Assignment #4 - Financial Statement Analysis
Assignment #4 - Financial Statement Analysis
Strayer University
Obtaining financing is one of the challenges facing a new venture. The financial planning and good budgeting will be significant factors in helping Portions Restaurant reach success. The restaurants financial statement analysis below lists the sources of funding, the capital structure, debt to equity ratios, the intentions of going public and a break even analysis.
The sources of funding Portions Restaurant is operating as a sole proprietorship, as a sole proprietorship, the restaurant will have limited sources of funds. In a sole proprietorship the owner’s personal financial condition determines his or her credit standing. Additionally, sole proprietorships may have to pay higher interest rates on funds borrowed because they are considered large risks (Ferrell, 2010 p.147). Among the few sources of money available for the restaurant are personal finances, family and friends banks and The Small Business Administration (SBA). Personal funds are the least expensive in terms of cost and control; they are also essential in attracting outside funding. Typical sources include savings, life insurance, or mortgage of a house or car. Start- up capital for Portions Restaurant will include 401k and mutual fund investment of the owner. Portions Restaurant believes that the use of personal income will be attractive to investors. Portions Restaurant will also seek financial support from family and friends. Family and friends are more likely to invest due to their relationship with the entrepreneur but there are disadvantages associated with this source. Small amounts of money are invested yet this may make them feel they have a direct input into the operations of the venture (Hisrich, 2010 p. 312). To prevent conflicts, upon receipt of the investments, Portions Restaurant will detail its intentions for the use of the money, the rights of the investor and the repayment schedule.
Strayer University
Obtaining financing is one of the challenges facing a new venture. The financial planning and good budgeting will be significant factors in helping Portions Restaurant reach success. The restaurants financial statement analysis below lists the sources of funding, the capital structure, debt to equity ratios, the intentions of going public and a break even analysis.
The sources of funding Portions Restaurant is operating as a sole proprietorship, as a sole proprietorship, the restaurant will have limited sources of funds. In a sole proprietorship the owner’s personal financial condition determines his or her credit standing. Additionally, sole proprietorships may have to pay higher interest rates on funds borrowed because they are considered large risks (Ferrell, 2010 p.147). Among the few sources of money available for the restaurant are personal finances, family and friends banks and The Small Business Administration (SBA). Personal funds are the least expensive in terms of cost and control; they are also essential in attracting outside funding. Typical sources include savings, life insurance, or mortgage of a house or car. Start- up capital for Portions Restaurant will include 401k and mutual fund investment of the owner. Portions Restaurant believes that the use of personal income will be attractive to investors. Portions Restaurant will also seek financial support from family and friends. Family and friends are more likely to invest due to their relationship with the entrepreneur but there are disadvantages associated with this source. Small amounts of money are invested yet this may make them feel they have a direct input into the operations of the venture (Hisrich, 2010 p. 312). To prevent conflicts, upon receipt of the investments, Portions Restaurant will detail its intentions for the use of the money, the rights of the investor and the repayment schedule.
References: Hisrich, R., Peters, M., & Shepherd, D. (2010). Entrepreneurship (8th ed.). New York, NY: McGraw Hill. Iacobucci, D. (2011). Marketing management: 2010 custom edition. Mason, OH: South- Western Cengage Learning. Taylor, B. (2011). Introduction to management science: 2011 custom edition. Upper Saddle River NJ: Prentice Hall U.S. Securities and Exchange Commission. Retrieved (2012) from http://www.sec.gov/info/smallbus/gbfor25_2006/goingpublic.pdf U.S. Small Business Administration. Retrieved (2012) from http://www.sba.gov/content/sba-loans