Question

I have chosen a automobile industry for business i.e. dealership of car, merchandising, retail medium business in a partnership form. Answer the following questions.

1.What are the different financing options to set up this business and reasons for the options? 250 words

2. Identify users of accounting information for your business and briefly discuss on how each can use the information. 250 words

3. Assume that the cash flow from operating activities for your business has been negative over the recent years, discuss the various steps that you are likely to take to improve the situation. 250 words

4. Assume that you want to improve the profitability of your business. Discuss the operational decisions that you are likely to take to improve the related ratios. 250 words

7. Discuss the decisions you are likely to take to ensure your business survives the COVID-19 impact. 250 words

Answer 1

Ans: 1 -

For Inventory: Floor-Plan Funding for Car Dealerships

For Revolving Cash Needs: Business Line of Credit

For Real Estate and Expansion: Bank Term Loans

For Equipping Repair Shops: Equipment Financing

For Body Shops: Accounts Receivable Financing

You should go for business line of Credit for managing working capital requirement of business and for purchasing inventory of Cars better option is Floor plans essentially act like a high-limit business credit card, giving you the funds to purchase inventory for dealership showrooms or lots when you need it.

Ans 2: Users of financial Information

• Internal users are people within a business organization who use financial information. Examples of internal users are owners, managers, and employees.
• External users are people outside the business entity (organization) who use accounting information. Examples of external users are suppliers, banks, customers, investors, potential investors, and tax authorities.

Ans 3: steps that you are likely to take to improve cashflows

1. Lease, Don't Buy.
2. Offer Discounts for Early Payment.
3. Conduct Customer Credit Checks.
4. Form a Buying Cooperative.
5. Improve Your Inventory.
6. Send Invoices Out Immediately.
7. Use Electronic Payments.
8. Pay Suppliers Less.

9. Increase Pricing