...selecting the proper financing sources Knowing the costs of financing is a prerequisite. This assignment is regarding the financing issues of business. it is very necessary to have proper knowledge over the financing terms and methods to obtain requisite financing for the organization. One has to know the costs of financing as a prerequisite before selecting the proper financing sources. In this assignment, several advantages and disadvantages are discussed for different financing methods, cost of finance, financial planning and information and many other issues that help to gain a proper knowledge about the financing in organization. Different books and journals have been used to prepare the assignment. Contents Introduction 3 Requirement 1 3 Task 1.1 : Business needs finance and available sources of finance to a business 3 Equity financing 4 Debt Financing 4 Lease Financing 4 Task 1.2 : Accessing and comparing the implication of the different sources of finance 4 Implication of equity financing 4 Implication of debt financing 4 Implication of lease financing 5 Task 1.3: evaluation of the appropriate sources of finance for the above mention businesses. 5 M1: Critically evaluate each available sources of finance to that particular firm. Evaluation should include the pros and cons, and legal aspects of each source. (Merit M1). 5 Case study 1: An engineering firm 5 Equity financing for this firm 5 Debt financing 5 Lease financing 5 Case study 2:...
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...Debt Versus Equity Financing ACC/400 May 14, 2012 Debt versus Equity Financing Debt versus equity financing is a critical element in the process of managing a business and also the most challenging decision facing managers who require capital to fund their business operations (Schroeder, Clark, & Cathey, 2005). Debt and equity are the two main sources of capital available to businesses, and each offers both advantages and disadvantages. This paper will compare and contrast lease versus purchase options, examine debt and equity financing, provide examples for each source of financing, and identify which alternative capital structure is more advantageous. Lease vs. Purchase Options: Compare and Contrast In business the decision to lease or purchase is a critical element of strategic management. Equally important is the way in which the asset will be used. Operating leases are most often used by organizations looking for fixed payments with no long-term risk, and a limited useful life of the asset. Capital leases are more aligned with the features of a conventional purchase. Purchasing often requires a higher monetary expenditure at the start, in addition to acquiring the financing to purchase through a lender. Leasing usually requires a lesser amount of cash down, and the monthly payments are often smaller. Additionally, leasing offers tax benefits because the full lease payment can be immediately deducted, whereas purchasing only allows the interest...
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...play an important role in achieving business success in today twenty-one century. They serve as agents of change provide creative, innovative ideas for business enterprises and help business grow and become profitable. There are two types of entrepreneurs which are business entrepreneur and social entrepreneur. Business entrepreneur is driven by a profit motive while social entrepreneur is driven by a mission to fill the gap left of the market and public sector. This essay will typically focus on business entrepreneur.（Frederick, H.H&D.F.Kurakto.2010）.The most important part for enterprise doing business is financing .Without money or capital which is extremely hard for entrepreneur starting up a business. However there are many sources of financing for entrepreneur. The essay will be illustrated from some sources of finance via an existing company. Sharetea Australia Pty is a company that specialist in food and beverages. The company has four shops located in different district s in Sydney. As a proprietary company which meant the company is owned by an individual that has limited shares, around fifty employees work in the company. Anthony Mu is the manager of the company which has 10 years working experiences. In this essay, it is necessary to discuss how do Anthony Mu raise funds as an entrepreneur for starting his business, and any source of finance that he used to maintain his company. It said that it is difficult to start a business at the first movement, because it...
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...Introduction The purpose of this report is to present different sources of finances to a business and the different implications of various finances in a business. It is divided into 6 parts. The first part will identify the sources of finance currently available to a business. The second part will assess the implications of the different source. The third part will evaluate appropriate sources of finance and analyze the costs of different sources of finance for the new solar power business project. The fourth parts will analyses the costs of different sources of finance for the new solar power business project. The fifth parts will explain the importance of financial planning. The sixth parts will assess the information needs of different decision makers. The seventh parts will explain the impact of finance may put out on the financial statements. 1. Identify the sources of finance available to a business. Liability is including bank loans, issuing bonds and notes payable, accounts payable, etc., and the latter mainly refers to the equity financing. Equity constitute liability, the enterprise to repay on schedule agreed by the principal and interest, the creditors generally don't participate in the enterprise the management decision, also does not have decision-making authority for the management of funds. Equity financing is to point to other investors to sell the company’s ownership, the equity of the owners to exchange funds. This...
