Darlene R. Billue Dr. Laura Jones Assignment 2 BUS508 Contemporary Business
Strayer University
May 4, 2018
Step 1: FINANCING
The junior accounting team has assembled a Financing Report that (a) offers three options for securing the additional funds required to meet the new order; and (b) details the criteria Shaun, the owner of SunsTruck, would like you to consider when choosing one of the three options. Based on this report:
Identify which financing option you think is the best option for SunsTruck to pursue given Shaun’s constraints. …show more content…
This option will have the business secure a loan of 100,000 at 7% of annual interest rate, to be repaid over 7 years, and self-finance the remaining $50,000. The interest from the loan would be $49,000 for seven years, and total amount will interest to about $149,000, the next 84 months the business should owe $1,773 each month. Debt financing is when the business borrows money from a lender that they will eventually pay back with interest.Self- financing allows the business to maintain control aside from outside impacts.It allows the business to grow without debt.Self-financing is one of the main forms of financing used by many business start-ups. When creating debt for a business the business needs to have strong discipline when taking a risk to borrow money for a loan. All business should pay attention to low cost to gain profit. Sun Truck can make a profit from their debt and open up new growth avenues for their …show more content…
The balance sheet provides the company or business with information about the position of the organization.The financial sheet shows what Sun Truck owns and owes for the business. This will give the potential investors an idea of what income is coming into the business and it will show the money that needs to be paid out of liabilities for individuals. It shows the information in terms of the company's assets, liabilities, and equity.Assets are any things the business owns. Liabilities are the cash settlements the business needs to make. Equity is the amount the business's investors own. On the balance sheets, the cash payments are ideally the same to, or balance out, the liabilities and the equity.This will give the business an overview to see how much the loans are as well as the accounts payable. This shows the investors the amount of capital that Sun Truck has to proceed with in business. When reviewing the balance sheets, it is also vital for you to have a report of the activities (income statement) close by. Because this will give you an overview of the business If Sun Truck has a high volume of capital then the future investors are willing to work with Sun Truck, because they are a low risk to their