Student name: Mohammad Rabaia’h Tutor: JonathanDuxbury
Student number: U1171709
Course: MBA
The business school
University of Huddersfield Count word: 4008
Table of content: 1.0 Introduction…………………………………………………. 2.0 Source of finance…………………………………………….
2.1 Alternative source of finance…………………………… 3.0 The role of management accountant………………………. 4.0 Analytical tool………………………………………………..
4.1 The balance scorecard……………………………………….
5.0 conclusion…………………………………………………….
6.0 Appendix…………………………………………………….
7.0 Bibliography…………………………………………………
1.0 Introduction:
In the new business environment, such organizations are setting a business strategy to achieve competitive advantage for long run. However, CEOs and executive managersare most likely take the responsibility to ensure work flow in an organization. Recently, researchers have shown that failure and success factors of any business back to the wrong decision making regarding the available financial resources or strategic technique in order to measure business performance.
MID Contracting is one of the leading companies in construction industry. It was established in 1991, the headquarter office based in Amman, Jordan. MID contracting operates in many countries in the middle east and gulf region such Iraq and Qatar. It aims to create value for current and future customer, and to receive the international recognition to achieve its vision. MID Contracting has got ISO certificate in the quality and environment management.
The purpose of this essay to identify the major source of long term of finance used by MID Contractingcompany, and attempt to assess the advantages and disadvantages clearly and accurately for each source. It will also suggest a suitable alternative source could be used, with accurate assessment advantages and disadvantages. Then it will evaluate the role of management accountant critically, and to discuss the source of information they have, and how effectively this information is used.
Finally, the essay will identify and evaluate analytical technique used by MIDContracting in performance management, and planning and controlling. It will also discuss another analytical tool as suitable alternative
2.0 source of finance:
Business has different types of sourcesto finance their operations. It has two options; internal sources and external sources. In internal sources, directors and managers have the authority to use inside sources of finance without take a permission from shareholder such as retained profit. In contrast, external sources used to obtain more funds from outside business, such as borrowing from a bank. They are divided into short term sources and long term source. Short term sources are those offer finance up to one year. On the other hand, long term sourcesare those offer finance over one year. (Atrill&McLaney, 2008)
“choosing the financing mix of short and long term debt and equity that best meets the investment requirement of a business is a key element of financial management”.(Pike & Neale, 2003)
The majority of contracting companies would access to long term sources of finance. These resources may provide a significant liquidity to expand into new markets, purchase new equipment or machinery.
This section will identify two primary long term sources for financing business, and assess the potential advantages and disadvantages.
Term secured loan is one of the long term sources may be used by MID Contracting company. According to Weston & Brigham (1987) term loan defined as “a contract under which a borrower agrees to make a series of interest and principle payments on specific dates to the lender”. The contract determines the maturity date, usually ranged between 3 to 15 year. The interest rate of the loan could be fixed or variables. In short, it is loan negotiated on collateralized asset. The collateral could be land,
