Analisis de Evaluación Curricular

Final Exam English IV

UNIVERSIDAD METROPOLITANA DE EDUCACIN, CIENCIA Y TECNOLOGANames:PIN:Jorge J. Salas A.4-748-2173Javier F. Coto B.8-1017-85Aileen E. Caballero E.1-732-240Adam Gil2-733-653

Theme:The concepts, sources and planning work in operation for businesses

Teacher:Delia Ballesteros

Date:29 de Abril de 2015

INTRODUCTION

Finances are rooted in the completion of a business transaction with the transfer of financial resources. It receives contributions mainly from disciplines such as economics, management, accounting and quantitative methods of analysis. Finance can be defined as "the art of managing money," while financial management "refers to the tasks of the financial manager". Finance contains a set of principles, techniques and procedures, which are used to transform the information reflected in the financial statements of a company, processed information usable for decision-making.Meanwhile financial planning and control processes are closely related to financial management and strategic planning. Planning and financial control involving employment projections are based standards and the development of a feedback process and adjustment to increase performance. The results obtained from the screening of all these elements of costs and expenses are reflected in the state budget or pro forma results. Meanwhile, sales estimates allow us to consider the various types of investments required to develop products. These investments, plus the previous year's balance sheet, provide the data necessary to develop the assets column of the balance sheet.These assets must be financed, but also requires an analysis of cash flow.The cash flow of the company plays an important role because, when net positive indicate that the company has sufficient financing. If not, it would warrant additional funding. This means that cash flow is the essential element for financial forecasts because he based on the projections made in order to achieve the goal or ultimate goal of every business: profitability. Matter Planning and Financial Control, aims to develop basic concepts of finance, financial planning, financial analysis, working capital funds and securities, credit and collections policy and funding in the short and medium term bank loans, financing of goods and investment analysis, and applications to practical problems that arise in organizations and in real life.Similarly, in today's global world should also consider the strategic and economic trends that the company must meet to achieve sustainability in the long term. It thus becoming a strategic analysis because besides identifying the strengths and weaknesses of the business, is necessary to know the impact of environmental factors to differentiate their business opportunities and threats that might affect it.Also the interpretation of financial data is extremely important for each of the activities carried out within the company, as by this executive is worth to create different outsourcing policies and may also focus on solving specific problems facing the company, such as, for example, accounts receivable or accounts payable; molded while credit policies to customers depending on their rotation, it can also be a focal point when used as a tool for rotating obsolete inventories. Through the interpretation of the data presented in the financial statements managers, customers, employees and suppliers of financing, you can tell the company performance shown in the market; It is taken as one of the primary tools of the company.Financial Planning and Control provides relevant to an organization considered as key elements in the ongoing monitoring of its management aspects and goals to achieve. Must be analyzed, similarly, the strategic planning process and its impact on the achievement of organizational objectives; learn to design a dashboard that allows to monitor and measure the progress of these strategic objectives, and control the cost of financing, through the evaluation of financing options and to create value in an organization, through determination the optimal financing structure of a company; and valuing companies under the method of the present value of projected free cash flows.In conclusion, the primary objective Planning and Financial Control aims is to help company executives to determine whether decisions about financing were the most appropriate, and thus determine the future of investments in the organization; however, there are other intrinsic or extrinsic elements are equally interested in understanding and interpreting these financial data in order to determine the situation in which the company is located. GENERAL OBJETIVESExpose techniques and tools on Financial Planning and Control, as necessary for effective and timely decision making strategic element, and to view it as a business and the impact of this activity in the company is administered in order to achieve their goals and objectives from the holistic point of view. SPECIFIC OBJECTIVESEstablish the nature of Planning and Financial Control and objectives, analyzing the mutual interrelations between investment alternatives and financing of the company as well as the effects of the Planning and Financial Control in the management, through control of revenues, cash flow and other financial statements.Analyze and define what the essential information to help businesses make decisions about the appropriate economic and financial performance. Study the financial strategy of the company and its connection with the strategies set out in this comprehensive plans. Analyze comparisons subsequent behavior of financial planning, with the objectives set initially in the financial plan, using the main indicators that form the basis for applying the techniques of financial control in the company.

