Sources Of Finance And Starting A Business Finance Essay - Free Essay Example

Sample details Pages: 4 Words: 1172 Downloads: 9 Date added: 2017/06/26 Category Finance Essay Type Argumentative essay Did you like this example? Bank Overdraft Most businesses have an account with a bank. The bank deals with all the deposits (money put into the account) and withdrawals (money taken out). Most banks know that businesses do not always receive money from sales straight away. If you run a sandwich bar in a local trading estate then you might get money straight away when you sell your sandwiches. If you are a business selling electrical equipment to an electrical retailer then you may not get paid straight away when you deliver your goods. Trade Credit This is a period of time given to a business to pay for goods that they have received. It is often 28 days but some businesses might not pay for 6 months and on some occasions even a year after they have received goods. Don’t waste time! Our writers will create an original "Sources Of Finance And Starting A Business Finance Essay" essay for you Create order Credit Card A credit card works very much like trade credit. If you buy something using a credit card, you will receive a statement once a month with the details of the amount spent during the last month. You then have a certain period of time to either pay the full amount or a minimum amount. Lease Most businesses have to buy equipment and machinery of some sort. Many firms have a fleet of company cars which certain staff uses or vehicles that they use for distribution. There are a number of ways of buying these things. The business might go to the bank for a loan, arrange some sort of finance deal with the supplier, and use cash they have in the business or arrange a lease option. Bank Loans Bank loans are very flexible. They can vary in the length of time that the loan has to be repaid. Loans arranged with a bank that are less than one year are regarded as short term finance. As with any other form of loan there are interest payments to be made and this can be expensive and also can vary. Long term sources of finance Shares A share is a part ownership of a company. Shares relate to companies set up as private limited companies or public limited companies (plcs). There are many small firms who decide to set themselves up as private limited companies; there are advantages and disadvantages of doing so. It is possible, therefore, that a small business might start up and have just two shareholders in the business. Venture Capital Venture capital is becoming an increasingly important source of finance for growing companies. Venture capitalists are groups of (generally very wealthy) individuals or companies specifically set up to invest in developing companies. Venture capitalists are on the look out for companies with potential. They are prepared to offer capital (money) to help the business grow. In return the venture capitalist gets some say in the running of the company as well as a share in the profits made. Government Grant Some firms might be eligible to get funds from the government. This could be the local authority, the national government or the European Union. These grants are often linked to incentives to firms to set up in areas that are in need of economic development. In Cornwall, for example, there have been a number of initiatives to encourage new businesses to locate there. Bank Loans As with short term finance, banks are an important source of longer term finance. Banks may lend sums over long periods of time possibly up to 25 years or even more in some cases. The loans have a rate of interest attached to them. This can vary according to the way in which the Bank of England sets interest rates. For businesses, using bank loans might be relatively easy but the cost of servicing the loan (paying the money and interest back) can be high. If interest rates rise then it can add to a businesses costs and this has to be taken into account in the planning stage before the loan is taken out. The source of finance selected by the HAYATABAD FAST FOODS is loan because we will not invest all available money into the business. FACTORS FOR APPROPRIATE SOURCE OF FINANCE A business faces three major issues when selecting an appropriate source of finance for a new project: Can the finance be raised from internal resources or will new finance have to be raised outside the business? If finance needs to be raised externally, should it be debt or equity? If external debt or equity is to be used, where should it be raised from and in which form? Can the necessary finance be provided from internal sources? In answering this question the company needs to consider several issues: How much cash is currently held? The company needs to consider the amount held in current cash balances and short-term investments, and how much of this will be needed to support existing operations. If spare cash exists, this is the most obvious source of finance for the new project. If the required cash cannot be provided in this way then the company should consider its future cash flow. A cash budget can be prepared, but it is probably too detailed at this stage. A cash flow statement as shown in Example 1 would probably be more practical. Other factors can be The debt or equity decision Equity Finance Debt Finance Debt finance includes The duration of the loan Fixed v floating-rate borrowing Status of company Currency of borrowing IMPLICATIONS Implications of different sources of finance on a business are discussed below Implications of sources of finance can be good as well as bad for a business organizing firm Loanacirc;â‚ ¬Ã¢â€ž ¢s implications can be both good and bad or positive or negative. Itacirc;â‚ ¬Ã¢â€ž ¢s easily available but the problem is that while paying the loan back to the bank, individuals or organization interest has to be paid which means we have to pay almost double of the amount we borrowed. Leasing also has its impacts like giving of installments but its good because it doesnacirc;â‚ ¬Ã¢â€ž ¢t make that much burden on firm The other sources of finance also have their impacts including positive and negative both. The implications on HAYATABAD FAST FOODS source of finance which it has taken mean loan is to pay the interest. THE IMPLICATIONS OF SOURCE OF FINANCE SELECTED FOR MR JAVEDacirc;â‚ ¬Ã¢â€ž ¢S BUSINESS ARE: POSITIVE IMPLICATIONS: Getting the money you desired for your need. In some cases credit unions are better places to get loans than banks but it depends on the amount and use for the money. Competitive interests rates. Bank loans are always available. Can get in large amount. NEGATIVE IMPLICATIONS: Regular payment. Policy modification. Change in interest rate. Personal assets can be targeted. Have to pay back in stated time. Delay in taking loan because of so much paper work and bank policy. Not everyone could qualify for loans. Have to pay back with interest. REFERNCE LIST:- www.google.com www.ask.com www.investopedia.com www.businessdictionary.com www.encarta.com

