This assignment relates to the scenario of Alicia Diamondstone and her business. Through using financial information from the year 2002 – 2006, a following of examinations and assumptions have been made.
This assignment consists of five sections. These sections are the sources of finance, difficulties and risks involved, a report outlining performance and the financial strengths of the business, the value of buying hotel solutions and a break even analysis.
There are two sources of finance available to all small businesses. These are equity finance and debt finance.
Equity finance is money which comes from the owner's own contributions towards the business. Debt finance is finance which is from those outside the business.
The sources of finance which would be available to Alicia Diamondstone would be both equity finance and some options in debt finance.
The sources of equity finance which would be available to Diamondstone would be through herself as the owner or through her business via retained earnings.
If Diamondstone obtained finance through herself as the owner, this could be done through other wages she received, mortgaging or selling a house or property or through surrendering insurance policies.
If Diamondstone obtained finance through her business via retained earnings this could be done through giving over assets or premises to a patent.
The sources of Debt finance available to Alicia Diamondstone would be bank term loans, personal loans, hire purchases and fully drawn advances.
Term loans are made to a business for a fixed period of time and for small businesses they are usually medium- term, up to ten years. Term loans are available from trading banks as well as finance companies and they can be taken at a variable rate or a fixed rate of interest. Term loans are usually secured against assets of the business and/or against the owner's personal assets or with a guarantor putting up their a...