Accounting
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
To determine the financial risk for Diamondstone's business, the use of gearing is required. Hire purchases are used for the renewal and expansion of assets and generally offer a higher interest than overdrafts. In 2003, Diamondstone's stock turnover was 11. It is important to do this so that a balance in the amount of fixed and current assets is made. Overall, the Income Statement showed a positive performance and a promising future for Hotel Solutions, despite minor areas that can be further investigated by Diamondstone. To best examine how the business is working, all three ratios have been used to determine the long-term financial structure of the business. Mismanagement is that despite the fact that there has been adequate preparation in regards to taking on the responsibility of a managerial position; the workload is simply too much for one person. MLC Personal, 2004, MLC Personal Site - A National Company [website]. The profitability according to the net profit on sales ratio is 7. Problems which may arise include using all short-term funds for the purchase of long-time assets, as well as spending too much of the money which has been borrowed. In regards to Diamondstone paying herself a manger's wage, which increases by 20% per annum, she must analyse the financial status of the business and establish whether or not the company is of financial stability for her to be able to increase her wage by 20% per annum. A fully drawn advance is also a renewal or expansion of assets and the interest is usually slightly higher than an overdraft. The proprietary ratio looks at the total proprietorship over the total amount of assets.
Common topics in this essay:
Liquidity Diamondstone's,
Alicia Diamondstone,
Hotel Solutions,
Using Net,
Solutions June,
External Advice,
According McMahon,
Using Sustainable,
Difficulties Risks,
Sources Finance,
equity ratio,
diamondstone's business,
financial structure,
debt equity,
hotel solutions,
debt equity ratio,
term loans,
current assets,
long-term financial structure,
gearing ratio,
profit sales,
long-term financial,
profit sales ratio,
net profit sales,
financial structure business,
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Acceptance Essays
