Finance – Implication for the Different Stakeholders
Implication for the different stakeholders
The possible implications for different stakeholders of the different sources of finance indentified as above are described as below:
If any of above mentioned sources of finance will be fulfilled then new microscope will be bought and scientist will be happy.
For the sources like overdraft, equity and new investors/ creditors the different stakeholders like bank, investors, shareholders, employees and owner will be interested. Bank, investors will be interested in knowing the position of the company, and concerned about whether to give loan/debts to our company, the insurance of back payment by Nij
The decisions made by the management team will affect whole employees. If they go for wrong source of finance, the company might go bankruptcy and employees will lose the jobs.
In case of equity the present owner and shareholders might have fear of losing power over the company.
the company.
Different information about the Niujintek ltd needed by finance providers
Niujintek ltd is looking for the financers to provide £90,000 for buying the new microscope which is big amount and no one lend money without having information and knowledge about the position of the company. They may need the following information about the Niujintek;
Reasons for the need of the money
Is it profitable or not?
The current financial position of the company
The liquidity of the company
The past record and the prestige of the company in dealing the business
The insurance of back payment
The terms for the contract
Recommendation on source of finance
Analysing and evaluating the different source of finance as described above, I would recommend equity as the source of finance as it is low risk for the company. It has been already sold the share of 49% to Pharma ventures and if it issues more share than it will help to raise the resources either through the cash or services. It reduces the burden of immediate repayment burden. Also the equity investors look forward to mainly growth opportunities and come with new ideas and act as counsellors for the company and help in success of company.
Task 2: The impact of sources of finance on Balance sheet
Table showing the impact of sources of finance on Balance sheet;
overdraft
New investors
Equity
Internal