Business Development And Evaluation Of Debt And Equity Financing

Healthy Potion is currently experiencing steady growth and profitability due to its success in the early stages of business development. However, as the business begins to grow out of the establishment phase it has become increasingly evident that the reliance on a single product is not a sustainable business plan. Healthy Potion requires a diversification strategy to grow their business and to ensure that it remains competitive in the long run. If successful, the implementation of this strategy will

Evaluation of Debt and Equity Funding The way the business is funded for its operation and business plans is a crucial factor for the long-term performance of the business. Two most fundamental financing methods include debt and equity financing which will be discussed and evaluated. Equity financing is a method of raising fund from investors with the promise of a share in business ownership. Debt financing is obtaining a loan from external party separate from the business for example the bank and

Evaluation of Debt and Equity Funding There are two ways for a company to raise funds: debt financing and equity financing. Debt financing Debt financing is a way of raising capital by ‘selling bonds, bills, or notes to individual or institutional investors with a promise of repaying principal and interest on the debt’ (Investopedia 2015a). One of the greatest advantages of debt financing is that the debtor has full control of the borrowed capital and does not need to relinquish any ownership of

Healthy potion is an existing business dedicated in producing and selling unique beverage made of some special concentrate imported from north-western China. Although the business is earning significant profits, there is a risk on the business for relying on a single product as its only main source of income. This essay will use SWOT analysis to assess the internal and external factors affecting Healthy Potion and also formulate a strategy to further expand the business whilst eliminating potential

Introduction Healthy Potion is a business that specializes in producing a unique healthy beverage. It is in a good developing situation and has made considerable profits from its current business activities. However, the business that has reliance on one single product and single operation system might have difficulty in sustainable development in the long run. Therefore, it is significant for the business to work out plans for business diversification with improvement of its risk management for

doubt that the development of SMEs is closely linked to national economy. The growth of SME sector, however, presents a stalled tendency, even recession situation, owing to the deficiency of accessing to

will decrease its only source of revenue. Whilst the business benefits from higher sales in hotter months, the seasonality of the product further increases risk, with sales on average falling by 43.5% from quarter 1 to 2 from 2012 to 2014. Instability in sales can cause cash flow problems in colder months and affect business profits (Koenig and Bischoff 2005 cited in Shields and Shelleman 2013, p. 37). Relying on a single supplier exposes the business to the risk of having to temporarily close if the

Potion’s development and success. To be specific, this essay provides an analysis of the business’ ‘strengths and weaknesses relative to the opportunities and threats’ (Bovee and Thill 2014). This is followed by a formulation of strategies that aim to further diversify the business and reduce concerns regarding risk management. Moreover, the case study presents a fund raising plan in which can be utilised to aid the business in raising the requisite fund of $200000 for future developments. Strategic

as a business, earning significant profits despite its small size. However, the business has now reached a stage where development is essential in order to increase future growth and profit margins. Hence, Healthy Potion must design a strategic plan that aims to diversify the business and subsequently arrange the appropriate finances necessary to materialise this plan. In order to invest in the businesses growth, Healthy Potion must evaluate the suitability of seeking either debt or equity financing

required to ensure smooth operations and maintain their current growth rate. However, Flash currently has almost reached its notes payable limit of 70% accounts receivables with its current commercial bank and thus, need to look for various alternative financing means to provide the required amount of funds it needs to finance its forecasted sales for year 2010 onwards. This report is written to provide an insight to Flash’s financial position for the following 3 years (2010 till 2012) through the use of