Socialism vs. Capitalism Differences, Similarities, Pros, Cons

Socialism and capitalism are the two main economic systems used in developed countries today. The main difference between capitalism and socialism is the extent to which the government controls the economy. Key Takeaways: Socialism vs. Capitalism Socialism is an economic and political system under which the means of production are publicly owned. Production and consumer prices are controlled by the government to best meet the needs of the people. Capitalism is an economic system under which the means of production are privately owned. Production and consumer prices are based on a free-market system of â€Å"supply and demand.†Socialism is most often criticized for its provision of social services programs requiring high taxes that may decelerate economic growth.Capitalism is most often criticized for its tendency to allow income inequality and stratification of socio-economic classes. Socialist governments strive to eliminate economic inequality by tightly controlling businesses and distributing wealth through programs that benefit the poor, such as free education and healthcare. Capitalism, on the other hand, holds that private enterprise utilizes economic resources more efficiently than the government and that society benefits when the distribution of wealth is determined by a freely-operating market. Capitalism Socialism Ownership of Assets Means of production owned by private individuals Means of production owned by government or cooperatives Income Equality Income determined by free market forces Income equally distributed according to need Consumer Prices Prices determined by supply and demand Prices set by the government Efficiency and Innovation Free market competition encourages efficiency and innovation Government-owned businesses have less incentive for efficiency and innovation Healthcare Healthcare provided by private sector Healthcare provided free or subsidized by the government Taxation Limited taxes based on individual income High taxes necessary to pay for public services The United States is generally considered to be a capitalist country, while many Scandinavian and Western European countries are considered socialist democracies. In reality, however, most developed countries—including the U.S.—employ a mixture of socialist and capitalist programs. Capitalism Definition Capitalism is an economic system under which private individuals own and control businesses, property, and capital—the â€Å"means of production.† The volume of goods and services produced is based on a system of â€Å"supply and demand,† which encourages businesses to manufacture quality products as efficiently and inexpensively as possible. In the purest form of capitalism—free market or laissez-faire capitalism—individuals are unrestrained in participating in the economy. They decide where to invest their money, as well as what to produce and sell at what prices. True laissez-faire capitalism operates without government controls. In reality, however, most capitalist countries employ some degree of government regulation of business and private investment. Capitalist systems make little or no effort to prevent income inequality. Theoretically, financial inequality encourages competition and innovation, which drive economic growth. Under capitalism, the government does not employ the general workforce. As a result, unemployment can increase during economic downturns. Under capitalism, individuals contribute to the economy based on the needs of the market and are rewarded by the economy based on their personal wealth. Socialism Definition   Socialism describes a variety of economic systems under which the means of production are owned equally by everyone in society. In some socialist economies, the democratically elected government owns and controls major businesses and industries. In other socialist economies, production is controlled by worker cooperatives. In a few others, individual ownership of enterprise and property is allowed, but with high taxes and government control.   The mantra of socialism is, â€Å"From each according to his ability, to each according to his contribution.† This means that each person in society gets a share of the economy’s collective production—goods and wealth—based on how much they have contributed to generating it. Workers are paid their share of production after a percentage has been deducted to help pay for social programs that serve â€Å"the common good.†Ã‚   In contrast to capitalism, the main concern of socialism is the elimination of â€Å"rich† and â€Å"poor† socio-economic classes by ensuring an equal distribution of wealth among the people. To accomplish this, the socialist government controls the labor market, sometimes to the extent of being the primary employer. This allows the government to ensure full employment even during economic downturns.   