This website uses cookies to ensure you have the best experience. Learn more

Assess How The Source Of Finance Impacts A Businesses Ability To Achieve Its Financial Objectives

1247 words - 5 pages

Assess how the source of finance impacts a businesses ability to achieve its financial objectives (20 marks)

There are five financial objectives, which are influenced by internal and external sources of finance. These five financial objectives are: liquidity, solvency, efficiency, profitability and growth. Internal sources of finance come from within the business and include retained profits. External sources of finance can be classified into two forms. Debt or equity. Debt is categorised as short term or long term. Short-term debts include; overdrafts, commercial bills and factoring, whereas long-term debts include; mortgages, debentures, unsecured notes and leasing. Equity can be issued ...view middle of the document...

In order to improve the quick ratio a business should use factoring. Factoring is the selling of accounts receivable to a specialised debt- collecting agency. The debt now becomes the factoring company’s problem, not the problem of the business. However, factoring will improve the quick ratio but will hinder the current ratio as current assets will reduce. A business will sell its accounts receivable to a specialist factoring company for less than what it is worth. For example a business has an accounts receivable of $100, and sells it to a debt-collecting agency for $90. The business loses $10 in the sale, however the issue of collecting the debt is no longer their problem. In conclusion selling a non-current asset, adding to a mortgage and factoring are adequate ways for a business to improve its financial objective- liquidity.

Solvency is the ability of a business to cover total liabilities with owners-equity. Solvency is the long-term financial viability of a business. The ratio used to measure the solvency of a business is the gearing ratio (total liabilities over owners equity). An accepted ratio is 100% or above. To improve the gearing ratio, a business should not draw out any capital and retain all profits in the business to maintain the owners equity. To decrease liabilities a business should find a cheaper mortgage broker to reduce the amount of interest being paid on the mortgage. New issues of shares is when a business becomes public and lists itself on the stock exchange. Issuing shares is an ideal way to generate cash without having to pay it back. Individuals who buy the shares become part owners of the business. Issuing shares will improve the owner’s equity of a business and will consequently improve the gearing ratio. A positive factor of issuing shares is that the business does not have to pay back the funds.

Efficiency is a measure of output per input. It is the ability of a business to use its resources effectively in ensuring financial stability and profitability. Two ratios are used to measure the efficiency of a business. There are the accounts receivable turnover ratio (sales divided accounts receivable, divided by 365 to get the average number of days for debt to be collected) and the expense ratio (expenses divided by sales). In order to improve the accounts receivable turnover ratio factoring should be used. Factoring would decrease accounts receivable because selling the debt reduces the days for it to be collected. However, there is a draw back to factoring, as the business that sells its debt does not receive the full accounts receivable amount. Factoring decreases the current ratio, but improves the quick ratio and improves the efficiency of the business. To improve the expense ratio a business can use the sale and lease back strategy. Sales would increase dramatically from selling a...

Other assignments on Assess How The Source Of Finance Impacts A Businesses Ability To Achieve Its Financial Objectives

Assess The Contribution Of Functionalism To Our Understanding Of The Family

644 words - 3 pages to which the existence of nuclear families helps to sustain capitalist and/or patriarchal power structures in the wider society. Overall, the Functionalist view contributes to our understanding of the family, however, only the positive aspects. It focuses on the positive role the family has within society and that a consensus exists among all of its members. However, like Marxists claim, they constantly ignore the negative and ‘dark side of the family’ which makes it biased in many ways meaning we cannot trust the Functionalist view entirely.

Inquiring About The Inner Energy As A Unconscious Source Of Creativity

1112 words - 5 pages Hedy Herrera Creativity and Consciousness. JFKU Hedy Herrera Creativity and Consciousness. JFKU February 7, 2013 February 7, 2013 Inquiring about the inner energy as a unconscious source of Creativity Opposite Forces: Inner Inquiring about the inner energy as a unconscious source of Creativity Opposite Forces: Inner Opposite forces: inner The question of how to access the creative source as an artist is a constant

Assess The Significance Of The Events In Montgomery 1955-56 To The Civil Rights Movement

661 words - 3 pages . There had never been a boycott as long and as well put together as the one that was organised in Montgomery, therefore causing it be of great significance to the civil rights movement. Through the boycott, it demonstrated the collective power of the black community which used directive but non-violent methods. This shocked the whites at how sustained the movement was. In November 1956, Montgomery white city commissioners appealed to the Supreme

Using Material From Item A And Elsewhere, Assess The Functionalist View That Religion Benefits Both Society As A Whole And Its Individual Members (18 Marks)"

645 words - 3 pages Using Material from Item a and Elsewhere, Assess the Functionalist View That Religion Benefits Both Society as a Whole and Its Individual Members (18 Marks)" Many functionalists argue that religion benefits both society as a whole as well as its individual members however other sociologists may oppose this view and claim that those who do actually benefit from religion this is at the expense of others, this in itself contradicts many of the