The concepts, sources and planning work in operation for businesses

Planning "is decided by rationality and intentionality against random / uncertainty" is "make decisions in advance about future courses of action (Anticipating React Vs)," you can also say that it is "the systematic development of programs geared towards meeting pre-defined objectives, through a process of analysis, evaluation and selection of the different opportunities that have been predicted ".For his part, control is an activity that is part of everyday human life, consciously or not. It is a function that is performed by previously established parameters, and the control system is the result of planning, therefore, points to the future. Control refers to the use of records and reports to compare what has been achieved as scheduled, therefore control is the set of actions taken in order that the activities are carried out according to plan. The management includes the process of skills, knowledge and resources to carry out the solution of tasks efficiently, while corporate governance is a term used to describe the set of techniques and experience of the organization, processes such as planning, efficient management and control of operations and other activities of the organization.The financial planning process presents techniques and tools for effective and timely decision-making, to visualize as a business and the impact of this activity in the company, in order to achieve its goals and objectives is given from the point holistic view. According to Weston and Brigham 1992 (Fundamentals of Financial Management), the financial planning process "involves making projections of sales, income and assets based alternative production and marketing strategies as well as the determination of the resources needed to achieve those projections "Brealey / Myers, 1992 (Principles of Corporate Finance) on financial planning, states that a "process of analysis of the mutual influences between investment alternatives and financing; projection of future consequences of present decisions, the decision to adopt alternatives and finally the subsequent behavior compared with the objectives set in the business plan. "In conclusion the process of financial planning is a technique that combines a set of methods, tools and targets, in order to establish an economic and financial forecasts and achieve business goals, taking into account the means that have and those that required to achieve it. FINANCIAL PLANS: CONCEPTSClearly, a company that does not prepare financial plans can not maintain a position of progress and profitability. A successful company requires: common sense, good judgment and experience, but a real business management requires setting targets and conducting operations so that the achievement of these objectives is ensured. Financial managers should consider the planning and control systems, considering the relationship between sales volume and profitability under different operating conditions, allowing them to predict the level of operations, financing needs and profitability as well as the needs of funds the company or cash budget.Financial planning is the projection of sales, income and assets based alternative production and marketing strategies as well as the determination of the resources needed to achieve these projections.The preparation of financial analysis begins with forecasts projected sales revenue and production costs, a budget is a plan that sets out the projected expenses and explains where obtained and the production budget presents a detailed analysis of investments They will be required in materials, labor and equipment, to support the level of sales forecast.During the planning process combine each projected operating budgets of different levels and with this data the cash flows of the company will be included in the cash budget. After being identified costs and revenue development the income statement and balance sheet and projected pro forma for the company, which are compared to the actual financial statements, helping to identify and explain the reasons for the deviations, correct the problems operating and adjusting the budget projections for the rest period. SOURCES OF FUNDS FOR BUSINESSAll type of business need fund for different purposes. Its mean that each business no matter, its purpose, need funding. Why?, because Financing is needed to start a business and ramp it up to protability. There are several sources to consider when looking for start-up nancing. But rst you need to consider how much money you need and when you will need it. The nancial needs of a business will vary according to the type and size of the business. For example, processing businesses are usually capital intensive, requiring large amounts of capital. Retail businesses usually require less capital.You can divide the sources of funds for business in:Short Term financing for current assets: A short term asset is an asset that is to be sold, converted to cash, or liquidated to pay for liabilities within one year. In the rare cases where the operating cycle of a business is longer than one year (such as in the lumber industry), the applicable period is the operating cycle of the business, rather than one year. An operating cycle is the time period from when materials are acquired for production or resale to the point when cash is received from customers in payment for those materials or the products from which they are derived. All of the following are typically considered to be short term asset: Cash and cash equivalents: it is the most liquid asset, which includes currency, deposit accounts, and negotiable instruments (e.g., money orders, checks, bank drafts). Marketable securities, Prepaid expenses, Inventory of all types (raw materials, work-in-process, and finished goods). Long term financing for current assets: Often referred to simply as "investments". Long-term investments are to be held for many years and are not intended to be disposed of in the near future. This group usually consists of three types of investments: Investments in securities such as bonds, common stock, or long-term notes. Investments in fixed assets not used in operations (e.g., land held for sale). Investments in special funds (e.g. sinking funds or pension funds).Long term financing for fixing assetsAlso referred to as PPE (property, plant, and equipment), these are purchased for continued and long-term use in earning profit in a business. This group includes as an