American Chicken Case Study

Introduction

American Chicken is a fast food take away outlet situated in Penzance; they are specialized in Pizza and Burgers. Also, American Chicken has two objectives, one is to make more profit, two is to expand their business and open another outlet in Hayle. Furthermore in the outskirts of the city there is a KFC and a McDonald’s, both of those take away restaurants are the competition of American Chicken, because they both sell similar products, there hasn’t been much growth in the business these past couple of years but the shop is currently still making profit.

To open another outlet in Hayle, American Chicken has to take out a mortgage on the property and repay this over the next 25 years, but American Chicken already has bank loans for the equipment they use in Penzance outlet. Besides, they have been advised by their local bank to get the equipment for the Hayle store via a mixture of hire purchase and leasing. The advantage of this is that the use of hire purchase or leasing is a popular method of funding the acquisition of capital assets. However, these methods are not necessarily suitable for every business or for every asset purchase.

Internal Sources of Finance

An internal source of finance is the owner’s savings and retained profits. Also, internal financing is the name for a firm using its profits as a source of capital for new investment. The advantages of investing in share capital are covered in the section on business structure. One of the disadvantages of internal finance is capital Needs, the main concern with internal financing is that when you take money from your operating budget or capital, it leaves you with less money to manage daily expenses.

Owners Savings

When a property buyer finances the pu...

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...t as well as the possibility of government charges.

Factoring

In maturity factoring (also called service factoring), the factor maintains the seller's sales ledger, controls credit, follows up on the payments, and pays the amount (after deducting a commission) of each invoice as it falls due, whether or not the payment was collected. In finance factoring, the factor (called the financing factor) advances funds to a producer or a manufacturing firm, on the security of produce or goods that will be produced or manufactured utilizing those funds.

http://www.businessdictionary.com/definition/factoring.html#ixzz2xGa2iNS2

Also, factoring it’s a type of financial service where someone sells or transfers tittles to its account. Also, they sometimes have some difficulties getting them to pay on time; this is because they choose to use a factoring company.

Hire purchases