Unit 5 - Evaluating Performance

Unit 5 - Evaluating Performance

Introduction

Around the globe, one of the most important aspects of organizations and firms is investing. In accordance with this, firms and organizations are taking initiatives and investing in different parts across the planet. A multi billion public MNE, Acme is one of them, which is within the United States. Acme, following this, has been resting strategies to acquire a US$500M production facility. Numerous suggestions have been made in respect to raise this sum of money. Among these suggestions is external financing. This paper will analyse different external financing solutions that are available in the modern business world, their pros and cons as well as suggesting the most appropriate alternative(s).

Discussion

Research Findings

Research indicates that there are different exterior funding solutions that are available in the U.S. Before sampling further into these solutions, it is important to state that exterior funding of investment strategies among organizations and companies is expensive as in comparison with internal funding. As per Lyandres (2007), at the optimal period of company investments the external financing is most costly. So far, different external financing alternatives identified in the market, these include leasing, trade credit, bank loans, and bond finance.

Bank Loans

These are the most commonly used exterior financial resources. Basically, banks practice the loaning business by providing both corporate and individual financial support that they have to pay back within a particular time period with an interest or certain percentages. Financial loans have both pros and cons as a form of exterior funding.

Bank Loans Advantages

To begin with, financial loans can be secured within a few months. This is one of the main reasons why financial loans are taking as a source of external finance. In this respect, Acme could easily acquire financial loans for its financial commitment within a a short span of time.

Bank Loans Disadvantages

There are different drawbacks that are associated with using financial loans as exterior financial solutions. To start with some financial loans have pre charge. In this respect, the client would be billed extra if he or she compensated off the financial loans post than the decided interval. In the same way, the use of financial loans is also restricted to the decided tasks. In other terms, one cannot invest a mortgage on anything else except that which is decided with the bank. Therefore, even if an immediate problem occurs outside what was decided, one cannot ...