assetland, buildings, machinery, furniture, tools, IT equipment, laptops, and certain wasting resources, timberland and minerals. They are written off against profits over their anticipated life by charging depreciation expenses (with exception of land assets). Accumulated depreciation is shown in the face of the balance sheet or in the notes. An asset is an important factor in a balance sheet.EQUITY VERSUS DEBT FINANCINGDebt financing means borrowing money and not giving up ownership. Debt financing often comes with strict conditions or covenants in addition to having to pay interest and principal at specified dates. Failure to meet the debt requirements will result in severe consequences. The interest on debt is a deductible expense when computing taxable income. This means that the effective interest cost is less than the stated interest if the company is profitable. Adding too much debt will increase the company's future cost of borrowing money and it adds risk for the company.The Basics of Equity FinancingEquity financing refers to raising funds for business use by trading complete or partial ownership of the company's equity for money or other assets. In financing corporations, this is most commonly done by selling either common stock, preferred stock, or some combination of these. Where a proprietorship may be funded entirely by its owner or with money that the owner receives from family, friends, or venture capitalists, corporations will be funded by stockholders who may include individuals, venture capitalists, or institutional investors.DEBT VS. EQUITY FINANCING: WHICH IS THE BEST WAY FOR YOUR BUSINESS TO ACCESS CAPITAL?Deciding between equity financing and taking on a loan for your business is a challenge for all small business owners when they need capital to expand a business. Should you go to a bank and apply for a business loan? Or should you look for an investor? Consider the advantages and disadvantages of each to determine which type of financing is best for your business: Equity financing Having an investor write you a check may seem like the perfect answer if you want to expand your business but don't want to take on debt. After all, it's money without the hassle of repayment or interest. But the dollars come with huge strings attached: You must share the profits with the venture capitalist or angel investor.Advantages to equity financing It's less risky than a loan because you don't have to pay it back, and it's a good option if you can't afford to take on debt. You tap into the investor's network, which may add more credibility to your business. Investors take a long-term view, and most don't expect a return on their investment immediately. You won't have to channel profits into loan repayment. You'll have more cash on hand for expanding the business. There's no requirement to pay back the investment if the business fails. Disadvantages to equity financing It may require returns that could be more than the rate you would pay for a bank loan. The investor will require some ownership of your company and a percentage of the profits. You may not want to give up this kind of control. You will have to consult with investors before making big (or even routine) decisions -- and you may disagree with your investors. In the case of irreconcilable disagreements with investors, you may need to cash in your portion of the business and allow the investors to run the company without you. It takes time and effort to find the right investor for your company. Debt financing The business relationship with a bank that loans you money is very different from a loan from an investor -- and requires no need to give up a part of your company. But if you take on too much debt, it's a move that can stifle growth. Advantages to debt financing The bank or lending institution (such as the Small Business Administration) has no say in the way you run your company and does not have any ownership in your business. The business relationship ends once the money is paid back. The interest on the loan is tax deductible. Loans can be short term or long term. Principal and interest are known figures you can plan in a budget (provided that you don't take a variable rate loan). Disadvantages to debt financing: Money must paid back within a fixed amount of time. If you carry too much debt you will be seen as "high risk" by potential investors whichwill limit your ability to raise capital by equity financing in the future. Debt financing can leave the business vulnerable during hard times when sales take a dip. Trade credit is the credit extended by one trader to another for the purchase of goods and services. Trade credit facilitates the purchase of supplies without immediate payment. Trade credit is commonly used by business organizations as a source of short-term financing. It is granted to those customers who have reasonable amount of financial standing and goodwill. There are many forms of trade credit in common use. Various industries use various specialized forms. They all have, in common, the collaboration of businesses to make efficient use of capital to accomplish various business objectives.A personal loan is a contract by which the lender advances a sum of money (principal) to another person named borrower, with the obligation to return the principal plus interest agreed and paid about the costs of the operation. Credit institutions offer countless personal loans, also called consumer loans, with different trade names (car loans, holiday loans, wedding loans ...), but with slight variations are virtually all the same.Type of interestThe interest rate is the price that the bank will charge for lending you the money you requested. Before you decide, compare different offers, but not only set the nominal interest rate, but the APR (more accurate if one examines loans with repayment period).Purpose, amount and termThe duration of a personal loan should not be longer than the life of the thing that is funding. Financial institutions also look for coherence between the purpose, the amount and term of the loan requested. That is, they will not grant him 5,000 for the purchase of a washing machine. A personal loan should go to finance a consumer product or service in particular and entities that want to avoid general use to remedy liquidity problems of customers. Therefore it is usually necessary to file a pro forma invoice or budget. Even mediate entities require payment to ensure that the money is actually targeted at length indicated by the client.

