The source of finance influence the business operation in following many ways. It will be divided into four main groups are business owner, borrowing from the bank, other way of borrowing and government aid.
The source of finance influence the business operation in following many ways. It will be divided into four main groups are business owner, borrowing from the bank, other way of borrowing and government aid.
The source of finance influence the business operation in following many ways. It will be divided into four main groups are business owner, borrowing from the bank, other way of borrowing and government aid.
1 The source of finance for Vietson Tours Company:
The source of finance influence the business operation in following many ways. It will be divided into four main groups are business owner, borrowing from the bank, other way of borrowing and government aid. Realizing the growth of tourism industry increased rapidly, Vietson has the plan to expand their business so they need to consider choose the right financial sources. There are some available sources of finance for Vietson Company that can be analyzed in the following: Limited company: This kind of business is owned by shareholders and run by director. The owners liability is limited so they are not liable for companys debt. It give the advantages for investor when the company bankrupt, they lose the investment but their personal possession will be kept. Partnership: It involves two or more persons contribute and run business together. In the case of Vietson, the company is Partnership Firm so they received 167,000 from Mr. Pham Duc and Mrs. Le Nga to purchase two mini bus and 30,000 for expenses. The sources of finance can be classified as two key are external and internal sources 1.1.1 The internal sources: The main sources include profit, sales of asset 1.1.2 The external sources: Borrowing from the bank: The bank always the important sources of finance business in short- term and long-term. Vietson Tours can borrow the debenture loan with fixed or variable interest. For Vietson Tours, they need to maintain the financial health of company to ensure the bank allow them borrow money. Retained earnings: Company will receive from the last season of business earned profit instead of paying shareholder as dividend. Working capital: It is the short-term reserve for daily expenses such as salaries, rent, bill and invoice payment. However, VetSon Tours is not a public company so they cannot raise the finance from sell the share to shareholder or stock market. The finance from loan: Overdraft facilities: It is the kind of short-term loan when company want to need to solve the short term financial problem. Vietson Tours Company can withdraw money with the amount higher than the bank account. Leasing: The firm can obtain the use of certain fixed asset such as building, machine, transportation etc. The main advantages of lessee is cheaper cost than the bank loan. It can be the agreement between lesser and lessee that both of them have good benefit. However, the lesser owns the asset until the payment settled. Hire purchase: It is able to allow company to acquire an asset quickly without paying full price. Therefore, they will have more options to use the item in period of time or buy it with good price. Thus, company can own the assets after finish payments. Venture capital: This sources from organization or individual that seek long-term profit rather than short-term dividends. Government loan: Company can borrow the government with low interest rate. It will give a lot of advantages for business. The main purpose of this sources is reduce the unemployment rate and support company especially small business. Therefore, Vietson Tours can use it as a good way to raise the finance. The cash flow statement for VietSon Tours in next three years: Particular Year 1 Year 2 Year 3 Opening cash balance: 51,696 118,178 Cash Sales 175,000 278,250 315,000 Cash from Receivables 133,700 253,883 306,327 Total cash collected 308,700 583,829 739,505 Cash payments: Cash Expenses 112,800 266,400 289,200 Bill Payments 144,204 199,251 219,625 Total 257,004 465,651 508,825 Closing cash balance 51,696 118,178 230,680