The Socialism vs. Capitalism Debate   The key arguments in the socialism vs. capitalism debate focus on socio-economic equality and the extent to which the government controls wealth and production. Ownership and Income Equality   Capitalists argue that private ownership of property (land, businesses, goods, and wealth) is essential to ensuring the natural right of people to control their own affairs. Capitalists believe that because private-sector enterprise uses resources more efficiently than government, society is better off when the free market decides who profits and who does not. In addition, private ownership of property makes it possible for people to borrow and invest money, thus growing the economy.   Socialists, on the other hand, believe that property should be owned by everyone. They argue that capitalism’s private ownership allows a relatively few wealthy people to acquire most of the property. The resulting income inequality leaves those less well off at the mercy of the rich. Socialists believe that since income inequality hurts the entire society, the government should reduce it through programs that benefit the poor such as free education and healthcare and higher taxes on the wealthy.   Consumer Prices Under capitalism, consumer prices are determined by free market forces. Socialists argue that this can enable businesses that have become monopolies to exploit their power by charging excessively higher prices than warranted by their production costs.   In socialist economies, consumer prices are usually controlled by the government. Capitalists say this can lead to shortages and surpluses of essential products. Venezuela is often cited as an example. According to Human Rights Watch, â€Å"most Venezuelans go to bed hungry.† Hyperinflation and deteriorating health conditions under the socialist economic policies of President Nicolà ¡s Maduro have driven an estimated 3 million people to leave the country as food became a political weapon.   Efficiency and Innovation   The profit incentive of capitalism’s private ownership encourages businesses to be more efficient and innovative, enabling them to manufacture better products at lower costs. While businesses often fail under capitalism, these failures give rise to new, more efficient businesses through a process known as â€Å"creative destruction.†Ã‚   Socialists say that state ownership prevents business failures, prevents monopolies, and allows the government to control production to best meet the needs of the people. However, say capitalists, state ownership breeds inefficiency and indifference as labor and management have no personal profit incentive.   Healthcare and Taxation   Socialists argue that governments have a moral responsibility to provide essential social services. They believe that universally needed services like healthcare, as a natural right, should be provided free to everyone by the government. To this end, hospitals and clinics in socialist countries are often owned and controlled by the government.   Capitalists contend that state, rather than private control, leads to inefficiency and lengthy delays in providing healthcare services. In addition, the costs of providing healthcare and other social services force socialist governments to impose high progressive taxes while increasing government spending, both of which have a chilling effect on the economy.   Capitalist and Socialist Countries Today   Today, there are few if any developed countries that are 100% capitalist or socialist. Indeed, the economies of most countries combine elements of socialism and capitalism. In Norway, Sweden, and Denmark—generally considered socialist—the government provides healthcare, education, and pensions. However, private ownership of property creates a degree of income inequality. An average of 65% of each nation’s wealth is held by only 10% of the people—a characteristic of capitalism. The economies of Cuba, China, Vietnam, Russia, and North Korea incorporate characteristics of both socialism and communism. While countries such as Great Britain, France, and Ireland have strong socialist parties, and their governments provide many social support programs, most businesses are privately owned, making them essentially capitalist. The United States, long considered the prototype of capitalism, isn’t even ranked in the top 10 most capitalist countries, according to the conservative think tank Heritage Foundation. The U.S. drops in the Foundation’s Index of Economic Freedom due to its level of government regulation of business and private investment. Indeed, the Preamble of the U.S. Constitution sets one the nation’s goals to be â€Å"promote the general welfare.† In order to accomplish this, the United States employs certain socialist-like social safety net programs, such as Social Security, Medicare, food stamps, and housing assistance. Sources and Further Reference â€Å"Back to Basics: What is Capitalism?† International Monetary Fund (June 2015).Nove, Alec. â€Å".†Socialism New Palgrave Dictionary of Economics, Second Edition (2008).Newport, Frank. â€Å".†The Meaning of ‘Socialism’ to Americans Today Gallup (October 2018).

