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Managing Financial Resources & Decisions Free essay! Download now

Home > GCSE > Business studies > Managing Financial Resources & Decisions

Managing Financial Resources & Decisions

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Managing Financial Resources & Decisions

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Managing Financial Resources & Decisions
Class Test 10/11
Section A

Hire Purchase and leasing are good ways to obtain assets if you do not have all the money at once. With Hire purchase goods are bought on credit and you do not actually own the product until after the last instalment is paid, it is useful if a business needs an asset but is having cash flow problems. Hire Purchase is most commonly used with Vehicles or machinery. One of the main drawbacks of Hire Purchase is that by the time you pay the last instalment you will have paid out more money than the product is actually worth. Leasing is different from hire purchase because it is an agreement between two groups the Lessor and the Lessee. The Lessor owns the product and the Lessee rents the asset for their own use. Leasing repayments are generally lower than with Hire Purchase but the Lessee will never own the product.
The main difference between a public limited company and a private limited company is how they issue their shares. Private limited companies do not sell their shares to the public they are sold within the business, public limited companies sell their shares on the share market and it is open to members of the public to buy and sell. This affects their ability to raise capital because shared issued on the market means there are more people to buy which in turn means more capital but private limited companies do not have this option and cannot issue shares on the open market.
A sole Trader is a business owned by one person. If the owner of the business wants to join a franchise they lose ownership of the business and have to do everything by the franchises way. They also lose control of decision making as everything will be decided by the franchisee. On the other hand a sole trader joining a franchise opens the opportunity to have more capital and a branded name. The business will also be promoted by the franchise so there is no additional cost the business owner for that. An example of a sole trader joining a franchise would be a local sandwich shop becoming a Subway.
A Bank Loan is a large amount of money loaned from the bank to a business, with bank loans there is repayment amounts and a lot of interest is added on to the repayments. A loan is a long term commitment anything from two to ten years. An overdraft allows the business the opportunity to lift out more cash from the bank itself. Bank overdrafts have smaller repayment periods and interest rates and are a short term commitment.
Factoring is something a ...

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