Finance

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TABLE OF CONTENTS 0.1 Introduction of Finance in your organization…………………………..............
Task: 1: Be able to explore the sources of finance available to Sainsbury’s
1.1: Identify the sources of finance available to Sainsbury’s............................................
1.2: assess the implications of the different sources of finance in Sainsbury’s………….
1.3: select appropriate sources of finance for a project in Sainsbury’s…………………..
Task: 2: Be able to analyses the implications of finance as a resource within a business
2.1: assess and compare the costs of different sources of finance in your Sainsbury’s……..
2.2: explain the importance of financial planning in Sainsbury’s…………………………….
2.3: describe the information needs of
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There are some kind of short term sources of finance in the form of debts such as bank overdraft, bank loan, creditors, debt factoring.
FIG: 1: SOURCES OF FINANCE

1.2: Assess the implications of different sources of finance in Sainsbury:
As we discuss above there are many sources of finance for company to choose but we must consider about elements related risking, legal, financial and dilution of control and bankruptcy.
Issued of debts: first, the company (Sainsbury) must concern about tax implication. When issuing debt, the company has to pay tax after they pay interest for debt holders. Hence, issuing debts will reduce the profit chargeable to tax and increase company profit available for dividends. The effect here is they don’t have pay tax on the interest from holding the debt when they receive profit, they must pay interest for debt holders first then pay corporate tax on remain money. When they use debt, the use of debt will increases the corporate tax shields and they have to pay an amount interest for bank or other sources.
However, when using debt sources, the existing shareholders stake would not be diluted because debt holders don’t have any voting right in company. It means when issuing more or less debts, the stake of the existing shareholders would not be reduced and the authority of chief executive officer as well as the management of company will be intact.
With the debts, the company must have obligation to pay

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