Service Marketing This life is quite challenging if we...

Service Marketing This life is quite challenging if we look at things from a different perspective in terms of responsibilities that we have to shoulder at almost all the stages of our lives there are a number of social and personal and private commitments that have to be met quite religiously. Personal commitments are those, which you take on yourself. These are the things that are required to be done to get somewhere in life and to live the life to its purpose and to make things much more meaningful. This may include taking in time to teach you about different cultures and providing for detailed description. We live in a highly global village where almost everything is interlinked and the diversity of cultures requires us to exhibit†¦show more content†¦Organizations diversify out of commitment to achieve better results and people have to do the same to update themselves. The demands and processes keep changing and that is what requires all these commitments to be highl y pronounced. There was a time when people used to avoid change but that did not leave them anywhere. You need to be on an n even keel with the world as it changes around you and so does the surrounding and the environment. Diversification is a process that enhances the strength of the organizations and firms to defend themselves in a more apt manner. Famous economist George Soros wrote in his paper on Diversification in 1998 that everyday is a new frontier and we are part of it and exposed to it. That is why we see business people doing so much of reading and we see so many people educating themselves at the later stages of our lives when we are through our formal stages of education. If we do not work on these we will not know about the changing technologies and so on and you have to be on the prowl if you want to be on the move rather than being overrun by someone who is much more advanced than us. It is true for personnel, literates and individuals. They all have their share o f updating to do and moreover they should be working on themselves because with the pace of the world the personal diversity is a must to have these changes to be made to bear. Personal commitments areShow MoreRelatedGlobal System For Mobile Communications1632 Words   |  7 Pagesa GSM one. This system started in Europe countries and United states is one of the country which is adapted this system. Hence GSM- Global system for mobile communications - it is a globally adapted the main or greatest advantage of the system is one can use this type of mobile anywhere in the world. Mobile Phone market has a huge demand to improve the service and function from manufacturer’s perspective. Globally , Mobile phones became an important part of peoples life. The life time changesRead MoreManaging Profitable Customer Relationship7707 Words   |  31 PagesChapter 1 Marketing: Managing Profitable Customer Relationships GENERAL CONTENT: Multiple-Choice Questions 1. 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Reaction to Hills Like White Elephants Free Essays

Throughout this school year, we analyzed and discussed several awesome poems, novels and stories. One that I particularly liked would have to be â€Å"Hill Like White Elephants† by Ernest Hemingway. The first thing about it that caught my attention would have to be its title, â€Å"Hills like White Elephants’. We will write a custom essay sample on Reaction to Hills Like White Elephants or any similar topic only for you Order Now To be honest, I really thought that it’ll be about some elephants in Africa or something but I was wrong. There were no elephants! The story is about an American man and woman having some beers as they wait for the train to Barcelona. So, just through the title, I guess you could say that this is an ambiguous text. To decipher it, you need to read it again and again! The text of Hemingway appears to be simple but then again his works are ambiguous, so his text may be further from the truth. The story makes use of sparse dialogue some even say that the way Hemingway’s characters speak is sometimes more important than what they say so when reading his text you really have to take in the dialogue and decode it. At first, when I just went through the story, I really didn’t get what the couple were talking about and then after several readings I found out that it was about abortion. It’s really beautiful how Hemingway could subtly bring about a message without even having it written directly. The powerful writing of Hemingway definitely has made a huge impact in me. Aside from me discovering a beautiful story, I learned not to take everything too literally and to have patience in order to understand. How to cite Reaction to Hills Like White Elephants, Papers

