Managing Financial Resources And Decisi
Managing Financial Resources and Decisions Assignment 1:
Introduction:
In this assignment I will identify the sources of finance that are available to MPD Ltd, and I will be assessing the implications of the different sources that are available to MPD Ltd. In addition, I will look at different sources of finance that will be appropriate for this business.
Task 1:
Sources of finance:
Mortgage
Overdraft
Loan
Factoring
Debentures
Working capital
Trade credit shares Mortgage:
A mortgage is a loan secured on property that can be repaid in instalments over a period of time typically 25 years and this is a long term source of finance. MPD Ltd will need a mortgage of £6 million to purchase a building and then convert it into a shopping mall.
Overdraft:
An overdraft is where the business is allowed to be overdrawn on its account and this also mean they can still write cheques, even if they do not have enough money in the account. However, this a short term source of finance. MPD Ltd currently has an overdraft of £400,000.
Loan: A loan is money borrowed at an agreed rate of interest over a set period of time; this is a medium or long term source of finance. MPD Ltd have been loaned £1,000,000 to use for funds.
Factoring
Factoring involves outsourcing company’s invoicing arrangements to an external organisation. It also immediately allows the company to receive money based on the value of its outsourcing as well as to receive payment of future invoices more quickly. MPD Ltd uses factoring by entering negotiations with a factor.
Working Capital:
Working capital is a short term money that is reserved for day to day expenses such as stationery, salaries, rent, bills and invoice payments. MPD Ltd has a working capital of £1,200,000 to pay the suppliers for stock and the wages of workers.
Debenture:
Debenture is a long term loan, with fixed or variable interest. Loans are usually secured against the asset being invested in, so the loan company will have a legal
Introduction:
In this assignment I will identify the sources of finance that are available to MPD Ltd, and I will be assessing the implications of the different sources that are available to MPD Ltd. In addition, I will look at different sources of finance that will be appropriate for this business.
Task 1:
Sources of finance:
Mortgage
Overdraft
Loan
Factoring
Debentures
Working capital
Trade credit shares Mortgage:
A mortgage is a loan secured on property that can be repaid in instalments over a period of time typically 25 years and this is a long term source of finance. MPD Ltd will need a mortgage of £6 million to purchase a building and then convert it into a shopping mall.
Overdraft:
An overdraft is where the business is allowed to be overdrawn on its account and this also mean they can still write cheques, even if they do not have enough money in the account. However, this a short term source of finance. MPD Ltd currently has an overdraft of £400,000.
Loan: A loan is money borrowed at an agreed rate of interest over a set period of time; this is a medium or long term source of finance. MPD Ltd have been loaned £1,000,000 to use for funds.
Factoring
Factoring involves outsourcing company’s invoicing arrangements to an external organisation. It also immediately allows the company to receive money based on the value of its outsourcing as well as to receive payment of future invoices more quickly. MPD Ltd uses factoring by entering negotiations with a factor.
Working Capital:
Working capital is a short term money that is reserved for day to day expenses such as stationery, salaries, rent, bills and invoice payments. MPD Ltd has a working capital of £1,200,000 to pay the suppliers for stock and the wages of workers.
Debenture:
Debenture is a long term loan, with fixed or variable interest. Loans are usually secured against the asset being invested in, so the loan company will have a legal
References: Business Essentials (Managing financial resources and decisions) http://www.piggybankrupt.co.uk/mortgage-after-bankruptcy.html