Essays on Implication of Different Sources of Finance Assignment

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The paper "Implication of Different Sources of Finance" is a decent example of a Finance & Accounting assignment.   The different implications which the different sources of finance present areas Internal Sources Owners Capital: The different advantages and disadvantages areas Advantages: The initial capital need not be repaid No interest needs to be paid on the owners’ capital Disadvantages: There is a limit to the amount the owner can invest Retained Profits: The different advantages and disadvantages areas Advantages: No interest has to be paid on retained profits Need not be repaid to the business Disadvantages: Not available for a new business The business might not have enough profits which can be used to finance the monetary needs Sell of Stock: The different advantages and disadvantages areas Advantages: A quick way to raise finance Helps to reduce the cost of holding stocks Disadvantages: The business will have to sell the stocks at a lower price than the prevailing market price for stocks Sale of fixed assets: The different advantages and disadvantages areas Advantages: A good way to raise finance from long term assets which are not required Disadvantages: Businesses are unlikely to have a huge assets base which is not required Time is required to raise the required finance from selling off assets Debt Collection: The different advantages and disadvantages areas Advantages: No additional cost for the business as the business raises the money from the dues in the market Disadvantages: There is a risk that the money raised might impact the overall brand image of the organization External Sources Bank Loan: The different advantages and disadvantages areas Advantages: Predetermined repayments are made at fixed intervals providing an opportunity to make arrangements easily The interest paid on the loan is charged as interest and helps the business to save on taxes Disadvantages: The interest paid might be high and lead towards additional cost Banks might want some assets as security for the loan that is provided Additional Partners: The different advantages and disadvantages areas Advantages: The principal amount need not be repaid Interest need not be paid on the principal amount Disadvantages: Dilutes control over business due to more partners Profits will be divided among more people

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