Stanley Milgrams Social Experiments free essay sample

Analyzes results social ethical implications of psychology professors tests showing subjects blind obedience willingness to inflict punishment. In the 1970s, Dr. Stanley Milgram, Professor of Psychology at the Graduate Center of the City University of New York, published the results of a series of experiments on the tendency of subjects to accede to authority even to the point of performing acts which they themselves considered unethical or immoral. The issue raised by Stanley Milgram and examined by him in his research is the disjunction between an individuals personal moral sense and his or her actions when performed under someone elses orders. The dichotomy is between conscience and authority, and Milgram says it is found in the very nature of society. Only the individual who lives in a remote area entirely alone escapes the role of social authority completely and can act only according to his or her conscience without pressure to do otherwise. We will write a custom essay sample on Stanley Milgrams Social Experiments or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page The individual in a social setting who acts only

Military Aircraft Essays - Stealth Aircraft, Monoplanes,

Military Aircraft Thesis: Military aircraft has become more sophisticated in variety, effectiveness in war situations, and special maneuvering techniques in recent years. Military aircraft has become more sophisticated in variety, effectiveness in war situations, and special maneuvering techniques in recent years. With the advance of stealth technology, many new and very effective aircraft have been developed. The F-117A was used during Operation Dessert Storm and every plane came back without a scratch. The very expensive B-2 stealth bomber has never been used in actual war, but during testing it was a success. The Advanced Tactical Fighter program was started to make an aircraft that could supercruise, the ability to cruise at supersonic speeds, and didn't cost very much. The YF-22 and YF-23 were the first planes to accomplish this. With all the planes we know of, there are also top secret programs probably going on right now. A new fighter that has never been heard of before has been spotted. As John Welch, the assistant secretary of Air Force said, "Stealth gives us back that fundamental element of war called surprise" (Goodall 9). After it was found that aircraft could be very useful in war, it was used for large scale reconnaissance. Then people started to add bombs to aircraft and then airplanes started to become an essence of war. After World War 2, new bombers were developed with fast speed, and could travel far distances. They could also carry nuclear bombs and missiles. The use of the bomber aircraft then led to the fighter, which was equipped with guns and missiles. Helicopters were also found to be good strike aircraft. They were armed with cannons, machine guns, rockets, torpedoes, and a variety of missiles. Vertical takeoff made the helicopter an advantage. The first flight of the F-117A was in June of 1981 in Groom Lake test facility. The total cost for the development of the F-117A was just under two billion dollars, but it only cost $43 million to make each plane. It became operational in October of 1983 and was the first operational stealth aircraft ever built. The F-117A is a night attack plane powered by two, nonafterburning General Electric engines. F-117As were designed for first-strike capabilities and to be able to fly into any countries airspace undetected. The primary task of the F-117A is to break through enemy airspace, destroy high value targets, and return back unharmed. They were considered to first be used in several different tasks, but weren't used until Operation Dessert Storm where they did an excellent job. As Donald Rice, Secretary of the Air Force, said, "Everyone now agrees the F-117 was a real bargain" (9). During Operation Dessert Storm the F-117As were found out to be very successful. The war began on January 16, 1991 when the F-117A fighters entered the Iraqi airspace on their way to downtown Baghdad. There were 43 of them over the skies of Iraq and not one was lost even though they went against one of the most modern air-defense systems in the world. Operation Dessert Storm was the largest aerial bombing attack in war history. It was also the first time a stealth aircraft was used as a main weapon. On the first day of Desert Storm the Lockheed F-117As dropped sixty-two 2,000 pound bombs on Baghdad destroying the most critical targets of the Iraqi military, including the headquarters of the Iraqi air force. "We've seen that not only does stealth work, but that it puts fewer assets at risk and saves lives" (9), as Donald Rice said. The pilots of those F-117As flew through the hardest anti-aircraft missiles any pilot has ever flown through. When you think of stealth, most people probably think of B-2 stealth bomber, but most people don't realize that it hasn't even been used in a real war situation yet. In November of 1987 the Pentagon ordered the first four B-2s to be built for $2 billion. Each B-2 cost $437.4 million to build. After the military liked the bomber, they originally ordered 133 of them, then they cut back to 75 because of the deficit-reduction bill. Then, in 1992, the House of Representatives voted to buy only twenty, and later only 15 saying that 10 would be enough. With four General Electric

