assesment
P1 1.1 Identify (i.e. - list down) at least 4 sources of finance available to Blue Mountain Solutions.
The sources of finance available for Miss Begun and her new establish business “Blue Mountain Solutions” are:
1. Loan from bank
2. Government Grants
3. Share capital issued
4. Bank Overdraft
5. Finance leasing
6. Sell of assets
P2 1.2 Assess the implications of different sources finance (e.g. - equity financing and debt financing) for Blue Mountain Solutions including their relative advantages and disadvantages. [Guidance - example of impact category- financial, legal, dilution of control, and bankruptcy).
The sources of finance available for a business include loans from bank. This source of finance is open to all kinds of business. Long-term bank loan offers money to business in return to a regular payment and a security on the loan, for example a building. The implication of this source of finance are financial because, the organization will need to pay interest therefore, the business profit will be affected directly, the higher the interest you will pay, the lower your profit will be.
The greatest impact of this source of finance is bankruptcy because, if the loan is not paid, the bank will take legal action against you and the collateral assets, for example, a building will be assessed and the organization may be liquidated. This source of finance is considered as a debt financing because the money you are borrowing will have to be paid back to the bank.
Long-time bank loan has advantages but in the same time has disadvantages. The advantages of bank loans include monthly repayments at a fix rate, fix terms of repayment and the interest that the business pay will be used as a deductible expense for tax return. The disadvantages include: interests payments, long repayment period, between 10 and 25 years, the business is not flexible – for example the business may have to pay charges in case the
The sources of finance available for Miss Begun and her new establish business “Blue Mountain Solutions” are:
1. Loan from bank
2. Government Grants
3. Share capital issued
4. Bank Overdraft
5. Finance leasing
6. Sell of assets
P2 1.2 Assess the implications of different sources finance (e.g. - equity financing and debt financing) for Blue Mountain Solutions including their relative advantages and disadvantages. [Guidance - example of impact category- financial, legal, dilution of control, and bankruptcy).
The sources of finance available for a business include loans from bank. This source of finance is open to all kinds of business. Long-term bank loan offers money to business in return to a regular payment and a security on the loan, for example a building. The implication of this source of finance are financial because, the organization will need to pay interest therefore, the business profit will be affected directly, the higher the interest you will pay, the lower your profit will be.
The greatest impact of this source of finance is bankruptcy because, if the loan is not paid, the bank will take legal action against you and the collateral assets, for example, a building will be assessed and the organization may be liquidated. This source of finance is considered as a debt financing because the money you are borrowing will have to be paid back to the bank.
Long-time bank loan has advantages but in the same time has disadvantages. The advantages of bank loans include monthly repayments at a fix rate, fix terms of repayment and the interest that the business pay will be used as a deductible expense for tax return. The disadvantages include: interests payments, long repayment period, between 10 and 25 years, the business is not flexible – for example the business may have to pay charges in case the
Cited: 11 12, 2013.] http://uk.reuters.com/business/quotes/overview?symbol=IHG.L. 14. Gitman, L. (2003) Principles of managerial finance. Boston, Mass, Addison-Wesley. 15. Marrison, C., (2002) Fundamentals of Risk Management, Mcmilan Press, New York. 16. Mary E.and Edward O., (2005) Solving business problems through the creative power of the arts: catalyzing change at Unilever, Journal of Business Strategy, Vol. 26 Iss: 5, pp.14 – 21 17 ..... Click the link for more information., 1961, "Dividend Policy, Growth, and the Valuation of Shares", Journal of Business 34, 411-433. Miller, M. H. (1991). Financial Innovations and Market Volatility, Cambridge, Massachusetts: Blackwell Publishers Anne P