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...Debt Vs. Equity Financing Paper Scarlett Halifax Accounting 400 March 25, 2013 Mrs. Marissa Portugal The last five weeks, we have learned many different principles in accounting. One of the most important principles we have learned in that of the different types of financing that are available to corporations. This paper will look at leasing versus purchasing and Debt versus equity financing. To understand and make the right decisions in financing, it is wise to look at your company’s internal statements and needs. Leasing is defined as an effective way for you to manage the cost of replacing business equipment and technology while maintaining your cash flow. Leasing is a good option is you need to do something immediate, but do not have immediate cash to outright purchase. There are also several benefits to leasing such as tax benefit and flexible interest rates. However, purchasing may be a better option for your company if you plan on keeping the equipment for the duration of its lifecycle. What is Debt Financing Debt Financing is defined as financing which is money that a business borrows to run the company. One of the most important things to consider is the interest rate amount at the beginning of financing the loan, but most to their determent this is a factor that a lot of companies seem to fail to investigate or research. A couple of debt financing examples are; short term and long term. A company’s operating loans...
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... PANTONE Cool Gray 10 C C:0 C:0 M:0 Y:0 K : 72 M:0 Y:0 K : 72 Guide on Access to Finance ! The Egyptian Junior Business Association (EJB) is a nongovernmental organization, established in 1999 and formally registered in 2000 with a vision to become the “association of first choice among Egyptian Junior Business people who are committed to the development of a culture of Excellence, Ethics and Public Service” and a mission to “Provide a platform for dynamic business people to affect a positive business environment through Business Development & Social Responsibility promoting a culture of excellence & business ethics.” The Center for International Private Enterprise is a non-profit affiliate of the U.S. Chamber of Commerce and one of the four core institutes of the National Endowment for Democracy. CIPE has supported more than 1,000 local initiatives in over 100 developing countries, involving the private sector in policy advocacy and institutional reform, improving governance, and building understanding of market-based democratic systems. CIPE provides management assistance, practical experience, and financial support to local organizations to strengthen their capacity to implement democratic and economic reforms. CIPE key program areas include anti-corruption, advocacy, business association, corporate governance, access to information, the informal sector and property rights, and women & youth. CIPE programs are also supported...
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...LO1 Understand the sources of finance available to a Business Finance is the most vital thing to run the business. Companies operating as commercial entities must have sufficient cash balances to facilitate their smooth operations. Cash requirement can be raised from different sources, ranging from equity, various forms of debt, to internally generated funds through retained earnings which would otherwise be distributed to shareholders (Myers and Myers, 1991; J. Gitman, 1991). The sources of finance can be classified as Internal and External, Short-term and Long-term or Equity and Debt (Bromwich & Bhimani, 2009, pp.45). The two main sources of finance for business include internal and external sources. The business managers decide which form of financing to be used in the business (Klammer, 2003, pp.35). Internal Sources of Finance Personal funds - utilized by sole traders and partnerships. Owner takes on risk of losing their money. Family and friends - utilized by sole traders and partnerships. Friends can not only lose money but also harm relationships Selling assets - Dormant (unused) assets are typically sold. Selling of fixed assets that are currently in use may solve liquidity problems but create future production problems. Retained profit - Profits reinvested back into the business External Sources of Finance Share capital - limited companies selling shares. #1 way for limited companies to raise money and can provide up to billions. Venture capital - invest...
