Please forward this error screen to 172. Traditional areas of need may be for capital asset acquirement – new machinery or the construction of a new building or depot. The development of new first lease finance & investment ltd can be enormously costly and here again capital may be required. Normally, such developments are financed internally, whereas capital for the acquisition of machinery may come from external sources.
Ordinary shares are issued to the owners of a company. The market value of a quoted company’s shares bears no relationship to their nominal value, except that when ordinary shares are issued for cash, the issue price must be equal to or be more than the nominal value of the shares. Simply retaining profits, instead of paying them out in the form of dividends, offers an important, simple low-cost source of finance, although this method may not provide enough funds, for example, if the firm is seeking to grow. The company might want to raise more cash. Offers for sale: An offer for sale is a means of selling the shares of a company to the public. An unquoted company may issue shares, and then sell them on the Stock Exchange, to raise cash for the company. All the shares in the company, not just the new ones, would then become marketable.
Shareholders in an unquoted company may sell some of their existing shares to the general public. Loan stock Loan stock is long-term debt capital raised by a company for which interest is paid, usually half yearly and at a fixed rate. Holders of loan stock are therefore long-term creditors of the company. The purpose of the loan A loan request will be refused if the purpose of the loan is not acceptable to the bank.
The customer must state exactly how much he wants to borrow. The banker must verify, as far as he is able to do so, that the amount required to make the proposed investment has been estimated correctly. How will the loan be repaid? Will the customer be able to obtain sufficient income to make the necessary repayments? What would be the duration of the loan? Traditionally, banks have offered short-term loans and overdrafts, although medium-term loans are now quite common.
If so, is the proposed security adequate? Leasing A lease is an agreement between two parties, the “lessor” and the “lessee”. The lessor owns a capital asset, but allows the lessee to use it. The lessee makes payments under the terms of the lease to the lessor, for a specified period of time.
Leasing is, therefore, a form of rental. Leased assets have usually been plant and machinery, cars and commercial vehicles, but might also be computers and office equipment. Suppose that a company decides to obtain a company car and finance the acquisition by means of a finance lease. A car dealer will supply the car. The supplier delivers the goods to the customer who will eventually purchase them. The hire purchase arrangement exists between the finance house and the customer. The finance house will always insist that the hirer should pay a deposit towards the purchase price.
The size of the deposit will depend on the finance company’s policy and its assessment of the hirer. This is in contrast to a finance lease, where the lessee might not be required to make any large initial payment. The directors of the company must then contact venture capital organisations, to try and find one or more which would be willing to offer finance. The image of the business is improved because the franchisees will be motivated to achieve good results and will have the authority to take whatever action they think fit to improve the results. Please forward this error screen to 172.