Outcome 4
Topics:
◆ Sources of finances available to business organisations
◆ Consider the different categories of finance and recommend suitable financing for given situations
Purpos:
Organizations require finance for different purpos and for varying lengths of time.
● Identify the length of finance the organization is likely to require for a specific purpo
● Recommend an appropriate type of finance
Occasions where an organization need finance:
1. starting up
2. expansion
3. cash flow problems
When Starting Up ------（企业开办）
New business starting up require funds for:
◆ Purchasing fixed asts （固定资产）
◆ Purchasing stock（存货）
◆ Advertising
◆ Paying professional fees.
When Expand business: （企业扩张） Purcha new fixed asts or extend market share
When cash flow problems occur: （现金流量问题）
● Despite making healthy profits, organizations also need a healthy cash flow to pay for the day-to-day running of the business
● Organizations face cash flow problems when money is need to pay current liabilities but it is tied up in stock and debtors. It will therefore need to rai finance to bridge the gap in the short-term.
Types of Finance: （融资类型）
Equity Capital vs Loan Capital
Equity Capital: （权益资本）
◆ 民有民治民享Provided by the owner.
◆ Obvious advantage：no interest to pay
◆ Generates equity capital internally
◆ Share capital is equity capital as provided by shareholders and the directors choo whether to pay a dividend or not depending on the amount of profits made
◆ Includes profits generated each year
◆ Money and asts provided sole trader or partnership would be known as equity capital
谷歌英文在线翻译◆ Risks associated with equity capital will depend on whether or not the owners enjoy limited liability. If companies fail to pay out a dividend, the share price will fall, leaving the company at risk of a takeover bid.
◆ Plea e Page 44-45
Financed By | Auth mang | Issued |
Ordinary Share Capital | 200 | 200 |
| | |
Rerves | | |
General Rerve | 30 | |
Unappropriated Profit | 69 | |
| | 99 |
Ordinary shareholders equity | | £299 |
| | |
Loan Capital: （债务资本）
● Refers to money that is borrowed from a source outside the business.
● This loan must be repaid in full with interest added;
● All types of loan capital incur a cost: be its interest, fees or loss of discount
● Sources of loan capital------
∙ Bank overdraft（银行透支）
∙ Loan （借款）
∙ Mortgage （抵押贷款）
∙ Hire Purcha （租购.
● Where loan capital is ud, the main risk is the possibility of losing the collateral or curity if repayments terms are not met
|
Which form of capital do you think is cheaper, equity or loan capital? 权益资本和债务资本相比， 那种资本形式（进行融资）你认为相对便宜? |
| |
Plea practice:
Page 51-52 SAQ 47会计制度设计 & SAQ 48
Short - term:
● Refers to funds that are borrowed for a period of no more than one year
日语能力考试真题
● Will be appropriate to finance asonal/cyclical fluctuations in trading, general working capital requirements or purchasing minor fixed asts with a short working life
Medium - term: 中期融资适用于企业购买生命周期适中的原材料或固定资产，解决某个持久性的现金流问题或是进行小规模的企业扩张。
● Refers to funds that are borrowed for a period of between two and ten years
● Will be appropriate to finance the acquisition of materials or fixed asts with a medium term life span, to overcome a persistent cash flow problem or finances sm
all-scale expansion
语言表达方式
Long term:
For longer periods / major project.
Refers to funds that are borrowed for a period of more than ten years.
Long-term finance will be appropriate to finance the acquisition of fixed asts with a long-term life span or finance large-scale expansion;
SAQ 47猴子英文怎么写
Sources of equity capital | Sources of loan capital |
| |
Capital | Creditors (goods bought on credit) |
| |
lucky的意思sprtRetained profits | Long term loan |
| |
SAQ 48
SAQ 48
Characteristics of Equity Capital
Equity capital is the capital provided by A Turner him/herlf. This is likely to be the owner’s own savings. Sole traders often also plough profits back into the business – this is another form of equity capital.
Although there is no interest or fees payable on equity capital, there are risk to the provider. Sole traders have unlimited liability. This means if the business goes into liquidation, the owner may have to ll his/her own posssions to cover the debt – his/her liability is not limited to the original amount invested.
takum
Characteristics of Loan Capital
Loan capital is capital that has been borrowed externally. In the ca of A Tuner, creditors and the long-term loan are sources of loan capital.
Until the loan is repaid, A Turner must pay annual interest of £1,600 (8% of £20,000). There may have also been an arrangement fee associated with this loan capital.