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...In the world of business there are a couple ways a company would be able to succeed when they are faced with hard struggles. The writer will introduce two different type of options that could achieve success for an organization. This includes debt and equity financing and which option is better for certain organizations. The writer will then conclude with his recommendations which could accommodate certain industries. These options allow team of analysts to better serve a business in order to successfully operate or expanding. Debt Financing As organizations try to succeed in the business world many often are left in the red do to many factors which could include lack of management and lack of experience in running a business. When this occurs to and organization there happens to be an option which could allow them to receive financing in order to continue daily operations for the business. When an organization take on debt in order to build from a hole they find themselves in they consider debt financing. When the organization acquires a debt through acceptance of a loan that is in contract stating that the owner is agrees to repay the money not only that was borrowed but also interest where the financial institute where it was borrowed from makes their money for the loan they provided. There are two different types of debt financing short-term and long-term. Short term financing is mainly use by a company to pay employees, purchase inventory or supplies which allow...
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...BPP Business School Finance Department Financing Entrepreneurial Initiatives Module Outline 1. Module Details It is a Level 7 (Master’s Level) elective module with 15 credits. As a pre-requisite students need to have taken Financial Statement Analysis or an equivalent Accounting course. There will be 10 sessions, 3 hours each every week. Tim Wiscarson will teach the course. 2. Aims and Objectives The course aims to provide students with a strong foundation in evaluating different business models and opportunities and understand the various ways unlisted companies can be built and listed. It is designed to expose the student to many different kinds of situations involving a critical evaluation of the business, for the purpose of determining its value and for seeking financing. It shows how the various financing and investment activities can have an impact on the structure, operations as well as the future of the business. 3. Syllabus 1. Outline The module aims to provide the students with an overview of analysis and valuation of different business models and entrepreneurial opportunities. It introduces different types and sources of financing and the various elements involved from both the management as well as the investor point. It aims to develop the students’ skills in addressing financing and investment issues within an entrepreneurial company and understand how to approach the market investors. As such it targets to enhance...
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...IDETIFYING DIFFERENT SOURCES OF FINANCE TO PLC ADVANTAGES AND LIMITATIONS Kensington College and Business & University of Wales In this article has been investigated about15 sources of capital finance available to PLCs January 2011 Nahid Mohsen Pour Nahid Mohsen Pour 2 identifying different sources of finance to Plc, advantages and limitations Contents QUESTION .............................................................................................................................. 3 ANSWER .................................................................................................................................. 3 LOAN STOCKS AND DEBENTURES ................................................................................. 3 DEBENTURES ........................................................................................................................ 4 CONVERTIBLE DEBENTURE ............................................................................................ 4 ORDINARY SHARES............................................................................................................. 4 PREFERENCE SHARES ....................................................................................................... 5 VENTURE CAPITAL ............................................................................................................. 5 BUSINESS ANGELS ..........................................................................
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...Neither the Board of Directors nor the management of BB or any agency of the Government of Bangladesh, however, necessarily endorses any or all of the views expressed in these Papers. The latter reflect views based on professional analysis carried out by the research staff of Bangladesh Bank, and hence the usual caveat as to the veracity of research reports applies. [An electronic version of this paper is available at www.bangladeshbank.org.bd] Non-Bank Financial Institutions in Bangladesh: An Analytical Review Md. Nehal Ahmed∗ and Mainul Islam Chowdhury∗ Abstract Non-Bank Financial Institutions (NBFIs) in Bangladesh are gaining increased popularity in recent times. Though the major business of most NBFIs is leasing some are also diversifying into other lines of business like term lending, housing finance, merchant banking,...
