Higher National Diploma in Business, Managing Financial Resources and Assignment

Higher National Diploma in Business, Managing Financial Resources and Decisions - Assignment Example The funding of a company’s operations through the use of debentures has become a commonly followed practice in the United Kingdom. Therefore, Excellence Solution Plc. can access debentures as a mode of funding. Share capital is a main form of external financing for a private limited company. Since Excellence Solution Plc. is listed in a premium stock exchange like London Stock Exchange, it would be comparatively easy for the company to sell its shares in the capital market to raise the required finances. Bank loans are usually considered as easily accessible sources of financing. The company may take a term loan which would be repayable at equal monthly instalments and which would carry a predefined interest rate. A bank loan is tax deductible and is feasible for the company because it would help to meet the goal of the company to pay back the loan in a year’s time. The bank loans would be easily accessible by Excellence Solution Plc. This is because, the company is an established company and banks and other types of financial institutions are much interested to extend financing to an established public limited company as compared to the small business entities. Taking loans from the bank would ensure that the company does not experience any dilution of control because the banks do not have any say in the decisions and management of the company. The interests paid on bank loans are tax deductible which would be highly advantageous for a company with high scale operations. But, in case of bankruptcy, the loan would act as a major burden because it is obligatory for the company to pay back the loan irrespective of its financial position. For an established public limited company like the case company, it would be very easy to access share capital. Not only are the shares capable of generating high amounts in the capital markets but also, they are likely to be bought by the shareholders in