ratios of the company helped to determine the level of performance and efficiency of the company.
4.0 Presentation of two graphs from the results description
(i) Movement in the monthly price of a share of Brambles Limited Company (All Ordinaries Index)
Price of a share of Brambles Limited Company with an index of ordinaries has been analyzed. The company involved in pooling services provider. The share price of the company has been observed to increase over two year’s period of time. This price of the share of this company is listed under the exchange of securities of Australia which is the leading system of finance. The price of share graph shown in this figure is less volatile as compared to the graph presented in figure 2.
(ii)Movement in the monthly price of the share of Brambles Limited Company (Without All Ordinaries Index)
The price of a share of the Brambles Limited Company is based on the float free capitalization of the market. The price of a share of this company with the index of all ordinaries has been observed in the above figure. According to Loughran et al. (2016, p.1187), the determination of the price of the share of the company helps the company in the management of their funds. It serves as the largest manager of fund pools. This company is involved in providing its customer logistic chain of supply.
5.0 Identifying important factors which have influenced the price of a share of the company
The factors which influence the price of the share of the company are:
Supply and demand- The supply and the demand for securities affects the security price. If the securities supply is less than its demand, then the security price increases. Moreover, if the securities supply is more than its demand, then the securities piece falls.
The rate of a bank- When the rate of the bank is low that is the bank has a rate of interest which is lower, the fund's demand will get higher and securities demand will also become high. On the other hand, when the rate of the bank is high, the fund's demand will get lower and securities demand will also become lower.
The cycle of trade- The cycle of trade refers to the fluctuations which are cyclic in the activities of the economy. During the condition of the boom, the price of the share would rise, whereas, during the condition of depression, the price of a share would fall. During the conditions of recovery and recession the price of the shares while gradually increase and fall respectively.
Based on the above calculations of Weighted Average Cost of Capital:
6 (i) Value of beta of the Brambles Limited Company has been analyzed to be 1.19.
(ii) The return rate of the share of the company has been analyzed to be 9.88%
(iii) The company involves conservative investing. The Brambles Limited Company follows this
strategy for preserving the value of a portfolio of the investment in securities which involves lower risk like securities of money market and fixed income.
7 (i) The WACC of the company has been analyzed by doing the calculations as shown in the above t5able. The WACC of the company is found to be 0.85%.
(ii) The implication of WACC which is higher on the evaluation of the management prospective projects on investment: WACC is used to make decisions in the company by assessing the company's projects. It helps in assessing the company's project which involves risk of similar kind and also the projects which distinct risk involved.
8.0 By the use of debt ratios of company over prior two years, emphasis on the improvement towards the preferred optimal structure of capital maintenance.
i) Working towards the company’s maintenance:
According to Jacob et al. (2017, p.176), bankers and investors mainly make the use of the debt ratio of the company to determine whether the bankers or investors want to give the loan to the company. Thus, the debt ratio over the two years of the company has been analyzed for determining whether the capital structure of the company is maintained efficiently or not. The performance of the business is evaluated by the use of this ratio which helps the investor to gain the critical information about the company. By the use of the debt ratio, the company's ability on making the return on investment has been accessed. The company's debt ratio is not too high, so it can be determined the investors can invest without any risk towards the company. This is because if the company debt ratio is seen to be higher than, the investors will determine the risk which is greater is involved in lending money to the company. The debt ratio of the company helps the investor in comparing the information of the company with other company for determining the potential risk.
(ii) Steps were taken by the company in adjusting the gearing ratio and repaying the loans.
The company takes various steps to adjust the gearing ratio. The company involves the selling of their shares; the board of director of the company authorizes the share sale which can be used for paying down the debt. Converting of loans or negotiating with the lender can de be done for swapping the debt which is existing for share. Making the reduction in the capital which is working and increasing the profit will also help in adjusting the profit of the company.
9.0 Policy of Dividend
The dividend policy implemented by the company is used for deciding what percent of the companies earning will be paid out to the company's shareholder. The particular dividend policy followed the company involves deciding the amount of earning of the company which should be distributed to its shareholders. This company uses the residual policy of dividend. This policy of dividend involves relying on the equity which is generated internally for financing the new projects of the company. According to Bugeja et al. (2016, p.10), the payments of dividend can be obtained from the equity which is left over or equity which is residual only after the requirements of the company’s projects are met. The balance between the equity and the debt is maintained by the company before distributing the dividend.
a) The company could make decisions related to investment based on the analysis of ratios. This could help the company capable of attracting investors.
b) The business of the company could be operated collectively for producing the output which will be more than the company input. This could be monitored by the flow of cash, gross profit and the net profit of the company.
c) The company could review its business processes. The services and the product of the company could meet the expectations of the customers.
d) The company could involve careful financial information analysis which is required for stock investing. This could be done by the company on the basis of examining the profit determined by analyzing the performance ratios of the company.
Based on the findings and analysis done, it has been observed that the company is involved in pooling business. The company's performance ratios helped to analyse that the company is making the good amount of profit.A plan of financing of business is not just a plan which helps the company in getting the loan or for securing backers. It has been analyzed that planning of financing the business is far more from getting loan. A plan of financing the business of a company is examining thoroughly the strategic that company follows which will help in the development of the company. Planning of financing helped the company in correcting the weakness of the organisation by rectifying the serious issues of the organisation.
comcast business, business casual, amazon business, facebook business manager, spectrum business, ohio business gateway, costco business center, business casual women, cannabis business social network, business casual men, investors business daily, yelp for business, business analyst, , business for sale, office depot business, cox business, paypal business account, vonage business login, staples business cards,