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...Project Financing Melissa Austin PJM 535 – Project Metrics, Monitoring, and Control Colorado State University – Global Campus Dr. Scott Burch August 23, 2015 Project Financing Project financing is a loan by a lender in which the debt gets paid back from the cash flow the project generates (Investopedia, 2015). With project financing of course risks are involved. The risks can fall into five different sections: financial, development, political, organizational, and execution (Kerzner, 2013). Let’s focus on two of the risk categories to explore in more detail, financial and development. Risks associated with financial risk are: secured versus unsecured debt, project versus corporate financing, and best timing for raising capital (Kerzner, 2013). A secured loan is protected by collateral and is usually the best way to obtain a large amount of money so the lender knows they will be repaid (GreenPath, 2015). A secured loan offers longer repayment terms, higher borrowing limits, and lower rates. Examples of secured loans include: auto loan, mortgage, or home equity line of credit. Unsecured loans are essentially the opposite of a secured loan in which the lender is taking a risk of lending with no collateral to recover (GreenPath, 2015). Examples of unsecured loans are credit cards, education, or personal loans. Project financing has a higher risk than corporate financing. Project financing relies on revenues that have not be made yet. Corporate financing can be extended...
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...Running Head: Business Financing and the Capital Structure Business Financing and the Capital Structure Shavonne Brewer Finance 100 March 10, 2014 Professor Andrew Maginnis If I were a financial advisor to a business what I would do is give an example how debt financing works. What I would explain is debt financing is like purchasing a home, car or using a credit card which are all forms of debt financing in which the individual is taking a loan from a person or business is making a pledge to pay it back with interest. However, a business owner can apply for a business loan from a bank or receive a personal loan from friends, family or other lenders all which has to be paid back. The advantages of debt financing is the lender has not control over the business. Once the business owner pays back the loan the relationship with the financier ends. Also, with debt financing the interest that is paid is tax deductible. It’s also easier to forecast expenses because loan payments do not fluctuate. (Parker T, 2012) The disadvantages of debt financing is debt is taking a chance on a business owner future ability to pay back the loan. If a company is hit hard with the times of the economy or if the business does not grow as fast or as well as...
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...Alternative Financing Options for Small Businesses FINANCING For more information, contact: The Business Link Toll-free: Fax: Email: Website: 1 800 272-9675 780 422-0055 (Edmonton) buslink@canadabusiness.ab.ca www.canadabusiness.ab.ca A Member of the Canada Business Network The Business Link is a not-for-profit organization supported by the Governments of Canada and Alberta, as well as other organizations committed to serving Alberta’s small business community. Disclaimer: The information presented in this document is intended as a guide only, and while thought to be accurate, is provided strictly "as is" and without warranty of any kind. The Business Link, its employees, its directors and members, its agents or contractors will not be liable to you for any damages, direct or indirect, or lost profits arising out of your use of information provided within this document, or information provided within The Business Link's websites. This material may be used, reproduced, stored or transmitted for non-commercial purposes; however, The Business Link's copyright is to be acknowledged. You may not use, reproduce, store or transmit this material for commercial purposes without prior written consent from The Business Link. © 2013 The Business Link ALTERNATIVE FINANCING OPTIONS FOR SMALL BUSINESSES (07/2013) Content Content ........................................................................................................................ 1 Purpose...........................
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...profitability on the financial statement. INTRODUCTION OF PROJECT In line with its Human Resource Management strategy, ITL is seeking to implement a “Quality Work Life Balance” –Quality WLB, a concept to improve employees’ satisfaction, skills and effectiveness. This is becoming more of an international trend where we have recently observed the UK Prime Minister, Tony Blair citing the tangible and intangible business benefits of good Quality Work Life Balance …“The UK business environment has shown that it is possible to have flexible labour markets combined with a balanced family friendly policy to help work life balance-WLB. The result will no doubt be higher growth, higher employment and low unemployment.” In this perspective, we shall be addressing the project on three fronts. Firstly, we shall be looking at the definition and importance of project financing. Secondly, the different sources of financing will be discussed and lastly, we shall discuss the impact of financing on various stakeholders of ITL. PROJECT FINANCING It is often difficult to start a business without sufficient capital. All businesses require some form of finance throughout the...
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