• Assess France's Attempts To Restore Its Colonial Rule In Indo-China Between 1945-1954

1744 words - 7 pages on the part of a major European power in putting down the resistance of a (relatively) small guerilla force of rebels within its own colony is a cause for much debate. There are many opinions as to where France’s biggest short comings fell or what their biggest mistake was. Some argue it was their treatment of the Vietnamese villagers, while others believe the environment posed an insurmountable barrier for the French. Still others argue that

Human Impacts On The Sustainability Of Groundwater

420 words - 2 pages Name: Tenika J Tassin Date: April 11, 2016 Instructor’s Name: Denise Albina Assignment: SCI203 Phase 1 Lab Report Title: Human Impacts on the Sustainability of Groundwater Instructions: You will need to write a 1-page lab report using the scientific method to answer the following question: * If current human development does not change, will groundwater sustainability be affected? When your lab report is complete – submit

Assess The View That The Growth Of Family Diversity Has Led To The Decline Of The Traditional Nuclear Family

800 words - 4 pages “Assess the view that the growth of family diversity has led to the decline of the traditional nuclear family.” (24 marks) Before 1970, cohabitation was illegal in certain countries. The law changed and now cohabitation is a common pattern among people around the world, as well as having sex before marriage and having a baby. At least 50% to 60% of couple’s cohabitate, starting from the late 1990’s. This results into the amount of

With Considered Reference To Scholarly Literature On The Subject, Assess The Advantages And Disadvantages Of Cannabis Legalisation In Australia

2135 words - 9 pages ensure the disadvantages of its legalisation will be kept to a minimum. Bibliography Atkinson, L & McDonald, D 1995, ;Cannabis, the Law and Social Impacts in Australia, Australian Institute of Criminology, pg 1 - 6 Australian Broadcasting Corporation 2012, Australian report calls for legalising cannabis, ecstacy, 9 September, <> Australian Broadcasting

Provide A Brief Overview Of The Juvenile Justice System In Ireland And Analyse Its Response To Young Offenders Making Reference To The Children Act 2001 In Your Answer

1224 words - 5 pages bnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnm Child Care Policy SS2006 Danielle Moynihan Student No.: 112434002 BSocSc 2 27/03/2014 | Child Care Policy SS2006 Q6. Provide a brief overview of the juvenile justice system in Ireland and analyse it’s response to

Using Material From Item A And Elsewhere, Assess Functionalist Views Of The Role Of Education In Modern Society (20 Marks)

1181 words - 5 pages differ. Davis and Moore made arguments that were hard to argue against because of its overall positive effect. They do not blind themselves from inequality as Parsons and Durkheim often do, but instead embrace it and show how it can have a positive effect on modern society. The New Right argue that the education system fails to prepare young people adequately for work, contradicting both Parsons and Davis and Moore’s findings. Also, the

The Impacts Of Recruitment Practice At Commercial Bank Of Ethiopia

4308 words - 18 pages evaluation to identify the individual aspects of each job and calculate its relative worth; * Assessment of qualifications profiles, drawn from job descriptions that identify responsibilities and required skills, abilities, knowledge and experience; * Determination of the organization’s ability to pay salaries and benefits within a defined period; * Identification and documentation of the actual process of recruitment and selection to

Similar Documents

How Divorce Impacts Children Under The Age Of 18

2164 words - 9 pages start with infants, preschool age children, school-aged and then adolescents. Then you will see how divorce affects children spiritually. Furthermore, you will see how the affect of divorce varies based on the child's gender. Finally, in this research paper, you will see ways to help a child adjust after divorce. Infants The first age group is infants.  Not too much is known on the affects of divorce for children under the age of 3. Some

Assess The Contribution Of Functionalism To Our Understanding Of Soicety

551 words - 3 pages Assess the contribution of functionalism to our understanding of society. (33) Functionalism is a consensus theory. It sees society as based on agreement among people about values, goals and rules in society. The job of the family is primary socialization. The family introduces norms and values to children, who carry these on to later years, where they are reinforced by religion and education. These norms and values allow people to move up

The Programme Of Action To Mitigate The Social Cost Of Adjustment: Objectives And Assessment Of Failures And Achievements

3202 words - 13 pages financial reputation because of its ability to make loan repayments; although not wipe out foreign debt, and its first entry onto the international capital market in almost two decades. Critics maintained, however, that the ERP had failed to bring about a fundamental transformation of the economy, which still relied on income earned from cocoa and other agricultural commodities. Critics also contended that many Ghanaians had seen few of the

The Impacts Of Social Media Essay

1472 words - 6 pages someone may have to make throughout their day. When it comes to where one would like to spend their hard earned dollar on a meal 45% of consumers turn to leading social media sites like Yelp for recommendations (Pann). 57% of consumers rely on the reviews from these sites on restaurants to determine where they will dine that night (Pann). But how reliable are these reviews that consumers are putting such high importance when it comes to their