StudentShare solutions
Triangle menu

Finance for non finance managers - Assignment Example

Nobody downloaded yet

Extract of sample
Finance for non finance managers

40 million from the debt market. Using debt to run the business has both advantages and disadvantages. Advantages Debt is a low cost capital. Using debt the company does not have to pay tax on it. Hence the company will have to pay less tax overall. Using debt the Earning per share of the company fluctuates more than using only equity as the source of capital. Hence during good times the Earning per share of the company will rise much higher than when the company use only equity (Tuller, 2007, p. 211). This satisfies the shareholders as they will get more in return. Hence they will always want some portion of the capital to be raised as debt. Again using debt the company don’t have to share the ownership rights with the shareholders. They don’t have to go back to the shareholders each time they need to take an important decision. All they want is to get fixed return on the investment that they have made. Again the lenders don’t have any claim on the future earnings. Furthermore if a debt can be paid on time, then the credit rating of the business will improve and they will readily get finance easily from the market next time they went to any financial institutions for loan. Disadvantages The company has to make regular monthly payment of instalment and interest. Barnet Solutions is going to expand in the European market for the first time. ...
176). Hence it is like a double edged sword. If the economy in the European market deteriorates the Earning per share of the company will fall down drastically. The shareholder then may ask tough questions to the management regarding their decision making process. Pure Equity The company can use Equity as the source of fund. Advantages Using Equity the company can avoid the hassle of going through the long process of applying for loan. It takes more time to raise debt than equity. It is less risky than a loan because the company will not have to pay back the obligation if they cannot afford it. The company can easily tap into its investors’ network and add more credibility to the business. The investors here takes a long term view and don’t expect and immediate return. The company also don’t need to payback if the business fails (Mason, 2010, p. 212). Disadvantages The investors can demand returns more than the interest rate the company will have to pay for debt. The investors also will require ownership of the company. They have to be consulted before making any big decision. It also takes time and effort to find the right investors for the company. Period 2012 2011 D/E 1.18 0.92 The standard Debt-equity ratio of any company is 2:1. Hence it is advisable for the company to raise fund through both debt and equity. The company can go 80:20 ratio of raising the money from the market with the majority being debt and other being equity. Hence the company can raise ? 32 million from the debt market and ? 8 million from the equity market. After using the above capital the debt equity ratio will become Period 2012 2011 D/E 1.28 1.04 This shows that the company will be well within the standards limits of the Debt-Equity ratio. Answer 2 The ...Show more


Finance for non-finance managers Contents Contents 2 Answer 1 3 Purely Debt 3 Pure Equity 4 Answer 2 5 Answer 3 6 Answer 4 7 References 9 Answer 1 Barnet Solution is going for expansion in the European market. For that Barnet solution will need to raise ?40 million additional funds…
Author : zmurazik
Finance for non finance managers
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the assignment on your topic
"Finance for non finance managers"
with a personal 20% discount.
Grab the best paper

Check these samples - they also fit your topic

Project Finance
This has been possible through continued exploitation of natural resources in developing countries governed by unstable governments. There is massive transfer of capital in form of debt to the emerging markets from the developed nations. The poor countries on the receiving end have poor legal systems that attract the ventures of multinational corporations, who desire the less regulated economy for quick profitability than their highly regulated home economies (Fight 2006).
30 pages (7500 words) Assignment
Finance for Manager (Finance)
Smith – Brown in West Yorkshire – Jool’s Furniture Industries Ltd. The main purpose of this report is to identify and analyse the current position of the company and to develop possible solutions that the company can adopt to improve the current position.
20 pages (5000 words) Assignment
Finance For Managers
It indicates whether the business has made a profit or a loss. The Statement of Financial Position as the name suggests indicates the financial position of the business in terms of it assets, liabilities and equity capital. This section provides a brief analysis of the company by looking at some important ratios and provides an explanation of their importance as financial measures 1.
20 pages (5000 words) Assignment
Finance For Managers
The practice of management involves making the most effective and efficient use of a company’s resources of men, money, machines and materials to produce the maximum output in terms of productivity, ultimately resulting in sales revenues and profitability for the business enterprise.
20 pages (5000 words) Assignment
Accounting and Finance for Managers
d a flaw in the traditional accounting model of overhead cost allocation and led to a higher return on investment (ROI) for firms that implemented this new cost management system (Cooper & Kaplan, 1988; Turney, 1991; Kaplan & Norton, 1992). Critics, on the other hand, argued
11 pages (2750 words) Assignment
Finance For Managers
The management of any firm is faced with the task of dealing not only with the short term challenges faced by the business, but they must also have a long term vision for
20 pages (5000 words) Assignment
Finance for non finance managers
Each of the option has its own advantages and disadvantages. Debt is a low cost capital. Using debt the company does not have to pay tax on it. Hence the company will have to pay less tax overall. Using debt the Earning per share of
6 pages (1500 words) Assignment
Legal & Finance
The state thus has set various laws and regulations that guide the two principles so that there is a mutual existence that is favorable to all (Sitkoff, 2011). Without the laws, organizations might exploit the employees since they are majorly profit-oriented unless it
4 pages (1000 words) Assignment
The Federal government has been asking the business community to adhere and comply with all set rules and regulations in the administration of taxes. Tax Solutions Inc. offers revolutionary and professional
12 pages (3000 words) Assignment
Stochastic finance
The stock’s random terminal value is f(x) =100x. c) What would be the expected future cash flow (contingent on its exercise) of a call option written on this stock if its exercise price were $50? That is, what is the expected cash flow of the option
10 pages (2500 words) Assignment
Comments (0)
Click to create a comment
Let us find you another Assignment on topic Finance for non finance managers for FREE!
Contact us:
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
Join us:
Contact Us