SHORT-TERM DEBT FINANCINGAs is obvious in the name, short term debt financing is a form of financing involving financial obligations that must be fulfilled usually within a year to two at most. It is more often used for working capital requirements, or day-to-day operations of the business. By the same token, businesses with cyclical operating conditions (for e.g. retailers) or those engaged in international trade will usually obtain financing through short-term debt. There are 4 main types of short-term debt financing options:OverdraftOverdraft is an instant extension of credit from a lending institution. When a company has an overdraft arrangement with a bank, it can draw down or transmit cash from its account beyond the available balance. It is also revolving in nature; does not have a fixed repayment period. The amount of credit will depend on the overdraft limit negotiated with the bank. (The advantage of an overdraft arrangement is that the company does not have to ensure that sufficient cash is always available for operating activities such as stock turnover or payment to creditors in the short term).Letter of CreditLetter of Credit is a letter from a bank guaranteeing a buyer's payment to a seller, that a seller will receive the amount within the credit period. The advantage of having such an arrangement with a bank is that it enables a company to negotiate better credit terms with suppliers.Short-Term LoanShort-term loan is, as the name suggests, a loan that must be repaid within a year or less, with interest. It is not revolving in nature; has a fixed repayment period. Companies will usually find this form of debt financing useful if liquidity is a concern, in particular short-term working capital requirements (For e.g., to purchase stocks or to pay creditors).Bill of ExchangeBill of exchange is a document that binds one party to pay a fixed sum of money to another party at a specified future date. It is often used in international trade. An exporter can grant credit to an importer for goods shipped, by drawing a bill of exchange to the same amount and credit period.AdvantagesShort term debt financing is a source of 'quick' liquidity for the business, in particular SMEs, who do not have large pool of reserve funds for emergency uses. Small enterprises are more prone to short term shocks from their operating environment such as a large debtor declaring bankrupt, or an abruptly ceased partnership with a major supplier. Hence, short term debt financing provides almost immediate funds to tide over such difficult situations that could otherwise impact the going concern of SMEs.Short term debt financing is usually easier to negotiate (compared to long term debts and equity financing), as the financier faces relatively lower credit risk. Due to the ease of negotiation, short term debt financing can be used to free up funds in the business for good investment opportunities that would otherwise have been foregone.Long-Term Debt FinancingIn contrast to short-term borrowings, long-term debt is used to finance business investments that have longer payback periods. For example, the purchases of machinery, which may help the company, produce goods over a 5-year period. There are 2 main types of long term debt financing options:

Term LoanBasically, term loan is a loan with a repayment period of more than one year. It is usually taken by companies with longer investment or payback horizons, such as building of a new factory or purchase of new production equipment. A bank term loan is usually repaid via periodic instalments. Mortgage is basically a long-term loan, secured by a collateral of some specified real estate property. The loan is normally amortised and the borrower is obligated to make a periodic instalments to repay the loan. Failing which, the lender can enforce its rights to possess the mortgaged property.LeasingLeasing, in general, allows a company use of an asset without having to pay the full amount upfront. A leasing agreement is drawn up with the lessee agreeing to pay periodic rental payments in exchange for the use of a capital asset. It is in effect a rental agreement, apart from a clause, which allows the lessee to own, or to buy over the machine at a reduced rate, at the end of the lease agreement.Disadvantages Long term debt is often costly to service (interest charges are higher). Long term debt financiers usually demand a great amount of information from the company to perform its credit evaluation. Start-ups usually find it more difficult to obtain long term debt financing, or if they do, at unfavorable terms, as they have almost no proven track record, low cash flow, and small asset base. Long-term debt financing contracts normally contain a lot of restrictive clauses and covenants, including the scope of business operations that the company is allowed to engage in, capital and management structure limitations, etc.

conclusion

Financial Planning involves a series of tools that will allow analysis based on its observations and not only anticipate the likely future of a company, but also set the primary objectives and goals. There is no perfect plan, but you can do one probable and possible alternative scenarios, which can be adjusted over time to try to get the best.Meanwhile, the financial statements are documents that provide information for decision-making in safeguarding the interests of the company, in this sense, the accuracy and truthfulness of the information that may contain these states is important. The pro forma statements (projected) show the revenues and costs expected in the future as well as the expected financial position, that is, assets, liabilities and stockholders' equity at the end of the forecast period, while the cash flow is show movement Cash. By financial statements owners, shareholders or board can obtain information about the financial position of a company as well as make use of certain tools of financial forecasting, to study, analyze what has been done and what you expect or projects perform in the future.The capital structure provides a combination of own and other financial resources and financing this capital in the short and long term, which is intended for the purchase of assets the company needs to fulfill its objectives. Moreover, the employer or manager who will have the responsibility to make funding decisions that the company needs, you must consider the types of funding deemed necessary, and when you choose, you must do that which represents more economy the company, this because there are many sources that the environment offers both internal and external and selecting the most appropriate to take as a basis the risk that the employer is willing to take.Additionally, the control is a very important element in any organization, it is the one that allows to evaluate the results and whether they are adequate to plans and objectives to be achieved. Only through this function, you can specify the errors, identify those responsible and correct the flaws, so that the organization is aimed correctly.The control should be at any level of the organization, thus ensuring that the same objectives are met. But we must clarify that the control should not only be at the end of the administrative process, but instead, should be made permanent, so that in this way, are resolved effectively and in the shortest time possible all deviations present. Some key elements to carry out financial control in a corporate entity, are based on the balance sheet, income statement, cash flow and statement of source and application of funds.Financial analysis with the reality of the situation and behavior of an entity is evaluated beyond the purely accounting and financial laws, and this has relative character, because there are not two equal companies or activities, either in size, each one has the characteristics that distinguish it in a positive and can not be relatively important for others. The use of accounting information for planning and control purposes is a great need for executive procedure. This information usually shows weaknesses that must be recognized for corrective actions, and the strengths that must be addressed for use as enabling forces in the management activity.Although the financial statements represent a record of the past, his study to define guidelines for future action. It is undeniable that the decision depends heavily on the possibility of the occurrence of certain future events, which can be revealed by a correct interpretation of the financial statements provides accounting. The application of the method for analysis demonstrates the importance of using these tools for deep knowledge of the financial situation and subsequent decisions, as well as the determination of costs is an important part to achieve success in any business. With it you can know in time if the price at which they sell what occurs in the company (or service) can achieve profit after covering all costs and operating expenses of the company.Business competitiveness has increased and profitability depends on operational efficiency, so are currently planning a series of restructurings and business arrangements to reduce costs, reduce their points balance to minimize losses and maximize profits, thus improving profitability. Financial managers should consider the planning and control systems, considering the relationship between sales volume and profitability under different operating conditions, allowing them to predict the level of operations, financing needs and profitability as well as the needs of funds the company or cash budget.Further, looking for other conclusions can say:Financial planning is the projection of sales, income and assets based alternative production and marketing strategies as well as the determination of the resources needed to achieve these projections. Financial control is the implementation phase in which financial plans are implemented, monitoring is the process of feedback and adjustment required to ensure that plans are followed and to modify existing plans due to unforeseen changes.The preparation of financial analysis begins with forecasts projected sales revenue and production costs, a budget is a plan that sets out the projected expenses and explains where obtained and the production budget presents a detailed analysis of investments They will be required in materials, labor and equipment, to support the level of sales forecast. During the planning process combine each projected operating budgets of different levels and with this data the cash flows of the company will be included in the cash budget.After being identified costs and revenue development the income statement and balance sheet and projected pro forma for the company, which are compared to the actual financial statements, helping to identify and explain the reasons for the deviations, correct the problems operating and adjusting the budget projections for the rest period.

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Lic. en Banca y Finanzas