Contents
Introduction 2 Identify and describe the various sources of finance available to Company 3 The implication of the different sources of finance to Company related to risk, legal, financial and dilution of control, and bankrupt. 4 Select the appropriate sources of finance for Company and make recommendations on the best ways of raising finance. 6 Assess and compare various costs involved with each sources of finance 8 Explain the importance of financial planning for Company 9 The information needs of different decision makers 11 The impact of finance on the financial statements 12 Conclusion 14 Reference 15
INTRODUCTION
Dong Kuang is a good friend of Paul Mottram the Executive Vice President, Asia
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There is no risk to raise capital because they’ve already known each other and that is their money’s saving. For example, at begin of this year; Kuang had purchased new machinery by using his own money £11,000 and a loan of £9,000.
However, the rate of contribution of each person determines the right of control of that one. There will be no dilution of control in business from the external. According Vietnamese business law, both Mottram and Kuang will be the owner of company, but they must choose one of them to be the manager.
If the company gets loss or goes to bankruptcy, Kuang and Mottram must be liable for debts or loss of business.
Government loan in Vietnam
Each year, the Government of Vietnam issues a packet of loan for investment that offers very low interest with long-term repayment. Kuang and Mottram can take the advantage of this by applying the requirement form to Department of Planning and Investment of Hochiminh city or Hanoi. This loan is low risk but the government will consider where their money goes.
However, the process of conducting the procedure is very complicate and contains some “black” fees in Vietnam.
Issuing shares – Being the Public Limited Company
At the present, Kuang and Mottram are partnership business. Transfer into Public Limited Company is a big problem for Kuang and Mottram.
Firstly, they will be diluted of management
The remainder of this note discusses each of the steps in the process and then provides an exercise on the various financial measures that are useful as part of the analysis. The final section of the note demonstrates the relationship between a firm’s strategy and operating characteristics; and its financial characteristics.
4. Conduct a feasibility analysis on the company, being sure to consider its market potential, industry attractiveness, and
Creditors take the biggest risk when lending money due to the fact that they have all the skin in the game and are taking a calculated risk. The review of the three aforementioned financial statements seem to be the clearest way to come to a conclusion about whether or not a creditor should lend a company money.
Finance. In order to finance our startup year, we issued stocks and borrowed loan to finance our operation and for safety in case the sales did not go well. Financing using stocks means that we are selling common or preferred stocks to individuals. In return for the money, they get some ownership over the company and its interest. This helps to bring public’s awareness about the company. If the sales suffice, we will pay the debt in the second round.
Examine the concepts of working capital and the financial analysis of a company’s working capital position.
The company’s existing portfolio has high risk options. They have been funding companies that requires huge amount of capital which increases the company’s risk. Also it was mentioned in the case that firm is experiencing a “Resource Problem”. Members of investment firm had been part of inner
It has been a serious process for many organizations to raise capital which automatically has business and financial risks involved.
Raising Capital it one of the most important thing in any business. It's useless having a great idea and the right connections if you don't have the money to get it going. Without capital, your business can't get off the ground. You need it to buy products or materials, pay wages, have a secure cash flow and generally run your business on a day-to-day basis. The most common types of debt capital are bank loans, personal loans, bonds and credit card debt. When looking to grow, a company can raise funds by applying for a new loan or opening a line of credit. This type of funding is referred to as debt capital as it involves borrowing money under a contracted agreement to repay the funds at a later date. With the possible exception of
Sources of finance refers to the ways of gathering various financial sources to meet the financial needs of the business. Furthermore, it states exactly how the companies are gathering and allocating finance to satisfy the requirements of the firm (Chandra, 2011). Firm either belong to existing or new categories that would need a varied amount of finance to meet the long and short term requirements such as construction, inventory, fixed assets and operating expenses (Hally, 2007).
The second recommendation would be to synthesize all available input from all possible sources- internal and external and create a strategic vision that will help the company see where they need to make changes and how those changes will help the growth of the financial.
Finding out the current financial status of the company in order to able to process further of a chosen segments which chosen resources Selecting the appropriate segment for the firm
In above case there might be companies that are healthy and many go through period of financial distress. In particular is the threat of not being able to meet debt obligations.
initiative is to attract outside capital, given the lack of collateral and sufficient cash flows and the
Q3. Does the company have any other sources that it could use to raise the funds it requires? Explain. (In your answer consider the amount required and the purpose of the funds). In which market can these funds be sourced from?