To start a business, or to develop existing business thinking, to extend more money, it is probably necessary. Enterprise Fund business finance. This resource will look. When you are working by the resource, do not forget that some sources of funding will be needed for some companies, but not for other users. But as the finance officer, I am responsible for the increase in working capital and new investments for future projects. There are so many sources of funding that the impetus provided by the company's working capital and investment projects.
An overview of funding sources-short and long term?
* The sources of financing in the short term:
bank overdraft
o trade credit
o leasing
o bank loans
o-credit card
* The sources of financing in the long term
o bank loans
Capital social
Bonds
o asset disposals
o venture capital
o Retained profit
The owners of capital
o Government, local government or the EU
In the short term fiscal
Refers to all investments, financial, or something else that lasts for one year or less. Short term financial involvement in General, less uncertainty than long term plans because of the financial market in General, more easily predictable than a year for a longer period of time. Change in the short term financial plans easier to short periods. Short-term financial plans in General, investment in securities in the short term
Overdraft financing
Overdraft financing when their company account than the current cash balance payments. Overdraft facility for the funding in the short term if it is, in theory, the loan is to be payable by the bank.
Commercial credit
One of the largest sources of funding for the short-sharing, trade credit, this event occurs when you use to buy from a vendor, but not for the need to pay for 30 days (or whatever the term). Trade credit can be expensive if you have the above discount, but not a new company, perhaps, a great deal of choice.
Leasing
The most fundamental aspect of a lease agreement is that ownership of the company, the client will pass. Leasing is a very flexible acquisition of the assets of your business needs. You can for the preservation of working capital financing during the period cash-generating equipment.
Leasing companies shall be entitled to capital allowances and the advantage to the company through the rent of the preferential rates. The holding of the client can, in General, the full cost of the lease, the lease of taxable income, if the transaction fees. Leasing can make deposits and lower monthly payments reduce the loan or hire purchase. You can also create a new line of credit, is completely separate from the banking business all day and overdraft facilities.
There are different types of leases. Determine what is best for you:
• The leasing or renting full pay out
This is the closest alternative to leasing. The lease company recover the full costs of equipment and load the period of the lease agreement. Although the hardware, you have the most "risks and benefits ' in relation to the property. You are responsible for the preservation and safeguarding of the active and the leased asset you want to display on your balance as crucial.
• the lease
If you have a device for a shorter period of time, which is then leasing the answer. The lease the equipment lease company expects to sell hand at the end of the lease, or rent to anyone. We do not rent the total material costs. The rental period, in this case is, in General, two to three years, although it can be much longer, but it is always less than the life of the computer.
• Lease
Lease is a form of an operating lease and is often used for vehicles. The lease company undertake any responsibility for the management and maintenance of vehicles. Services that you regular maintenance and repair costs, the replacement of tyres and batteries included, replacement vehicles, roadside assistance and recovery services, and the payment of the vehicle licenses.
Source Commercial finance can help you and advise you on the leasing and other financial issues. Please contact us to source Commercial finance.
A loan from the bank is a fixed amount for an indefinite period with regular, fixed payments. The importance of a loan is often lower than an overdraft.
Example of a loan: borrow £ 12, a company of a bank of more than 3 years at an annual interest rate of 5%. The estimated repayments of the loan would be 392 pounds per month to 36 months (pound 14,112). A fixed-term means how many months or years before the loan must be fully refunded. A term loan will normally be for an amount of more than an overdraft.
Credit card
A credit card works as trade credit. If you buy something with a credit card, you will receive a statement once a month with details of the amount spent in the last month. You have a specific time period, the full amount or to pay a minimum.
For example:James is running is a sandwich bar. Many of the supplies will receive a cash and carry-bread, cheese, margarine, ham, tuna, and so on ... Supplies are paid by credit card on a weekly basis. The 16th of each month in his statement. This month is the pound 645. He said that he is a minimum amount of $ 50 or full payment by the 5th of the next month. If he actually received full payment for a loan to pay without interest rate per month. If he chooses to pay, only a portion of the total amount to pay the interest on the outstanding amount due. This is expensive!
Many companies have a credit card company. It is a convenient way for the management of expenditure and paid full may be a useful and low-cost short-term financing.
Interest in the long term
Capital for a period of more than one year. Investment and personal finance is often the long-term financing in the form of a loan with a payback period of one year. Examples of long-term financing includes a 30-year mortgage, or a note of the ten-year Treasury. Equity is another form of the long-term financing, such as when a company share capital for new project to raise problems
Capital stock (equity)
Equity, interest rate is a way to increase of capital from outside investors in exchange for a discount off of the company. These different forms, including of a share of future profits can adopt, but is usually linked to the share of the ownership of the company to a certain extent. When you are the owner of the entire company, 100% of your actions.
Bonds and other long term debt of alternatives in the equity funding of an entity, the long term financing. The distinctive characteristic of debt financing is that there is less risky than the equity to the investor is, as always, with interest and repayment of capital to shareholders. In the opinion of the company, it is less costly than equity financing, because the risks are smaller, the following factors should be considered when the long-term capacity.
* The minimum and maximum loan limit.
