Finance Business Enterprises

Question: Discuss about the case study of Finance for Business Enterprises. Answer: Introduction: The commercial banks have been playing a decisive role in fulfilling the external finance needs of small business enterprises. As such, it is necessary that the government authorities regarding the implications of the small business enterprises in the industry make the effective finance policies. In these regard, it can be said that the commercial banks offer loans at a small rate of interest to enable the small-scale business enterprises to survive in an intensely competitive market environment. In this regard, it can be said that there has been financial crisis, which have negatively affected the business functionalities of the commercial banks. As such, it can be said the economic condition of a particular region has been one of the essential determinants that has been affecting the market situation in a specific region. The commercial banks have been playing an essential role in facilitating sole-proprietorship businesses and small scale businesses in having smoother business ope rations and achieving economic stability . The commercial banks specializes in the identifies the asset and the debt that is usually not identified in a companys balance sheet. Thus assessing such financial transactions in the case of some transactions which have a significant portion of such assets and liabilities in the balance sheet . These transactions mainly relates to financial institutions that offer asset management as well as the brokerage services to the clients. The Financial institutions usually record their accounting standards under the figure asset under management that includes the balance sheet items . The current accounting rules under the purview of the IFRS as well as the operating leases in the case of such transactions relate to off- balance sheet financing . However, it is the necessary that commercial banks identify such transactions in a consistent basis in their year-ended annual financial statements Share market and the corporation The main sources of funds have been the deposits made by reputed business houses and the individuals. In addition, a moderate rate of interest is charged on the loans offered to consumers. Thus there the requirement of funds is primarily met through these sources. In addition, commercial banks have investors investing on a regular basis. Thus, proper utilization of funds is necessary for commercial banks in meeting the long goals and business targets for the organization. These funds are primarily used in meeting the daily operational expenses as well as addressing the needs of the funds of small -scale business enterprises .In regard to this. it is necessary that certain conditions are taken into consideration like the background of the candidate as well as the existing financial condition of the person . In addition, it is necessary that the long term loan payment capabilities of the candidature are considered under the loan granting procedure. These attributes are not always given enough emphasis, leading to wastage of essential financial resources of the business enterprise. There have been cases where consumers have failed to repay the loans as per the terms and the conditions of the business entity. In such instances, it is the responsibility of the loan recovery department to carry out the necessary procedures as per the needs of the commercial bank. Small-scale business enterprises have been a valuable source of revenue to the business entity. As such, commercial shall have to strictly adhere to the relevant financial guidelines to assist the business entity in its growth. Chapter 9: Corporations issuing equity and the share marketA share market is the formal exchange that assists in the buying and the selling of equity shares as well as securities. Thus, this is a strong platform that assists in the buying and the selling of equity shares for the common public. A public listed company is a platform whose shares are being traded on a formal stock exchan ge, A company is listed on the public exchange because these shall enable a brand to sell shares to the common public. Through this, the organization shall be able to gather additional funds for achieving further growth. In this regard, it can be said that the primary and the secondary market plays an effective role to assist the equity financing in the organization. The primary market forms the foundation on which the shares are traded in the market. The primary market assists every company the equal opportunity to trade shares in the market , In addition , it acts as the bridge through which the business enterprises and prospective shareholders comes in contact . The secondary market here relate to the selling of preference shares, stock and debentures . Thus, both these market act as a platform for buying and selling of financial products to the end- consumers. Thus, it facilitates the process of the buying the trading of shares in the market. The process of wealth maximization in the case of the shareholders shall depend on a lot of factors . In this regard, it can be said that the wealth maximization of shareholders would have an adverse impact on the market condition of the business enterprise. However, it can be said that a balance must be maintained between offering of shares to the public and retaining the existing market position of the business entity. An organization can keep an amount of percentage of the ownership in the hands of the owners. Therefore , this shall assist the business enterprise in having control over the organization , and looking after the operational , financial and the operational aspects of the business entity. Therefore, it can be said that the existing equity condition of a business enterprise can be judged through the frequency of the seasoned equity offerings to a business entity. In addition, it can be said that the seasoned equity offerings have been a valuable source of information to the business entity. Thus, the reference point or the external market condition shall have a considerable impact on seasoned equity offerings of a business entity. Therefore, appropriate measures are required to be taken in executing such sales deals. Non-bank Financial institutions Article chosen: Casu, B., Dontis Charitos, P., Staikouras, S., Williams, J. (2016). Diversification, size and risk: The case of bank acquisitions of nonbank financial firms.European Financial Management,22(2), 235-275. The non-bank financial intuitions have been playing a vital role in the mobilization of funds. Following are the functions performed by these financial institutions in the context of the global market. Financial intermediation - These banks have been playing a vital role in the transfer of funds . This is especially true in the case of savers who have their funds transferred to the investors at a certain rate of interest, thereby, benefitting both the parties. Methodical approach- It is a more methodical approach in the saving and the wealth maximization of funds as it is based on the following characteristics: a. law of large numbers as well as economies of scale. In addition, it offers the following benefits to the owners - reduction of risk in the context of portfolio diversification, lesser administrative cost. As such, this would assist individuals and business houses in achieving greater savings in a less amount of time. Investment through funds The primary objective of NBFIs is to achieve profitability, through the investment of funds. The investment in funds is possible through various alternative schemes like saving as well as loan associations and investment in certain bonds, mortgages and securities. References Casu, B., Dontis Charitos, P., Staikouras, S., Williams, J. (2016). Diversification, size and risk: The case of bank acquisitions of nonbank financial firms. European Financial Management, 22(2), 235-275. Hovakimian, A., Hu, H. (2016). The Impact of Reference Point Prices on Seasoned Equity Offerings. Available at SSRN 2755066. Jacques, K.T., Moylan, R. and Nigro, P.J., 2016. Commercial Bank Small Business Lending Pre and Post Crisis. The Journal of Entrepreneurial Finance, 18(1), p.22. Jacques, K.T., Moylan, R. and Nigro, P.J., 2016. Commercial Bank Small Business Lending Pre and Post Crisis. The Journal of Entrepreneurial Finance, 18(1), p.22