BUSINESS OPERATING SYSTEM

Business Operating System

Business Operating System

Aldgate Motors

Aldgate Motors is the largest Auto mobile company that is selling new and trading in vintage cars. The option of trading is one of the best option company is providing in order to facilitate customers who want to buy new cars. This option is not only retaining but also gaining new customers day by day, which shows the positive sign for future expansion for the company.

Latitude Credit

Latitude Credit is a subsidiary of Aldgate Motors which provides loans to buyers. This facility is one of the best facilities the company is providing to its customer. The major flaw seen in the facility is of the day's turnover. The management is taking too much time in giving loan to the customer that is distracting customer and moving them to go for their competitor. So there is much other option that the company may opt in order to entertain and retain their customers.

Company's Loan Process

Recently, company is looking for their latitude, in order to find loan for their customers. This is taking time of 6 days. Within this time span customer distracts and looks forward for other company or other financial institution for the loan. So company opted to generate their personal finance with the help of both tools of financing. These financing toots will help the company to generate sufficient funds, which will help the dealer to immediately finance the car on the request of the customer (Ansari, 2008, 60-76).

Financing Tools

Debt financing and equity financing are the two major types of financing for a business. Debt financing is a type of financing facility, in which a company obtains a loan from a bank or any other financial institution (Davey & John, 1982, pp 238 - 249). While, equity financing is a type of financing, in which the company obtains the funds from the outside investors through issuing stock, common stock, or preferred stock.

The main advantage of debt financing is the fact it will finish in the future, the company's obligation is only until the time, when the loan is on the company the moment the company pays off the loan, and their obligation is over. Another huge advantage of debt financing is the tax shield that comes with debt financing (Ross, Westerfield & Jordan, 2002, pp 137 - 141). However, the disadvantage of debt financing is that it increases the risk of the company, because there is always a chance of default from any company. Another drawback is the interest factor; the company has to pay interest on the debt on a regular basis (Guilding, 2002, pp 64 - 87).

The advantage of the equity financing is that there is no obligation to pay any fixed amount on a regular basis; the company can pay anytime to the investors. However, the disadvantage of equity financing is the lack of tax shield (Ross, Westerfield & Jordan, 2002, pp 137 - 141).

The decision by a company, whether to go for debt financing or equity financing depends on ...