Download file to see previous pages...
These sources can be broadly classified into short term and long term sources of finance. Long term sources of finance, as the name indicates, are required over longer periods of time (any duration that is above 1 year) whereas short term source of finance that are required within a period of one year. There are three main long term sources of finance for JS and co, namely, share capital, debentures and long term loans.
An equity share represents a share of the company’s assets and a share of earnings after the claims are met. Equity shareholders are the owners of the business and have a right in the company for the percentage of shares owned by them (Samuels et al, 2000). Also, the risk is borne by the shareholders who invest in the company. JS and co can issue new shares in order to raise some surplus finance.
Debentures are bonds issued to the investors in exchange for finance lent to the company. JS and co can borrow money in the form of debentures from the public, by agreeing to repay the sum by some future date. Also, Js and co has to pay an interest to the creditors (debenture bond holders) before paying out dividends to the shareholders. Hence, in this case, debentures have a little risk attached to them compared to the shareholders, from the company’s perspective (Samuels et al, 2000).
Long term loans from banks and other sources are the easiest ways to raise a large amount of capital. Obtaining higher amounts of long term loans will be easier for JS and co, as the business is well established and is making profits. However, the interest payable might be high (as it is spread over a long period of time). Hence a high interest cover should be available for the company, in order to ensure interest payments in times of a financial crisis. Increasing the long term liabilities will increase the gearing ratio (Burke and Wilks, 2007). This coupled with sustaining a high interest cover
...Download file to see next pagesRead More
The most important element for any business is the availability of the funds and finance. Almost all organisations make sure that they have the required funds in order to run the operations of the business in effective and efficient manner. Main issue in the starting of any business or organisation is to search for appropriate source of finance in order to make sure that the start-up funds are available (Johnson, & Scholes 2001).
By using the credit policy, an organisation sells its goods on credit to the customers. And after a certain period of time, the customers are required to pay back the credit amount to the organisation. But, sometimes, there are certain customers who are either unwilling to pay back money to the organisation.
It was found that he could not get more than 50% finance from the bank. Then the promoter had to search for different kind of private investor. Among these the venture capitalists and the angel investors are found as the best persons to approach. After considering all the factors the promoter has chosen to approach an angel investor, which is easily available in United Kingdom.
Task 2 (The Initial Costs): It would require about 50,000 pounds to start the business. The capital required for setting up this organization may be sourced from either banks or the sale of personal assets. Though the sale of personal assets
In nutshell the term financial management indicates “money management”. Financial managers spend a good section of their working hours in developing investment plans, analysing prevailing projects, balancing cash
One of its biggest brands is Nike which is a globally recognized brand in the sports products manufacturing. Now it has 6 different markets in the Middle East and has more than 50 brands and having its head office in many
There is always a tendency of expenses increasing and this is why the organization needs to have a financial plan so as to manage unexpected expenses and emergencies such as unexpected increases in operational costs. However, the most important part of financial
The barber shop attends three customers per hour and the working time is six hours a day. Thus the shop attends 18 customers a day and within which 50% is children that means 9 are children. Number of working days in a month
She already has 200000 pounds and needs to get 600000 pounds through sources of long term and short term finance. We need to analyze different sources of finances that can eb taken to consideration for bearing the
The business seeks to enhance customer satisfaction by offering many ways in which our customers can place their orders to suit their convenience.
Our flower shop is located in London, which is a prime location for this type of business. The
19 Pages(4750 words)Essay
GOT A TRICKY QUESTION? RECEIVE AN ANSWER FROM STUDENTS LIKE YOU!
Let us find you another Essay on topic Managing Financial Resources and Decisions for FREE!