Short and Long-term Financing - Assignment Example

Only on StudentShare

Extract of sample
Short and Long-term Financing

Sainsbury plc uses different types of financing such as borrowing, bank loans, term loans and equity funds to acquire needed cash.
Long term finance is usually paid off after a long period of time such as 10-25 years. On the other hand, short term finance needs to be paid off within a year. Long term finance is acquired to fulfil a company's long-term funding needs whereas short term funds are used to finance company's working capital. Sainsbury relies on short term bank loans, bank overdrafts and short term notes for short term financing, and relies on equity shareholder's funds, medium term notes, finance leases and loan stock for long term financing. The company relies on too much loan capital, which is mostly high interest bearing in the long-term. High payments of interest reduce the company's profits. Also, high loan capital weakens a company's credit worthiness and increases risk in future.
Equity financing carries high cost because it is more risky for investors. However, equity financing can be used to generate huge capital and payment of dividends is not compulsory. On the other hand, debt financing requires fixed payment of interest compulsorily. Businesses cannot rely on one source of finance rather they endeavour to maintain a mix of debt and equity capital. ...Show more

Summary

Sainsbury plc is a limited company publicly listed on the London Stock Exchange. Because of the type of company's business, it has access to a great number of financing opportunities as compared to other types of business like sole proprietorship and partnership etc…
Author : schambergerabdu
Save Your Time for More Important Things
Let us write or edit the assignment on your topic
"Short and Long-term Financing"
with a personal 20% discount.
Grab the best paper

Related Essays

Short and Long-Term Career Goals
The author’s perspective was to establish a financial consulting firm that aims to give advice to small or lower budgeted businesses. He believed that spreading knowledge and education would be a step in the positive direction for getting his country, and its slumping economy, out of distress and would add some reality to his dreams.
4 pages (1000 words) Essay
Long Term Financing of Companies
Financing may be of short term or long term. Short term financing is necessary for meeting the need of working capital when long term financing is necessary for a company mainly for expansion of its.
6 pages (1500 words) Essay
Factors That Influence Companies' Choice Of Location.
Globalisation has created a tougher global economic market (Suarez-Orozco and Qin-Hilliard 2004). As it enabled the free movement of goods, products, services, capital, investments, people, and ideas and influence the very structure of contemporary society, it demands that organisations identify and establish strategic approaches that will help the firm not only survive the tough global market, but also make its niche (Teece, Pisano and Shuen 1997; Stead and Stead 2008)
51 pages (12750 words) Dissertation
Long Term Decisions
Its involvement in the market process leads to the improvement in the business environment and market structure. The government in many countries is the one that finances major infrastructural developments like roads, bridges, highways, ports, and airports.
4 pages (1000 words) Research Paper
Short and Medium-Term Loan in the UAE : Policies and procedures
The discussion in the report that follows has a vivid description of a lending company of UAE pertaining to the loans that it provides and the various terms that a customer has to abide by for the purpose of getting a loan granted. The completion of the project would require the company to seek loan from a financial institute of UAE itself.
20 pages (5000 words) Research Paper
"Long-Term Investment Decisions"
Considering such factors enables an investor to determine which sector of the market to invest where they are sure that they will have good returns on their investment (Northcott 1992). The factors mentioned above are categorised into external factors and internal factors.
4 pages (1000 words) Research Paper
Market Plan
Of these raw materials approximately 99% are being imported. Firth, Geen & Hitchings (2005) indicated that approximately 25% of adults within the UK purchase over-the-counter products which contain herbs as their basic ingredient. In the period from 1 November, 2004 to 31 October, 2005 there were eighty-one (81) stores selling fresh growing herbs and eighty (80) stores selling fresh cut herbs in East of England.
8 pages (2000 words) Assignment
Long-term Sources of Finance
It is not desirable to use short term funds because of higher rate of interest and because of their limited availability. If the short term funds are diverted for long-term purposes, business will suffer for want of working capital required for inventory, bills receivable and operating expenses.
14 pages (3500 words) Essay
Initiating Change in the Manufacturing and Distribution Division of PolyProd on page 241-246 in the Cummings & Worley tex
Managing sophisticated information system has started to impact on some of the company’s abilities to keep abreast with altering business climate. Manufacturing and Distribution Division is faced with the task of implementing change management strategy so as to
1 pages (250 words) Case Study
Find out how much would it cost
to get a custom paper written by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT