Académique Documents
Professionnel Documents
Culture Documents
NAME OF STUDENT
REGISTRATION NO.
UNIT TITLE
ASSIGNMENT TITLE
ASSIGNMENT NO
NAME OF ASSESSOR
SUBMISSION DEADLINE
I, __________________________ hereby confirm that this assignment is my own work and not copied or
plagiarized from any source. I have referenced the sources from which information is obtained by me for
this assignment.
________________________________
_________________________
Signature
Date
----------------------------------------------------------------------------------------------------------------
Date
Unit Outcomes
Assessors
Outcome
decision
First
attempt
Understan
d the
sources of
finance
available to
a business
LO1
Identify the
sources of
finance
available to a
business
LO2
Rework
1.1
Assess the
implications of
the different
sources
1.2
Evaluate
appropriate
sources of
finance for a
business project
1.3
Analyse the
costs of
different
sources of
finance
Understan
d the
implication
s of
finance as
a resource
within a
business
Internal
Verification
Feedback
Evidence for
the criteria
2.1
Explain the
importance of
financial
planning
2.2
Assess the
information
needs of
different
decision
2.3
makers
Explain the
impact of
finance on the
financial
statements
2.4
M1
M2
M3
Assessors
Outcome
Internal
Verification
Feedback
Evidence for
the criteria
decision
D1
D2
D3
Assignment
( ) Well-structured; Reference is done properly / should be done (if any)
Overall, youve
ASSESSOR SIGNATURE
DATE
Assessors
Outcome
Internal
Verification
Feedback
Evidence for
the criteria
decision
NAME: ..............................................................................
STUDENT SIGNATURE
DATE
NAME : .............................................................................
VERIFIED
YES
NO
DATE
: ................................................................
VERIFIED BY : ................................................................
NAME
: ................................................................
TABLE CONTENT
Introduction ............................................................................................................................6
Identify the sources of finance available to VietSon Tours ...................................................7
Assess the implications of the different sources of finance to VietSon Tours ......................8
Evaluate appropriate sources of finance for VietSon Tours ..................................................9
Analyse the costs of different sources of finance for VietSon Tours ....................................10
Explain the importance of financial planning to VietSon Tours ...........................................11
Assess the information needs of different decision makers ...................................................12
Explain the impact of finance on the financial statements to VietSon Tours ........................13
References ..............................................................................................................................14
INTRODUCTION
Nowadays, every people have a lot of time to work without relax, so travel is a good
choice to do this. Although the economy of Vietnam is go down in 2012, the travel
industry in Vietnam are developing. The government also provide the assistance for the
company and help them in doing activities. Vietson Tours is one of the travelling
company. It is in the process to expanse the business. Expansion in this period is not
really good with a company, which set up recently, so the company will have some
difficulty to do that. Many tourists come to this country is a good opportunity of Vietson
Tours to have more profitability if they can catch it. Im a new appointed Trainee
Accountant at Vietson Tours. In this report, I will show Mr Pham Duc, who is the
investor of Vietson Tours evaluating the different sources of finance appropriate to each
expansion stage of Vietson Tours. This report include seven main part: Identify the
sources of finance available to VietSon Tours, Assess the implications of the different
sources of finance to VietSon Tours, Evaluate appropriate sources of finance for VietSon
Tours, Analyse the costs of different sources of finance for VietSon Tours, Explain the
importance of financial planning to VietSon Tours, Assess the information needs of
different decision makers, Explain the impact of finance on the financial statements to
VietSon Tours
Retained earning of the private company is necessary to reinvestment, but in this period, the
dividend of your company has to make the stockholder satisfy if you want them keep invest to
Vietson tours company.
Public company:
When Vietson Tours company become public company, it will be a large company in Vietnam,
Hire purchase is unnecessary in this stage. It can make more expense when your company pay
the interest of hire purchase.
The government will help you to expanse the business buy giving the government grant. The
biggest advantage of it is that you don't need to pay back the money, which you receive from the
government. The government will make some assistance to produce money without nervous
about pay debt. Beside, many support programs will follow with extra support such as help to
design the types of your business. But the disadvantages also have. One of them is time, which
need a long time to have the acceptance from the government. You can't have the ability to wait
the answer.
2.1 Analyse the costs of different sources of finance for Vietson Tours.
Share capital:
In Vietson Tours company, they pay the dividend for the stockholder by dividend in cash or scrip
dividend.
With dividend in cash, it means the stockholder will be received the direct cash from the
company for paying dividend. Vietson Tours is a partnership, so they don't have the legal
provision for paying dividend. If the company pay the dividend, it will be effect with tax. The
company must to pay double tax, one for tax of profits that the company make by doing business
or it call tax corporation and tax for the dividends, which are paid for stockholder or it can call
personal tax.
About Scrip dividend, instead of paying dividend in cash, the Vietson Tours company issue more
stock for the stockholder. So the company won't purchase the cash for stockholder, the company
con keep the cash for the company.
Borrowed funds:
When loan the money, the interest is the main cost. For example, Vietson Tours have a debt
5.000 borrowing from the bank and the interest rate is 10% per year. So 500 is the interest cost
that the company must pay for the creditor.
Tax relief on interest will decrease the cost of debt. 500 is the money the company have to pay
each year for interest rate. So base on the tax corporation this cost can be reduce, which will be
necessary for the partnership.
10
Arrangement fees will be the cost that the Vietson tours have to pay when the company loan the
money. For example, the cost happen in checking references or prints the relevant document.
Government Grant:
The government give the company some grants to help them expanse the business. It usually
have without cost but not easy to have the government grants. The company must have the
condition, which suitable with the government's requests. So it will be have the cost for changing
to different business. For instance, Vietson tours is a company tours, they can use the money to
open more tour, which travel or visit the island such as Hoang Sa or Truong Sa of Vietnam, it
can help to protect sovereignty of Vietnam, so the government may be give the company some
government grants.
Retained earning:
The opportunity cost appear when the company have more than one choice when doing the
business.
Cash Sales
Cash from Receivables
Total Revenue
Cash Expenses
Bill Payments
Pay for 2 mini bus
Total start-up Expense
Cash requirement
Total Expense
Year 1
175,000
133,700
308,700
112,800
144,204
167,000
5,000
30,000
459,004
Year 2
278,250
253,883
532,133
266,400
199,521
Year 3
315,000
306,327
621,327
289,200
219,625
465,921
508,825
11
Vietson Tours make short financial planning (in one year). It illustrates the cash sales, cash from
receivables, cash expenses and bill payments on year one, year two and year three. All of them
increase year by year.
The benefits of financial planning are that the market and investors can be able to have a
knowledge a lot with the business, make the truth. Following the financial planning that the
management use to manage and make suitable spending expenses and orienting the business.
2.3 Assess the information needs of different decision makers.
Owner:
The person who own the assets of the company and run the business. You need to care about the
market share, who are your competitors, what do you do to take care of customers and product
them the best service in your company and the price of service and product of company. The
profitability include expense and revenue, it evaluates the activities of the company, it does the
work good or bad. The efficiency also access the work of company and employees. The last
thing that the owner caring about is liquidity, which is able to pay the ready money.
Bank or lender:
The creditors like bank or lender, whom you loan from also have to know the profitability, they
have to make sure that the debtors can possible to pay back the loan. Planning business, which
will show the income expense or liability in the future of company and they have to know about
that. Gearing ratio is also important because if the company have the high level of gearing ratio,
it will be easy to downturn in the business, they keep continue to pay the debt in spite of bad
sales.
Customers:
The customer use services or buy goods of the company, so the price is the first thing that they
have to concern. What service that the company product and the brand of the company, Is it a
famous or a big company.
Government:
The government will give the assistance to the company and the company must to pay tax to the
government. They usually care about the size of the company, define the location of the
company to have a suitable support, the employees, capital and industry. Profit is also cared by
the government because the activities of business impact with the financial of a country.
Investors:
Investors buy, sell or invest the stock. Like other decision makers, they want to know and care
the profitability, efficiency, liquidity and business plan. Shareholder investment of the company,
who are the shareholder, who have the largest stock of the company. The current situation of the
12
company is very important with the investors, they make the decision to keep invest to the
company or not.
2.4 Explain the impact of finance on the financial statements to VietSon Tours
Cash flow include inflow and outflow.
Inflow is the money that the company receive from the customer who buy the company's
services or goods and from selling the assets.
Out flow is payments, the company pay for the supplier, tax such as tax corporation and the
interest rate of lenders.
To manage the cash flow ( inflow and outflow) the company have to prepare the plan for cash
flow for next year, next two or three year. Because with a correct plan can alert for the problem,
which can occur.
Choosing the right partner and customers is also the way that company manage the cash flow.
The customers who have able to pay on time are a good choice. With the partners, the company
usually consider carefully before they sign a contract.
Management working capital is decisions relevant with working capital and short-term finance.
The purpose of management working capital is that the company can continue with the activities
and it have enough cash flow for short-term debts and expense of activities.
The problem happen when the company manage the cash flow is that the financial planning is
not actually correct. The customers don't or never pay the payment on schedule.
13
Reference
Riley, J., 2012. Sources of finance - choosing the right source. [Online] Available at:
http://www.tutor2u.net/business/gcse/finance_choosing_right_sources.htm [Accessed 1 November
2014].
VietSmart ESM, 2011. Lp k hoch ti chnh cho doanh nghip. [Online] Available at:
http://www.cfo.edu.vn/tvct/Tu-van,22,28,33,Ke-hoach-tai-chinh-la-gi-Tai-sao-doanh-nghiep-can-kehoach-tai-chinh-,page=0 [Accessed 3 November 2014].
14