Lecture 17.docx

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University of Calgary
Management Information Systems
MGIS 317
Ronald Schlenker

Lecture 17 If a company is trading profitably, some of these profits will be taken in tax by the government and some is nearly always paid out to the owners or shareholders (dividends). If any profit remains, this is kept (retained) in the business and becomes a source of finance for future activities. These are the three main providers of company finance Rights Responsibilities Objectives Shareholders - Part ownership - Capital - Receive an of the investment annual return company in cannot be on investment proportion to claimed back in shares the number of from the - To receive shares owned company, capital growth - To attend the except when it through an AGM and vote ceases trading increase in - To receive a share price dividend by the board Banks - To receive - To check on - To make a interest business profit payments as viability before - To receive laid down in loan or repayment of the loan or overdraft is capital at the overdraft agreed, this is end of the loan agreement both a term - To be repaid responsibility before to the banks shareholders if and the the company is companies’ wound up shareholders Creditors - To receive - To provide - To provide payment regular credit to agreed statements of encourage the - To be paid amount owing business to before and terms of purchase stock shareholders repayment in the event of the business being wound up Raising external finance- the importance of a business plan Business plan- detailed document giving evidence about a new or existing business, and that aims to convince external lenders and investors to extend finance to the business. Business plans do not guarantee the success of a business, but they are likely to increase the chances of avoiding failure. This plan does not only provide essential evidenc
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