Eco Assignment Essays - Costs, Public Economics, Microeconomics

Eco Assignment Essays - Costs, Public Economics, Microeconomics 6) From economic point of view, what are the main causes of market failure ? From economic point of view, the main causes of market failure are Incomplete markets, Indivisibilities, Common property resources, Imperfect markets, Asymmetric Information, Externalities, Positive Externalities of Production, Negative externalities of production, Public Goods and Public Bads. In this present reality, there is non-achievement of Pareto optimality because of various requirements in the working of immaculate rivalry. A vital reason for ecological corruption is business sector disappointment. It implies poor working of business sectors for ecological merchandise and administrations. It reflects disappointment of government arrangement in uprooting business sector twists made by value controls and endowments. Based on Incomplete markets statement, Markets for certain things are incomplete or missing under perfect competition. The absence of markets for such things as public goods and common property resources is a cause of market failure. There is no way to equate their social and private benefits and costs either in the present or in the future because their markets are incomplete or missing. Based on Indivisibilities statement, the Paretian optimality is based on the assumption of complete divisibility of products and factors used in consumption and production. In reality, goods and factors are not infinitely divisible. Rather, they are indivisible. The problem of divisibility arises in the production of those goods and services that are used jointly by more than one person. An important example is of road in a locality. It is used by a number of persons in the locality. But the problem is how to share the costs of repairs and maintenance of the road. In fact, very few persons will be interested in its maintenance. Thus marginal social costs and marginal social benefits will diverge from each other and Pareto optimality will not be achieved. Based on Common property resources, Another cause of market failure is a common property resource. Common ownership when coupled with open access, would also lead to wasteful exploitation in which a user ignores the effects of his action on others. Open access to the commonly owned resources is a crucial ingredient of waste and inefficiency. Its most common example is fish in a lake. Anyone can catch and eat it but no one has an exclusive property right over it. It means that a common property resource is non-excludable (anyone can use it) and non-rivalrous (no one has an exclusive right over it). The lake is a common property for all fishermen. When a fisherman catches more fish, he reduces the catch of other fishermen. But he does count this as a cost, yet it is a cost to society. Because the lake is a common property resource where there is no mechanism to restrict entry and to catch fish. The fisherman who catches more fish imposes a negative externality on other fishermen so tha t the lake is overexploited. This is called the tragedy of the commons which leads to the elimination of social gains due to the overuse of common property. Thus when property rights are common, indefinite or non-existent, social costs will be more than private costs and there will not be Pareto Optimality. Based on imperfect markets statement, Pareto efficiency increases under perfect competition. But it declines under market distortions or imperfections. Let us consider a case of monopoly. Initially, monopoly equilibrium is at point E where the private marginal cost curve, PMC, cuts the marginal revenue curve, MR, from below. The monopolist produces OQ1 output at OP1 price. But the production process generates smoke in the air. Therefore, the pollution board levies a tax equal to on the monopoly firm. The imposition of a pollution tax is, in fact, a fixed cost to the monopoly firm. Now the social marginal cost curve cuts the marginal revenue curve at point e. The monopolist increases the price of his product from OP1 to OP2 and restricts output to OQ2 and thereby reduces consumers surplus to Q2 MLQ1 (= OQ1 LP1 OQ2 MP2). In fact, Q2 MLQ1 is the social cost of OQ2 output. But the net loss to society is Q2 MLQ1 TE= eMLT, the shaded area in the figure. Based on Asymmetric Information statement, Pareto optimality assumes that producers and consumers have perfect