* The cost of debt.
* The dilution of property.
* Interference with decision-making.
* Safety requirements.
* The market liquidity funds are available?
* The impact of the signal to the market?
Government Grant
Some companies may be eligible for funding from the Government. This can be the local authority, the national Government or the European Union. These subsidies are often linked to incentives for companies to search for areas in need of economic development. For example, In Cornwall, there were a number of initiatives to promote new companies.
Cornwall has the lowest gross domestic product (GDP) per capita in the United Kingdom. The average wage in Cornwall is 28% below the average of the UK. That is why the region EU funding and the Government. Companies that are looking to search in Cornwall to find help for starting or moving of a company in the region. A disadvantage of this type of funding is that it is a large amount of paperwork and administration. These costs can be increased and, in some cases, the project is interesting.
A famous example of how a business project can be built using the money of the European Union, the Eden Project. The EU is not the only source of funding for the implementation of the project, but is an important partner for the achievement of this important tourist destination for a private party in Cornwall.
Actions
An action is a partial ownership of a company. Shares refer to limited liability companies and private or public limited liability companies (companies). There are many small businesses that decisions of a company, there are advantages and disadvantages of doing so. For this reason, it is possible to start a small business, and we have two shareholders of the company.
If the company wants to grow, they can spend more shares, but there are limits to which they can sell to any issue of shares-shares must be fully supported by the existing shareholders. Automata are different. They sell shares to the public in General. This means that everyone shares in the company can buy.
An Office of Merrill Lynch Merrill Lynch as an investment bank that can only be achieved in large-scale transactions of the sources of finance.
Some companies as a private company with limited liability is started and have developed over time. It may be a point where they cannot share spend on friends and family, and additional resources necessary for enlargement. They can then decide to a public company. This is called the "floating the company. This means that the company has a number of administrative and legal procedures in order to be able to offer its shares to the public will go through.
It may be that the company wants to raise £ 300 m to finance its expansion plans. He can do with 300 million pounds of 1 share in the company. The provision of these shares must be accompanied by a prospectus is indicated on the details of the company-that is, how it is structured, how it is managed and so on. This is so that potential investors, private individuals or settings that you want to buy shares, information about the company before the purchase of shares.
Often, a company, the services of an investment bank, to assist in a matter of using the share. These devices are specialized in organizing major financial transactions of this kind. Examples of such institutions, Morgan Stanley, Merrill Lynch, Rothschild and Goldman Sachs. These settings may subscribe to the issue of the share. This means that, if not all of the shares are sold, the institution must still provide that all the money the company the shares.
As soon as the shares are sold, owners equity to buy or sell shares through the stock exchange. These purchases and sales, have no effect on the undertaking concerned directly, and is one of the most important benefits of the award. You will receive more information about how the stock market through our resources on the London Stock Exchange.
It may be earlier in the development of an API so that more resources are needed. In this case, the issue more shares. Many companies through the so-called issue of "rights". This occurs when new shares are issued, but existing shareholders will have the right to buy more shares at a discount. If the new funding is needed for the enlargement of the company is doing well, this can be an attractive proposal for an existing shareholders. It is now a new fast and relatively inexpensive fundraising.
Mortgages
A mortgage is a loan for the purchase of property. Some companies can property by means of a mortgage to buy. In many cases, purchase, used as collateral for a loan. This is often occur with smaller companies. An individual operator, for example, a flower store may want to move to larger installations. They believe that a new store with a price of £ 200,000. To make that kind of money, the Bank is a type of protection-a guarantee that if the borrower is unable to pay the money, the bank will be able to recover from their money.
The borrower can choose their own assets as security for the loan, it is often called to take a second mortgage. If the company does not work and that the borrower does not pay the bank loan, the bank has the right to the House of the borrower and the repair of their money. Use in this way, a mortgage is a very popular way to increase the resources for small businesses, but as you can see that a large risk.
Task 2
There are two projects received Ltd. I pat was asked to calculate the bottom;
x-y
1) Payback period 1 2. 5
2) Discounted payback 3.2 2.8
Return 14.483 20.281 79/542/EEC(3) internalrateofreturn%
(4) The net present value of 300-600
IR
The discount rate that are frequently used in capital budgeting that makes the net present value of all the cash flows of a given project is equal to zero. In General, the higher the internal rate of return project, it is desirable to carry out more of the project. As such, you may arrange the TRI of various potential projects to be used in a company is considering. Assuming all other factors are the same between different projects, the project with the highest IR is likely to be considered to be the best place in the first place.
IR is also known as the "economic rate of return (error).You can of IRR. consider, such as the growth rate of a project to be generated. While the real rate of return for a specific project, in the end produce often differ from the estimated rate of return, a project worthy of IRR is significantly higher than the other options would be much more chance of strong growth.TRI can also be compared with the yield on the securities market. If a company is not for all projects with the internal rate of return is greater than the return of the financial markets can be generated is, can it simply retained earnings to invest in the market.
As we have seen that the definition of the internal rate of return of Project x is much lower than project y. Project X is negative Y of the project. As the finance officer, I propose that we will not be for the investment project for X
